Effort and Performance in Public-Policy Contests

Government intervention often gives rise to contests in which the possible ‘prizes’ are determined by the existing status-quo and some new public- policy proposal . In this paper we study the general class of such two-player public-policy contests and examine the effect of a change in the proposed policy, a change that may affect the payoffs of the two contestants, on their effort and performance. We extend the existing comparative statics studies that focus on the effect of changes either in the value of the prize in symmetric contests or in one of the contestants’ valuation of the prize in asymmetric contests. Our results hinge on the relationship between the strategic own-stake (“income”) effect and the strategic rival’s-stake (“substitution”) effect. This relationship is determined by three types of ability and stakes asymmetry between the contestants. In particular, we specify the asymmetry condition under which a more restrained government intervention that reduces the contestants’ prizes has the perverse effect of increasing their aggregate lobbying efforts.public-policy contests, policy reforms, lobbying efforts, strategic own-stake effect, strategic rival’s-stake (“substitution”) effect.

Political Culture and Monopoly Price Determination

In this paper we study the endogenous determination of monopoly price. Our proposed game of endogenous monopoly-price setting extends the literature on monopoly-price, monopoly rent-seeking contests and monopoly rent-seeking rent-avoidance contests by (i) determining the monopoly price such that it maximizes a composite utility function that depends on two components: expected social welfare and lobbying efforts. The welfare component has a positive or no effect on the utility while the lobbying efforts have a positive, negative or no effect on the utility (ii) introducing the political culture of the government and clarifying its role in the endogenous determination of monopoly price. In the proposed model the single parameter representing political culture is the weight assigned to the enhancement of social welfare. Our main concern is with the study of the relationship between this parameter and the proposed monopoly price and, in turn, the rent-seeking rent-avoidance efforts of the potential monopoly and the consumers and their aggregate expected benefit.

Size and distribution of prizes and efforts in contests

The intensity of competition in contests is affected by the sum of the awarded prizes and by the prize distribution among the contestants. The current paper examines which of these two parameters has a larger effect on the players' extent of participation in the contest.Contests

Strategic Restraint in Contests

Economic policy is modeled as the outcome of a (political) game between two inte rest groups. The possible ex-post (realized) outcomes in the game correspond to the proposed policies. In the literature the policies fought for are exogenous. We extend such games by allowing the endogenous determination of the proposed policies. In a first stage the groups decide which policy to lobby for and then, in a second stage, engage in a contest over the proposed policies. Our main result is that competition over endogenously determined policies induces strategic restraint that reduces polarization and, in turn, wasteful lobbying activities.Interest groups, endogenous lobbying targets, voluntary restraint, polarization, voluntary restraint

Lobbying and Compromise

The compromise enhancing effect of lobbying on public policy has been established in two typical settings. In the first, lobbies are assumed to act as 'principals' and the setters of the policy (the candidates in a Downsian electoral competition or the elected policy maker in a citizen- candidate model of electoral competition) are conceived as 'agents'. In the second setting, the proposed policies are solely determined by the lobbies who are assumed to take the dual role of 'principals' in one stage of the public-policy game and 'agents' in its second stage. The objective of this paper is to demonstrate that in the latter setting, the compromising effect of lobbying need not exist. Our reduced-form, two-stage public-policy contest, where two interest groups compete on the approval or rejection of the policy set by a politician, is sufficient to show that the proposed and possibly implemented policy can be more extreme and less efficient than the preferred policies of the interest groups. In such situations then more than the calf (interest groups) wish to suck the cow (politician) desires to suckle thereby threatening the public well being more than the lobbying interest groups. The main result specifies the conditions that give rise to such a situation under both the perfectly and imperfectly discriminating contests.public-policy contests, interest groups, policy makers, lobbying, compromise

Politics of Randomness

The main drawback of the public-policy contest is that the notion of contest success function, a crucial component of the contest model, does not have micro-foundations and, therefore, the random behavior of the government seems ad-hoc. In the present paper we propose a partial micro-foundation for the public-policy contest. The possible rationalization of random government behavior is illustrated in the case of the all-pay auction and Tullock's lottery logit functions. We also clarify how stake asymmetry, lobbying-skill asymmetry and return to lobbying effort determine the relative desirability, from the government's point of view, of these CSFsinterest groups, policy makers, lobbying, public-policy contests, contest success function, rationalization of random government's behavior

Performance characteristics of an adaptive controller based on least-mean-square filters

A closed loop, adaptive control scheme that uses a least mean square filter as the controller model is presented, along with simulation results that demonstrate the excellent robustness of this scheme. It is shown that the scheme adapts very well to unknown plants, even those that are marginally stable, responds appropriately to changes in plant parameters, and is not unduly affected by additive noise. A heuristic argument for the conditions necessary for convergence is presented. Potential applications and extensions of the scheme are also discussed