Rational Voters in a Partisanship Model

This paper examines a voter model for the US which is interconnected with the partisan theory. In our model, voters are rational and forward-looking. They are perfectly informed about the preferences of political parties and about the state of the economy. The predictions of our voter model differ from the predictions of conventional voter models, according to which the incumbent benefits from low unemployment and low inflation, irrespective of its political colour. In a partisan setting, the democratic party benefits from high unemployment and the republican party benefits from high inflation. Regressions of presidential approval rates indicate that the predictions of both the partisan voter model and the conventional model are consistent with the data

Why Are Residents Reluctant to Consult Attending Physicians?

A physician performs two tasks: making diagnoses and determining treatments. To reduce medical error, residents are supposed to consult their supervisors when they face uncommon circumstances. However, recent research shows that residents are reluctant to do so. This paper presents a model that explains (i) which residents shy away from consulting; (ii) when residents are reluctant; (iii) the importance of protocols in the medical sector; and (iv) when consulting is a sign of strength or a sign of weakness. Furthermore, I show that encouraging residents to consult by investigating mishaps leads to another distortion: residents will give too much weight to own assessments

Transparency and Pre-meetings

Some committees are made up of experts, persons interested in both the (subject) matter at hand and in coming across as able decision-makers. Such committees would like to concea

How committees of experts interact with the outside world: some theory, and evidence from the FOMC

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 derive two propositions about the way members of such committees interact with the outside world. First, they 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. Second, if such committees are required to become transparent, e.g., by publishing verbatim transcripts of their meetings, members will organize pre-meetings away from the public eye. Large part of the paper is dedicated to a case study of the U.S. Federal Open Market Committee in the United States. It provides suggestive evidence supporting the two propositions

Task-specific Human Capital and Organizational Inertia

__Abstract__ Employees' incentive to invest in their task proficiency depends on the likelihood that they will execute the same tasks in the future. Changes in tasks can be warranted as a result of technological progress and changes in firm strategy as well as from fine-tuning job design and from monitoring individuals' performance. However, the possibility of a change in tasks reduces employees' incentive to invest in task-specific skills. We develop a simple two-period principal-agent model showing that some degree of inertia benefits the principal. We then analyze how organizations can optimally combine several policies to approach the optimal degree of inertia. In particular, we consider the optimal mixture of (abstaining from) exploration, managerial vision, organizational task-specific investments, and incentive pay. Our analysis yields testable predictions concerning the relations between these organizational policies

How Polarization and Political Instability affect Learning through Experimentation

In a multiperiod setting, decision-makers can learn about the consequences of their decisions through experimentation. In this paper we examine how in a two-party system polarization and political instability affect learning through experimentation. We distinguish two cases: the decision to be made is not salient and does not affect the outcome of the following elections (exogenous elections) and the decision is salient and the election outcome depends on it (endogenous elections). We show that while the possibility of learning increases activism, the existence of political instability distorts learning. Furthermore, in contrast to the existing literature, we demonstrate that, when elections are exogenous, polarization between political parties does not always decrease active learning. In the case with endogenous elections we find that electoral concerns may induce candidates not to experiment, even if the majority of voters prefers activism

Do More Powerful Interest Groups have a Disproportionate Influence on Policy?

Decisions-makers often rely on information supplied by interested parties. In practice, some parties have easier access to information than other parties. In this light, we examine whether more powerful parties have a disproportionate influence on decisions. We show that more powerful parties influence decisions with higher probability. However, in expected terms, decisions do not depend on the relative strength of interested parties. When parties have not provided information, decisions are biased towards the less powerful parties. Finally, we show that compelling parties to supply information destroys incentives to collect information

Learning from others? Decision rights, strategic communication, and reputational concerns

We examine centralized versus decentralized decision making when experience of agents is private information and communication is necessary to learn from others. An agent has reputational concerns and his market may or may not observe what the other agent chooses (global versus local markets). With decentralized decision making, agents' willingness to communicate depends heavily on what a market observes. Strikingly, less communication may improve welfare. If markets are global, centralization outperforms decentralization as it makes communication possible, and communication is informative for any finite degree of conflict among agents and with the center

Sharing Information through Delegation and Collaboration

This article analyzes under which conditions a manager can motivate a junior worker by verbal communication, and explains why communication is often tied up with organizational choices as job enlargement and collaboration. Our model has two important features. First, the manager has more information about a junior's ability than the junior himself. Second, the junior's effort and ability are complements. We show that the manager has an incentive to exaggerate the junior's ability. We discuss two ways in which the manager can make credible statements about the junior's ability. First, the senior can delegate a task to the junior for which it is important that the junior has a correct perception of his ability. Information is shared through a costless signal. Second, the senior can spend more time on a junior she perceives as able than on a junior she perceives as less able. Information is then shared through a costly signal