Out of Sight, Out of Mind:The Value of Political Connections in Social Networks

This paper investigates the impact of social-network connections to politicians on firm value. We focus on the networks of university classmates and alumni among directors of U.S. public firms and congressmen. Using the Regression Discontinuity Design based on close elections from 2000 to 2008, we identify that a director’s connection to an elected congressman causes a Weighted Average Treatment Effect on Cumulative Abnormal Returns of -2.65% surrounding the election date. The effect is robust and consistent through various specifications, parametric and nonparametric, with different outcome measures and social network definitions, and across many subsamples. We find evidence to support the hypothesis that firms benefit more when connected politicians remain in state politics than when they move to federal office. Overall, our study identifies the value of political connections through social networks and uncovers its variation across different states and between state and federal political environments.Social network; political connection; close election; regression discontinuity design; firm value.

Incumbency, Party Identity and Governmental Lead: Evidence for Heterogeneous Incumbency Effects for Germany

Do incumbents in an election have an advantage, and if so, are these advantages heterogeneous across parties or government and opposition? We first present a theoretical discussion on the possible heterogeneity of incumbency effects in a pure two-party system. Then, we estimate the incumbency effect for the direct district candidates in German federal and state elections using a regression discontinuity design (RDD). When studying the heterogeneity in these effects, we find that incumbents from both large parties, the center-right CDU and the center-left SPD, have an advantage only if the SPD is in government. This effect is robust and shows even in state elections that are unrelated to federal elections - calling into question the findings of average incumbency effects in the literature. Because this effect is stronger in the East than in the West and only shows post reunification, we hypothesise that the emergence of the socialist party "The Left" may be behind this heterogeneity.incumbency advantage, regression discontinuity design, federal elections, state elections

Do Campaign Contribution Limits Curb the Influence of Money in Politics?

Over 40% of countries around the world have adopted limits on campaign contributions to curb the influence of money in politics. Yet, we have limited knowledge on whether and how these limits achieve this goal. With a regression discontinuity design that uses institutional rules on contribution limits in Colombian municipalities, we show that looser limits increase the number and value of public contracts assigned to the winning candidate’s donors. The evidence suggests that this is explained by looser limits concentrating influence over the elected candidate among top donors and not by a reduction in electoral competition or changes in who runs for office. We further show that looser limits worsen the performance of donor-managed contracts: they are more likely to run over costs and require time extensions. Overall, this paper demonstrates a direct link between campaign contribution limits, donor kickbacks, and worse government contract performance

Political Dynasties

We study political dynasties in the United States Congress since its inception in 1789. We document historic and geographic patterns in the evolution and profile of political dynasties, study the extent of dynastic bias in legislative politics versus other occupations, and analyze the connection between political dynasties and political competition. We also study the self-perpetuation of political elites. We find that legislators who enjoy longer tenures are significantly more likely to have relatives entering Congress later. Using instrumental variables methods, we establish that this relationship is causal: a longer period in power increases the chance that a person may start (or continue) a political dynasty. Therefore, dynastic political power is self-perpetuating in that a positive exogenous shock to a person's political power has persistent effects through posterior dynastic attainment. In politics, power begets power.

On committed citizen-candidates

I study if the equilibria of the citizen-candidate model analyzed in Osborne and Slivinski (1996) are robust to some degree of commitment from candidates. In analogy with their notion of "sincere" voting, I consider one of "sincere" commitment: commitment is costless to positions closer to one's ideal point than any other candidate's position, but it is too costly to positions further away. With "sincere" voting this ensures candidates always vote for themselves. I show hat, for the most common population distributions, all the multiple candidate equilibria analyzed in Osborne and Slivinski (1996) are not equilibria in this model, as the unique equilibrium with four or less candidates has a single candidate entering

Breaking the O(n^2) Bit Barrier: Scalable Byzantine agreement with an Adaptive Adversary

We describe an algorithm for Byzantine agreement that is scalable in the sense that each processor sends only $\tilde{O}(\sqrt{n})$ bits, where $n$ is the total number of processors. Our algorithm succeeds with high probability against an \emph{adaptive adversary}, which can take over processors at any time during the protocol, up to the point of taking over arbitrarily close to a 1/3 fraction. We assume synchronous communication but a \emph{rushing} adversary. Moreover, our algorithm works in the presence of flooding: processors controlled by the adversary can send out any number of messages. We assume the existence of private channels between all pairs of processors but make no other cryptographic assumptions. Finally, our algorithm has latency that is polylogarithmic in $n$. To the best of our knowledge, ours is the first algorithm to solve Byzantine agreement against an adaptive adversary, while requiring $o(n^{2})$ total bits of communication