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Prospect Theory, Loss Aversion, and Political Behavior  

Francesco Passarelli and Alessandro Del Ponte

Prospect theory introduces several anomalies in the behavior of rational agents, including loss aversion, the reflection effect, probability weighting, and the certainty effect. Loss aversion occurs relative to the current state of the world, called reference point. Being loss averse causes people to prefer the current state of affairs above and beyond the expected utility that comes from a risky political change, engendering a status quo bias. Yet, bias is asymmetric due to the reflection effect: people are too tepid toward advantageous platforms or candidates, whereas they are not critical enough of detrimental policies or bad politicians. Both rich and poor citizens take similar stances on nonpartisan issues (such as national defense): this happens because they evaluate uncertain policy changes relative to a reference point. Citizens welcome radical political platforms with greater enthusiasm than incremental proposals. Generally, under prospect theory societal conflict is smoother than under expected utility theory. Older societies are more prone to preserving the status quo than younger ones. These properties also affect the choice of voting rules. Loss aversion induces people to prefer more prudent voting rules and preserve the status quo. Hence, agents favor higher majority thresholds or even unanimity over simple majority in constitutional choice. The status quo bias supports the persistence of policy cycles, with prolonged drifts in one direction before a trend reversal. In sum, loss aversion and other anomalies pinpointed by prospect theory offer insightful predictions with which to study political phenomena.


Information Aggregation in Political Decision Making  

Francesco Squintani

Information is of great value to politicians, who make decisions with uncertain consequences and want to convince the public and their political counterparts of the validity of their proposals. Because of conflicting interests and ideal views, information is not easily shared among political agents. However, information aggregation is collectively valuable, because it leads to better decision-making and facilitates defusing conflicts. Formal theorists investigate some of the institutions used to aggregate information among political agents. There are several studies on committee decision-making. They establish that rational voters do not make voting choices using only their individual information. This complicates information aggregation, especially when high quorum voting rules are adopted. However, deliberation may restore efficient information aggregation. In the case of homogeneous committees, strategic incentives for information acquisition are optimized by a decision mechanism based on random sequential individual consultations. The fundamental characteristic of committees is that all decisions are made jointly. An early 21st-century surge of formal studies on information aggregation considers the “opposite case” of information exchange among political entities that make decisions independently of each other. These articles deliver insights on topics as diverse as the optimal organization of meetings, the benefit of cabinet governments, the shape of political and social networks, and the value of engagement of societal groups. The breadth of these results is a testimony to the success and promise of this methodology. Of great importance for international conflict avoidance is building and maintaining trust among states and nonstate entities. Formal analysis of international conflict management institutions such as standard diplomatic communications, peace summits, and third-party intermediation clarifies that, while none of these institutions fully prevent war, they are all useful to aggregate information, build trust, and facilitate peaceful agreements. Even communication through standard diplomatic channels and public announcements may significantly reduce the risk that disputes evolve into conflicts. Third-party intermediation is more effective, even if mediators are not endowed with the power to enforce their settlement proposals.


Dead Ends and New Paths in the Study of Economic Voting  

Timothy Hellwig and Dani M. Marinova

Connections between the economy and vote are commonly invoked to evaluate political accountability in representative democracies. A principal motivation for studying economic voting lies in its value as a gauge of whether democracy works or not. In recent years, however, researchers have cast doubt on the assertion that economic conditions influence voters’ evaluations of political incumbents. Criticisms hail from several directions. Some, adopting a cross-national perspective, cite the instability problem as evidence against economic voting’s existence. That is, variance in the economy-vote relationship across different national contexts is sufficiently large so as to undermine claims that the economy registers a systematic effect. Other critics charge that the electorate lacks sufficient knowledge to incorporate economic conditions in their decisions at the polls. Still others remind us not to mistake correlation for causation. They charge that the voters’ perceptions of how well the economy is performing are viewed through a pre-existing partisan lens. All told, these and other reservations cast doubt on the use of economic voting as a means to evaluate accountability and, in turn, democratic performance. These charges against the fidelity of economic voting require further examination. Rather than join a growing chorus of observers concluding that the economic vote is a chimera, this piece posits that recent critiques should push us to reconceive rather than discredit economic voting. Recent work in psychology and behavioral economics provides a basis for constructive and meaningful reinterpretations of the economy’s influence on voter decisions. These new directions include an emphasis on framing effects—be it on the part of strategic elites or from the media, an emphasis on what voters know about the economy, and a wider consideration of just which “economy” matters to which set of voters. While many in number, each of these new directions advance understanding by embodying deeper conceptions of voters and elected officials.


