http://repub.eur.nl/res/concept/jel-D7/ Recent publications classified by JEL Code D7 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/38212/ 2012-11-01T00:00:00Z At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue and next chooses for either a major reform or a minor reform. Not addressing an issue means that the status quo is maintained. Politicians differ in their ability to make correct decisions. They want to make good decisions and want to come across as able decision makers. An important characteristic of the model is that politicians and voters have different priors concerning the desirability of a major reform. We show that electoral concerns may lead to anti-pandering. Politicians tend to put issues on their political agenda when voters are relatively pessimistic about a major reform, and keep issues off the table when voters are optimistic about major reform. Sayag, R.S. Swank, O.H. http://repub.eur.nl/res/pub/38555/ 2012-01-01T00:00:00Z Introduction. The immediate goal of the National Rural Employment Guarantee Scheme (NREGS) is to ensure a social safety net for vulnerable groups by providing a fall-back source of employment when other alternatives are scarce. However, its long-term goals are to create durable rural assets and infrastructure which meet local needs and help address chronic poverty and to foster a model of governance based on the principles of grass-root democracy and transparency (Ministry of Rural Development, 2008). While several papers have examined pertinent aspects of the functioning of the programme, such as targeting (Jha et al., 2009), impact on consumption (Ravi and Engler, 2009) and various implementation issues including corruption (Rai, 2008; Institute of Applied Manpower Research, 2008) there is limited work on the quality and upkeep of the infrastructure built through the programme and indeed whether the constructed projects meet local needs. ... Roy, J. Bedi, A.S. http://repub.eur.nl/res/pub/26648/ 2011-01-01T00:00:00Z Communal violence requires a prior existence of radicalism. The chapter shows that the degree of extremism of one group can increase or decrease in response to that of the other. Lootable wealth unambiguously raises radicalism. It is not the absolute level of income but the difference between peacetime income and that of conflict periods that determines the magnitude of radicalism. Murshed, S.M. Mahmud, A.S. http://repub.eur.nl/res/pub/31151/ 2011-01-01T00:00:00Z Abstract: We analyze rural household livelihood and children’s educational investment decisions in a post-conflict setting located in the Chittagong Hill Tracts region of Bangladesh. The study represents a contribution to the microeconomic analysis of conflict. Another innovation of the paper lies in the fact that we employ information about subjective perceptions of violent experiences, which is in turn used to explain household economic decision making. Heightened subjective perceptions of violence lower consumption expenditure, but it can raise land use intensity, and more risky mixed crop cultivation. In some case experiences of displacement and other violence raises the likelihood of households sending children to school. This indicates that a specific postconflict ‘phoenix’ factor may be in operation, even without substantial infrastructure reconstruction. Also, the trauma emanating from actual past experiences combined with current high perceptions of risk of violence after an imperfect accord ending a lowintensity conflict may make people bolder and more risk taking in order to enhance their long-term future. We, therefore, also make a contribution to the literature on a non-linear relationship between violence and the temporal patterning of livelihood decision-making. Murshed, S.M. Badiuzzaman, M. http://repub.eur.nl/res/pub/34803/ 2011-01-01T00:00:00Z Using unique village census data collected in 2003 and 2008 in Senegal, we assess the impact of a major World Bank-funded Community Driven Development (CDD) program on membership and assortative matching in community-based organizations (CBOs). We implement both standard discrete choice and dyadic regression techniques. We find that channeling development aid through CBOs makes these organizations more inclusive in the sense that a number of traditionbound assortative matching patterns are partly broken. Ceteris paribus, this leads to more heterogeneous CBOs. On the other hand, the likelihood of CBO membership is reduced in treated villages, with significant differences between men and women. Our results suggest that grassroots level development projects which target CBOs must be carefully designed and executed if they are not to result, paradoxically, in a greater degree of social exclusion, with differentiation by gender playing a crucial role. Wagner, N. Arcand, J.-L. http://repub.eur.nl/res/pub/18544/ 2010-03-01T00:00:00Z We study two aspects of globalization. It allows a decision-maker to go beyond his own local experience and to learn from other decision-makers in addressing common problems. This improves the identification and diffusion of best practices. It also provides extra information to `markets' that evaluate decision-makers: comparisons become possible. We identify conditions under which the globalization of markets helps or hurts (i) the communication among decision-makers about their own experience and (ii) the quality of the decision that is taken next. An important mediating factor is whether decision-making is centralized or decentralized. Swank, O.H. Visser, B. http://repub.eur.nl/res/pub/19993/ 2010-02-01T00:00:00Z This paper studies the impact of bicameralism on the level of corruption of elected officials. The relationship between parliamentary organization and corruption is analyzed in a two-period game between legislators, citizens and a lobby group, which delivers several predictions that we empirically investigate using a panel of 35 democracies during the period 1996–2004. Assuming that legislators choose a multidimensional policy on which citizens and a lobby group have opposing interests, we show that bicameralism improves the accountability of legislators