uclogo.gif Economics 362. Economic Models of Politics

Course description: In this course, we will study current research in political economics, with an emphasis on questions about how different constitutional structures may affect the conduct of politicians and the performance of government. Topic include game-theoretic models of electoral competition, candidate positioning, party formation, legislative bargaining, and lobbying. In the first two weeks, we will go through the four models surveyed in my paper "Economic analysis of political institutions: an introduction," in Advances in Economic Theory and Econometrics, vol. 1, D. Kreps and K. Wallis eds. (Cambridge, 1997), pp. 46-65. (We will also use notes from European Economic Review 43:671-697.) Thereafter, the main textbook for this course will be T. Persson and G. Tabellini, Political Economics (MIT, 2000). Each student who is registered for a grade in this course will write and present in class a review of some paper or papers of interest in the recent literature. For a more readings, see sections III and IV of the Econ 309 course outline from last term.
Spring2001, Tuesdays and Thurdays 12:00-1:20 pm. Instructor: Roger Myerson.

Overview texts
T. Persson and G. Tabellini, Political Economics (MIT, 2000).
R. Myerson, "Analysis of democratic institutions: structure, conduct, and performance," Journal of Economic Perspectives 9:77-89 (1995).
R. Myerson, "Economic analysis of political institutions," in D. Kreps and K. Wallis, Advances in Economic Theory and Econometrics 1:46-65 (Cambridge, 1997).
R. Myerson, "Theoretical comparison of electoral systems," European Economic Review 43:671-697 (1999).

Institutional Comparative Politics
C. Friedrich, Constitutional Government and Democracy (Harper, 1937; 4th ed Ginn, 1968).
G. Cox, Efficient Secret (Cambridge, 1987).
R. Taagepera and M. Shugart, Seats and Votes (Yale, 1989).
M. Laver and N. Schofield, Multiparty Government (Oxford, 1990).
M. Shugart and J. Carey, Presidents and Assemblies (Cambridge, 1992)
M. Laver and K. Shepsle, eds., Cabinet Ministers and Parliamentary Government (Cambridge, 1994).
G. Cox, Making Votes Count (Cambridge, 1997).

Comparison of Electoral Systems Persson-Tabellini (8, 9.2)
D. Rae, V. Hanby, J. Loosemore, "Thresholds of representation and thresholds of exclusion," Comparative Political Studies 3:479-488 (1971).
W. Riker, "The two-party system and Duverger's law," American Political Science Review 76:753-766 (1982).
G. Cox, "Electoral equilibrium under alternative voting institutions," American Journal of Political Science 31:82-108 (1987).
G. Cox, "Centripital and centrifugal incentives in electoral systems," American Journal of Political Science 34:903-935 (1990).
A. Lijphart, "The political consequences of electoral laws, 1945-1985," American Political Science Review 84:481-496 (1990).
S. R. Reed, "Structure and behavior: extending Duverger's law to the Japanese case," British J. of Political Science 20:335-356 (1990).
R. Myerson and R. Weber, "A theory of voting equilibria," American Political Science Review 87:102-114 (1993).
R. Myerson, "Effectiveness of electoral systems for reducing government corruption," Games and Economic Behavior 5:118-132 (1993a).
R. Myerson, "Incentives to cultivate favored minorities under alternative electoral systems," American Political Science Review 87:856-869 (1993b).
G. Cox, "Strategic voting equilibria under single non-transferable vote," American Political Science Review 88:608-621 (1994).
J. Carey and M. Shugart, "Incentives to cultivate a personal vote: a rank ordering of electoral formulas," Electoral Studies 14:417-439 (1995).
R. Myerson, "Comparison of scoring rules in Poisson voting games," to appear in Journal of Economic Theory (2001).

Spatial models and median voters Persson-Tabellini 2, 3.1-3.3, 6
H. Hotelling, "Stability in competition," Economic Journal 39:41-57 (1929).
D. Black, "On the rationale of group decision making," Journal of Political Economy 56:23-34 (1948).
A. Downs, An Economic Model of Democracy (Harper and Row, 1957).
A. Meltzer and S. Richard, "A rational theory of the size of government," Journal of Political Economy 89:914-927 (1981).

Probabilistic Voting Persson-Tabellini (2.3), 3.4, 7.4, 8
P. Coughlin and S. Nitzan, "Electoral outcomes with probabilistic voting and Nash social welfare optima," Journal of Public Economics 15:113-121 (1981).
J. Ledyard "Pure theory of two-candidate competition," Public Choice 44:7-41 (1984).
A. Dixit and J. Londregan, "Determinants of success of special interests in redistributive politics," Journal of Politics 58:1132-1155 (1996).
S. Lohmann, "An information rationale for the power of special interests," American Political Science Review 92:809-827 (1998).
R. Myerson, "Informational origins of political bias towards critical groups of voters," European Economic Review 43:767-778 (1999).

