Dynamic reform of public institutions: a model of motivated agents and collective reputation

State capacity is optimized when public institutions are staffed by individuals with public-service motivation. However, when motivated agents value the collective reputation of their place of employment, steady-state equilibria with both high and low aggregate motivation (reputation) in the mission-oriented sector exist. Reforming a low-motivation institution requires a non-monotonic wage path: since the effect of higher wages on motivation is negative for a highreputation institution, but positive for a low-reputation institution, a transition to a high-reputation steady state requires an initial wage increase to crowd motivated workers in, followed by a wage decrease to crowd non-motivated workers out

Underrepresentation, Quotas and Quality: A dynamic argument for reform

The trade-off between increased representation and perceived quality is central to the debate on how to address underrepresentation in high-profile professions. We address this trade-off using a dynamic model of career selection where juniors value both the identity and perceived quality of their mentors (seniors). A preference for homophily results in the persistence of underrepresentation, suggesting intervention is needed. However, if an abrupt quota causes a large decrease in the perceived quality of underrepresented seniors, then underrepresented juniors of high talent will select out of the profession, causing a permanent (real) quality difference. Encouragingly, we show that gradual reform—while decreasing perceived quality in the short term—enables a transition to equal representation and equal quality in the long term. We discuss the implications of our analysis for commonly-used measures to increase representation

A rationale for unanimity in committees

Existing theoretical and experimental studies have established that unanimity is a poor decision rule for promoting information aggregation. Despite this, unanimity is frequently used in committees making decisions on behalf of society. This paper shows that when committee members are exposed to "idiosyncratic" payoffs that condition on their individual vote, unanimity can facilitate truthful communication and optimal information aggregation. Theoretically, we show that since agents" votes are not always pivotal, majority rule suffers from a free-rider problem. Unanimity mitigates free-riding since responsibility for the committee's decision is equally distributed across all agents. We test our predictions in a controlled laboratory experiment. As predicted, if unanimity is required, subjects are more truthful, respond more to others' messages, and are ultimately more likely to make the optimal decision. Idiosyncratic payoffs such as a moral bias thus present a rationale for the widespread use of unanimous voting

Refugees and social capital: Evidence from Northern Lebanon

Despite numerous studies on the social and political impact of refugees in Europe, we have very little systematic evidence on the impact of refugee settlement on social cohesion in the developing world. Using data gathered in Northern Lebanon, we show that increased salience of the "refugee crisis" decreases natives' trust and prosocial preferences toward refugees, suggesting a negative impact of mass refugee settlement. However, this negative impact is driven exclusively by respondents with no individual exposure to refugees. In fact, despite concerns that refugee settlements may result in local conflict, we find that individual proximity to refugees is positively correlated with trust towards refugees, and that proximity has a positive spillover effect on social capital towards other migrants. This implies that, while the refugee crisis may have had a negative impact on social cohesion, this negative impact is mitigated in areas where natives are in contact with refugees

Social identity and political polarization: evidence on the impact of identity on partisan voting trade

While scholars and pundits alike have been pointing to a trend of increasing partisan affect in the US, there has been very little analysis as to how partisan affect impacts the decisions of voters. We hypothesize that affective polarization may effect voting both through an expressive channel, as voters become more likely to vote instinctively, and through an instrumental channel, as voters expect candidates to take decisions that are more favorable towards their partisan in-group. To explore this hypothesis, we conduct a laboratory experiment designed to separate between the expressive and instrumental impact of affective polarization, and find evidence that affect significantly impacts subjects' voting decision through both channels. Importantly, however, we show that the instrumental impact of affective polarization depends on the underlying degree of polarization in policy preferences. Additionally, in contrast to the existing literature, our study demonstrates that affective polarization has a clear negative impact on social welfare by decreasing the likelihood that high valence candidates win elections. Lastly, we compare the impact of affect between groups that are formed using a neutral prime (minimal groups) and groups that are formed using the subjects' stated partisan identity. Surprisingly, we find no difference in voting behavior between the two treatments, implying that among a group of individuals that are otherwise relatively homogenous (university students) the impact of partisan identity is no greater than an arbitrary label

The political economy of multilateral aid funds

In 2014 over $60 billion was mobilized to help developing nations mitigate climate change, an amount equivalent to the GDP of Kenya. Interestingly, breaking from the traditional model of bilateral aid, donor countries distributed nearly fifty percent of their aid through multilateral aid funds (OECD, 2015). In this paper, we show that by delegating aid spending to an international fund, donor countries mitigate a "hold-up" problem that occurs when donor countries are tempted to allocate aid based on, say, a regional preference. That is, under bilateral aid, donor-country bias decreases the incentive of recipient countries to invest in measures such as good governance that increase the effectiveness of aid. By delegating allocation decisions to a fund, however, donor countries commit to allocating aid via centralized bargaining, which provides recipient countries with an increased incentive to invest. Additionally, we show that allocating funding by majority rule further increases recipient-country investment, since higher investment increases the probability that a recipient's project will be selected by the endogenous majority coalition, and detail conditions under which majority is the optimal voting rule

Political Polarization and Selection in Representative Democracies

While scholars and pundits alike have expressed concern regarding the increasingly “tribal” nature of political identities, there has been little analysis of how this social polarization impacts political selection. In this paper, we incorporate social identity into a principal-agent model of political representation and characterize the impact of social polarization on voting behavior. We show that identity has an instrumental impact on voting, as voters anticipate that political representatives’ ex post policy decisions have an in-group bias. We also conduct a laboratory experiment to test the main predictions of the theory. In contrast to existing work that suggests social polarization may have a positive impact by increasing participation, we show that social polarization causes political representatives to take policy decisions that diverge from the social optimum, and voters to select candidates with lower average quality

Turnout and policy : the role of candidates

Turnout is an important determinant of which candidate wins an election. Since candidates know this, it follows that they will consider turnout when choosing their policy platforms. In this paper I formally examine the effect voter turnout has on candidates' policy positions by characterizing the equilibrium policy choices of candidates given the subsequent equilibrium turnout. I show that alienation among extreme voters, which occurs only when citizens' utility over policy is convex or linear, is a necessary condition for divergent, positive-turnout equilibria. My model suggests that candidate polarization is correlated with the importance of the election outcome and, counterintuitively, predicts that the level of turnout can increase with the cost of voting

Why do committees work?

We report on the results of an experiment designed to disentangle behavioral biases in information aggregation of committees. Subjects get private signals about the state of world, send binary messages, and finally vote under either majority or unanimity rules. Committee decisions are significantly more efficient than predicted by Bayesian equilibrium even with lying aversion. Messages are truthful, subjects correctly anticipate the truthfulness (contradicting limited depth of reasoning), but strikingly overestimate their pivotality when voting (contradicting plain lying aversion). That is, committees are efficient because members message truthfully and vote non-strategically. We show that all facets of behavior are predicted by overreaction, subjects overshooting in Bayesian updating, which implies that subjects exaggerate the importance of truthful messages and sincere voting. A simple one-parameteric generalization of quantal response equilibrium capturing overreaction covers 87 percent of observed noise