Endogenous (In)Formal Institutions.

Despite the huge evidence documenting the relevance of inclusive political institutions and a culture of cooperation, we still lack a framework that identifies their origins and interaction. In a model in which an elite and a citizenry try to cooperate in consumption risk-sharing and investment, we show that a rise in the investment value encourages the elite to introduce more inclusive political institutions to convince the citizenry that a sufficient part of the returns on joint investments will be shared. In addition, accumulation of culture rises with the severity of consumption risk if this is not too large and thus cheating is not too appealing. Finally, the citizenry may over-accumulate culture to credibly commit to cooperate in investment when its value falls and so inclusive political institutions are at risk. These predictions are consistent with the evolution of activity-specific geographic factors, monasticism, and political institutions in a panel of 90 European regions spanning the 1000-1600 period. Evidence from several identification strategies suggests that the relationships we uncover are causal

Environmental Morale and Motivation

This chapter discusses the role of environmental morale and environmental motivation in individual behavior from the point of view of economics and psychology. It deals with the fundamental public good problem, and presents empirical (laboratory and field) evidence on how the cooperation problem can be overcome. Four different theoretical approaches are distinguished according to how individuals’ underlying environmental motivation is modeled. Specifically, we look at the interaction between environmental policy and environmental morale through the lens of cognitive evaluation theory (also known as crowding theory)

Direct Democracy for Transition Countries

Theoretical arguments and empirical evidence are advanced to bolster the claim that direct political participation via referenda and initiatives constitutes an advanced form of democracy with beneficial effects on Transition Countries.nDirect democracy raises trust and honesty and improves social outcomes. Per capita incomes and subjective well-being are raised.nStandard arguments against direct democracy (citizens' incompetence and lacking interest, danger of manipulation and emotionality, hindering progress and destroying civil rights, high cost) are rejected.nElements of direct democracy can be introduced at the national and local levels, and then proceeding further. Citizens should have the right to govern this process.