Entry and positioning of partisan candidates Persson-Tabellini 5.1-5.3
M. Osborne, "Spatial models of political competition under plurality rule," Canadian Journal of Economics (1995) 28:261-301.
M. Osborne and A. Slivinski, "A model of political competition with citizen-candidates," Quarterly Journal of Economics 111:65-96 (1996).
T. Besley and S. Coate, "An economic model of representative democracy," Quarterly Journal of Economics 112:85-114 (1997).

Retrospective voting and agency Persson-Tabellini 4, 9, (10)
R. Barro, "Control of politicians," Public Choice 14:19-42 (1973).
J. Ferejohn, "Incumbent performance and electoral control," Public Choice 50:5-26 (1986).
J. S. Banks and R. K. Sundaram, "Adverse selection and moral hazard in a repeated elections model," in W. Barnett, M. Hinich, and N. Schofield, eds., Political Economy (Cambridge, 1993).
T. Persson, G. Roland, and G. Tabellini, "Separation of powers and political accountability," Quarterly Journal of Economics 112:1163-1202 (1997).
D. Austen-Smith and J. Banks, "Electoral accountability and incumbency," in P. Ordeshook, ed., Models of Strategic Choice in Politics (Michigan, 1989).
J.J Laffont, Incentives and Political Economy (Oxford, 2000).
S. Rose-Ackerman, Corruption and Government (Cambridge, 1999).

Legislative structure, agendas, and bargaining Persson-Tabellini (2.3), 5.4, 7.2, (9.3), 10
T. Romer and H. Rosenthal, "Political resource allocation, controlled agendas, and the status quo," Public Choice 33(4):27-43 (1978).
K. Shepsle, "Institutional arrangements and equilibrium in multi-dimensional voting models," American Journal of Political Science 23:27-59 (1979).
K. Shepsle and B. Weingast, "Structure induced equilibria and legislative choice," Public Choice 37:503-519 (1981).D. Baron and J. Ferejohn, "Bargaining in legislatures," American Political Science Review 83:1181-1206 (1989).
V. Crawford and J. Sobel, "Strategic information transmission," Econometrica 50:1431-1451 (1982).
T. Gilligan and K. Krehbiel, "Collective decisionmaking and standing committees," Journal of Law Economics and Organization 3:287-335 (1987).
B. Weingast and W. Marshall, "Industrial organization of congress," Journal of Political Economy 96:132-163 (1988).
D. Austen-Smith and J. Banks, "Elections, coalitions, and legislative outcomes," American Political Science Review 82:405-422 (1988).
D. Baron and J. Ferejohn, "Bargaining in legislatures," American Political Science Review 83:1181-1206 (1989).
T. Gilligan and K. Krehbiel, "Asymmetric Information and Legislative Rules with a Heterogeneous Committee," American Journal of Political Science 33:459-490 (1989).
K. Shepsle and M. Laver, "Coalitions and cabinet government," American Political Science Review 81:873-890 (1990).
R. McKelvey and R. Riezman, "Seniority in legislatures," American Political Science Review 86:951-965 (1991).
J. Huber, "The vote of confidence procedure in parliamentary democracies," American Political Science Review 90(2):269-282 (1996).
V. Chari, L. Jones, and R. Marimon, "The economics of split voting in representative democracies," American Economic Review 87:957-976, (1997).
D. Diermeier and T. Feddersen, "Cohesion in legislatures and the vote of confidence procedure," American Political Science Review 92:611-621 (1998).
D. Diermeier and R. Myerson, "Bicameralism and its consequences for the internal organization of legislatures," American Economic Review 89:1182-1196 (1999).[pdf preprint]
A. Dixit, G. Grossman, and F. Gul, "A theory of political compromise," Journal of Political Economy 108:531-568 (2000).

Lobbying Persson-Tabellini 3.5, 7.3-7.6
M. Olson, Logic of Collective Action (Harvard U. Press, 1965).
G. Becker, "A theory of competition among pressure groups for political influence," Quarterly Journal of Economics 98:371-400 (1983).
J. Snyder, "Campaign contributions as investment," Journal of Political Economy 98:1195-1227 (1990).
J. Snyder, "On buying legislatures," Economics and Politics 3:93-110 (1991).
R. Morton and C. Cameron, "Elections and the theory of campaign contributions," Economics and Politics 4:79-108 (1992).
D. Baron, "Electoral competition with informed and uninformed voters," American Political Science Review 88:33-47 (1994).
G. Grossman and E. Helpman, "Electoral competition and special interest politics," Review of Economic Studies 63:265-286 (1996).
A. Dixit, G. Grossman, and E. Helpman, "Common agency and coordination," Journal of Political Economy 105:752-769 (1997).
T. Groseclose and J. Snyder, "Buying supermajorities," American Political Science Review 90:303-315 (1996).
URL of this course page: http://home.uchicago.edu/~rmyerson/econ362.htm