The Economic Voter Decides  

Mary Stegmaier, Michael S. Lewis-Beck, and Lincoln Brown

In democracies, we elect our political leaders by choosing among a rival set of candidates or parties. What makes us pick one over all the others? Do we carefully weigh the platforms of all the candidates and then select the one closest to our personal desires? Or, do we select the candidate our friends and neighbors recommend? Perhaps, even, to save time, do we just vote for the same party we did last time? All of these are choice strategies, and there are many more. Here we focus on a well-known explanation of how voters decide, commonly called the Michigan Model, so named for the university where it was developed, in a path-breaking scholarly volume—The American Voter. The authors systematically gathered data, via scientific survey research, on individual voters in American presidential elections, measuring different traits, perceptions, and attitudes that they hypothesized might influence vote choice. They arranged these different factors, or variables, into long-term forces and short-term forces that acted on the voter, and could be arrayed as if they were spread along a funnel of causality: from more remote, fixed variables, such as social class or party identification, to more proximate, fluid variables, such as issue preferences and candidate attributes. All these variables generally mattered, but those that concern us here deal with issues, in particular economic issues. How do voter evaluations of the economy help the voter decide what party to favor? Is it the national economy or the pocketbook that counts? How important are economic issues compared to other issues? What conditions make economic considerations more (or less) impactful? Does economic voting operate differently in different countries? These and other questions are addressed herein, with special attention to three leading democracies where economic voting has been heavily studied—the United States, Britain, and Germany. As demonstrated, economic considerations are pervasive and powerful elements in the democratic voter’s calculus.


Arrow’s Theorem  

Conal Duddy and Ashley Piggins

Kenneth Arrow’s “impossibility” theorem is rightly considered to be a landmark result in economic theory. It is a far-reaching result with implications not just for economics but for political science, philosophy, and many other fields. It has inspired an enormous literature, “social choice theory,” which lies on the interface of economics, politics, and philosophy. Arrow first proved the impossibility theorem in his doctoral dissertation—Social Choice and Individual Values—published in 1951. It is a remarkable result, and had Arrow not proved it, it is unlikely that the theorem would be known today. A social choice is simply a choice made by, or on behalf of, a group of people. Arrow’s theorem is concerned more specifically with the following problem. Suppose that we have a given set of options to choose from and that each member of a group of individuals has his or her own preference over these options. By what method should we construct a single ranking of the options for the group as a whole? Any such method may be represented mathematically by a “social welfare function.” This is a function that receives as its input the preference ordering of each individual and then generates as its output a social preference ordering. Arrow defined some properties that would seem to be essential to any reasonable social welfare function. These properties are called “unrestricted domain,” “weak Pareto,” “independence of irrelevant alternatives,” and “non-dictatorship.” Each of these properties, when taken alone, does appear to be very necessary indeed. Yet, Arrow proved that these properties are in fact mutually incompatible. This troubling fact has been central to the study of social choice ever since.


Populist Politics in Africa  

Danielle Resnick

Although widely used in reference to the Americas and Europe, the concept of populism has been less frequently applied to political dynamics in sub-Saharan Africa. Populism is variously viewed as a political strategy aimed at fostering direct links between a leader and the masses, an ideational concept that relies on discourses that conjure a corrupt elite and the pure people, and a set of socio-cultural performances characterized by a leader’s charisma, theatrics, and transgression of accepted norms. A cumulative approach that combines all three perspectives allows for identifying episodes of populism in Africa. These include historical cases of populist regimes in the 1980s as well as more contemporary examples of party leaders in the region’s democracies who use populism in their electoral campaigns to mobilize subaltern groups, especially those living in urban areas. As found in other regions of the world, those African leaders who have ascended to the presidency on the back of populism typically exert anti-democratic practices once in office. This reaffirms that populism can allow for greater representation of the poor and marginalized in the electoral process, but that populists’ celebration of popular will and supposedly unmediated ties to the people become convenient justifications for bypassing established institutions and undermining the rule of law.


Strategic Voting Versus Sincere Voting  

Damien Bol and Tom Verthé

People do not always vote for the party that they like the most. Sometimes, they choose to vote for another one because they want to maximize their influence on the outcome of the election. This behavior driven by strategic considerations is often labeled as “strategic voting.” It is opposed to “sincere voting,” which refers to the act of voting for one’s favorite party. Strategic voting can take different forms. It can consist in deserting a small party for a bigger one that has more chances of forming the government, or to the contrary, deserting a big party for a smaller one in order to send a signal to the political class. More importantly the strategies employed by voters differ across electoral systems. The presence of frequent government coalitions in proportional representation systems gives different opportunities, or ways, for people to influence the electoral outcome with their vote. In total, the literature identifies four main forms of strategic voting. Some of them are specific to some electoral systems; others apply to all.