to the electorate when the same party controls the two chambers and party polarization is high, while the opposite holds if the two chambers are controlled by different parties. These predictions find strong support in our empirical analysis. Testa, C. http://repub.eur.nl/res/pub/16516/ 2009-07-28T00:00:00Z A firm may induce voters or elected politicians to support a policy it favors by suggesting that it is more likely to invest in a district whose voters or representatives support the policy. In equilibrium, no one vote may be decisive, and the policy may gain strong support though the majority of districts suffer from adoption of the program. When votes reveal information about the district, the firm's implicit promise or threat can be credible. Dahm, M. Dur, A.J. Glazer, A. http://repub.eur.nl/res/pub/16514/ 2009-04-01T00:00:00Z This paper presents a unified framework for characterizing symmetric equilibrium in simultaneous move, two-player, rank-order contests with complete information, in which each player's strategy generates direct or indirect affine "spillover" effects that depend on the rank-order of her decision variable. These effects arise in natural interpretations of a number of important economic environments, as well as in classic contests adapted to recent experimental and behavioral models where individuals exhibit inequality aversion or regret. We provide the closed-form solution for the symmetric Nash equilibria of this class of games, and show how it can be used to directly solve for equilibrium behavior in auctions, pricing games, tournaments, R&D races, models of ligitation, and a host of other contests. Baye, M.R. Vries, C.G. de http://repub.eur.nl/res/pub/32452/ 2009-01-14T00:00:00Z ABSTRACT This paper focuses on two areas of security concern for the European Union: terrorism and international crime. I present a model of game-theoretic interaction between a European state and a domestic dissident group, who, on occasion, may resort to acts of terrorism. Here, identity is crucial to the putative terrorist, providing the microfoundations of dissident group behaviour by solving the collective action problem. I also sketch a macromodel of drugs production in a conflict-ridden developing country, where I argue that demand-side policies of regulation may be better than policies that are aimed at eradicating supply. As far as the policy implications are concerned, first excessive deterrence against potential terrorists may backfire. Secondly, space needs to be created so that Muslim migrants are able to merge their personal identities within their adopted European homelands. Thirdly, the economic discrimination against Muslims in Europe needs to be redressed. Finally, aid to fragile drug producing states should be broad-based and poverty reducing, not just benefiting warlords. Murshed, S.M. http://repub.eur.nl/res/pub/21700/ 2009-01-01T00:00:00Z Two phenomena have been recently utilised to explain conflict onset among rational choice analysts: greed and grievance. The former reflects elite competition over valuable natural resource rents. The latter argues that relative deprivation and the grievance it produces fuels conflict. Central to grievance are concepts of inter-ethnic or horizontal inequality. Identity formation is also crucial to intra-state conflict, as it overcomes the collective action problem. Conflict can rarely be explained by greed alone, yet, the greed versus grievance hypotheses may be complementary explanations for conflict. The greed explanation for conflict duration and secessionist wars works best in cross-country studies, but has to make way for grievance-based arguments in quantitative country-case studies. Grievances and horizontal inequalities may be better at explaining why conflicts begin, but not necessarily why they persist. Neither the presence of greed or grievance is sufficient for the outbreak of violent conflict, something which requires institutional breakdown, which we describe as the failure of the social contract. The degradation of the social contract is more likely in the context of poverty and growth failure. We provide a synthesis of the greed and grievance hypotheses, including comments on post-conflict reconstruction. Murshed, S.M. http://repub.eur.nl/res/pub/14438/ 2008-12-01T00:00:00Z This paper proposes a …first step towards a positive theory of tax instruments. We present a model that extends models of redistributive politics by Myerson (1993) and Lizzeri and Persico (2001). Two politicians compete in terms of targeted redistributive promises …nanced through distortionary taxes. We solve for the case of both targetable and non-targetable taxes. We prove that there is an imperfect efficiency-targetability trade off on the tax side. Politicians prefer targetable taxes over non-targetable ones, especially when the latter are less efficient. Yet, targetable taxation is always used even when it is very inefficient compared to non-targetable taxes. Crutzen, B.S.Y. Sahuguet, N. http://repub.eur.nl/res/pub/14437/ 2008-06-09T00:00:00Z We propose a model in which two parties select the internal organization that helps them win the election. Party choices provide incentives to the politicians who represent them. Depending on whether politicians are opportunistic or partisan, we identify four effects. First, a selection effect: intraparty competition gives parties more candidates to choose from. Second, an incentive effect: intraparty competition adds a hurdle and impacts on candidates’ incentives. Third, a trust effect: because of the incentive effect, intraparty competition is a signal to uninformed voters. Finally, with partisan preferences, an ideology effect appears. Ideology is a public good in a competitive party and induces free riding. Intraparty competition is valuable when voters are badly informed or interparty competition is weak. These results rationalize the introduction of direct primaries in the U.S., the organizational changes in Western European parties since 1960 and the organizational differences between centrist and extreme parties. Castanheira, M. Crutzen, B.S.Y. Sahuguet, N. http://repub.eur.nl/res/pub/13977/ 2008-05-27T00:00:00Z In experimental investigations of the effect of real incentives, accountability—the implicit or explicit expectation of a decision maker that she may have to justify her decisions in front of somebody else—is often confounded with the incentives themselves. This confounding of accountability with incentives makes causal attributions of any effects found problematic. We separate accountability and incentives, and find different effects. Accountability is found to reduce preference reversals between frames, for which incentives have no effect. Incentives on the other hand are found to reduce risk seeking for losses, where accountability has no effect. In a choice task between simple and compound events, accountability increases the preference for the simple event, while incentives have a weaker effect going in the opposite direction. It is thus shown that the confounding of accountability and incentives is relevant for studies on the effect of the latter, and that existing conclusions on the effect of incentives need to be reconsidered in light of this issue. Vieider, F.M. http://repub.eur.nl/res/pub/28632/ 2008-04-01T00:00:00Z Some committees are made up of experts, persons who care both about the matter at hand and about coming across as able decision makers. We show that such committees would like to conceal disagreement from the public. That is, once the decision has been reached, they show a united front to the outside world. Also, if such committees are required to become transparent, for example, by publishing verbatim transcripts of their meetings, members will organize pre-meetings away from the public eye. A large part of the article is dedicated to a case study of the U.S. Federal Open Market Committee in the United States. It provides suggestive evidence supporting our theory. Swank, J. Visser, B. http://repub.eur.nl/res/pub/11731/ 2008-03-01T00:00:00Z We analyse the implications of endogenizing information collection and reputational concerns for the performance of a sequential decision structure. In this model, two agents decide in a sequence whether to implement a public project. The cost of gathering information is private. We derive two results. First, endogenizing information replaces the herding problem with a free-rider problem. Second, endogenizing information aggravates the distortionary effect of reputational concerns. Visser, B. Swank, O.H. http://repub.eur.nl/res/pub/10772/ 2007-12-07T00:00:00Z To date, theory and research on corruption in organizations have primarily focused on its static antecedents. This paper focuses on the spread and growth of corruption in organizations. For this purpose three downward organizational spirals are formulated: the spiral of divergent norms, the spiral of pressure, and the spiral of opportunity. Social Identity Theory is used to explain the mechanisms of each of these spirals. Our dynamic perspective contributes to a greater understanding of the development of corruption in organizations and opens up promising avenues for future research. Nieuwenboer, N.A. den Kaptein, S.P. http://repub.eur.nl/res/pub/10440/ 2007-07-17T00:00:00Z Transparent decision-making processes are widely regarded as a prerequisite for the working of a representative democracy. It facilitates accountability, and citizens may suspect that decisions, if taken behind closed doors, do not promote their interests. Why else the secrecy? We provide a model of committee decision-making that explains the public’s demand for transparency, and committee members’ aversion to it. In line with case study evidence, we show how pressures to become transparent induce committee members to organize pre-meetings away from the public eye. Outcomes of pre-meetings are less determined, more anarchic, than those of formal meetings, but within bounds. We characterize feasible deals that are credible and will be endorsed in the formal meeting. Swank, O.H. Visser, B. http://repub.eur.nl/res/pub/18748/ 2007-07-01T00:00:00Z The authors examine whether greater inter-state trade, democracy and reduced military spending lower belligerence between India and Pakistan. They begin with theoretical models covering the opportunity costs of conflict in terms of trade losses and security spending, as well as the costs of making concessions to rivals. Conflict between the two nations can be best understood in a multivariate framework where variables such as economic performance, integration with rest of the world, bilateral trade, military expenditure, population are simultaneously taken into account. The authors' empirical investigation based on time series econometrics for the period 1950-2005 with causality tests suggests that reduced trade, greater military expenditure, less development expenditure, lower levels of democracy, lower growth rates and less general trade openness are all conflict enhancing. Moreover, there is reverse causality between bilateral trade, militarization and conflict; low levels of bilateral trade and high militarization are conflict enhancing, equally conflict also reduces bilateral trade and raises militarization. The authors also run forecasting simulations on 6 different VECM models. Globalization or a greater openness to international trade in general are more significant drivers of a liberal peace, rather than a common democratic political orientation suggested by the pure form of the democratic peace. Murshed, S.M. Mamoon, D. http://repub.eur.nl/res/pub/12272/ 2007-04-01T00:00:00Z When hiring an adviser (he), a policy maker (she) has incomplete information about his preferences. Some advisers are good (their preferences are closely aligned to the policy maker’s), and some advisers are bad. Recently, some scholars have argued that the policy maker’s power to replace her adviser induces him to act more in line with her interests, so the adviser’s desire to influence future policy reduces his incentive to manipulate information. We show that the policy maker’s power to replace her adviser may harm her because this power may have an adverse effect on the behavior of good advisers. Wrasai, P.T. Swank, O.H.