Difference between revisions of "Baron, D. (1991), Bargaining Majoritarian Incentives, Pork Barrel Programs and Procedural Control"
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* Proposals are fully characterized by <math>b\in B</math> and net benefits are <math>z_{i}=b_{i}-T/n</math>. | * Proposals are fully characterized by <math>b\in B</math> and net benefits are <math>z_{i}=b_{i}-T/n</math>. | ||
* Payoffs are discounted: <math>\delta^{\tau}z_{i}=U_{i}(z,\tau)</math>. Extensive form is the same as before for closed rule. | * Payoffs are discounted: <math>\delta^{\tau}z_{i}=U_{i}(z,\tau)</math>. Extensive form is the same as before for closed rule. | ||
| + | |||
| + | Structure of game: | ||
| + | * P is drawn (which implies a ratio of B/T). | ||
| + | * A random legislator is chosen to distribute B. Note that per the above, all T are distributed equally no matter what. | ||
| + | * Legislators vote against the status quo, in which everyone gets nothing and is taxed nothing. | ||
Stationarity implies members are paid their continuation value in equilibrium in exchange for their votes. <math>\delta v(g,t), \forall t\in\Tau</math> | Stationarity implies members are paid their continuation value in equilibrium in exchange for their votes. <math>\delta v(g,t), \forall t\in\Tau</math> | ||
Revision as of 13:54, 23 October 2011
Note similarity to Baron and Ferejohn (1989):
- Multi-lateral,
- Bargaining
- Divide the "pie" (not the dollar)
- Non-cooperative
- Use of stationary equilibrium
- Divisibility and transferability of benefits.
Looks at cases where B<T (benefits less than costs).
Programs are characterized by B, T (total benefits and total taxes). P (programs) are characterized by [math]B/T, P\in[0,\inf][/math].
- [math]B: \{b|b_{i}\gt 0, i=1,2,3,...,n, \sum b_{i}\leq B\}[/math]
- T is always distributed equally among n districts so [math]t_{i}=T/n[/math].
- Proposals are fully characterized by [math]b\in B[/math] and net benefits are [math]z_{i}=b_{i}-T/n[/math].
- Payoffs are discounted: [math]\delta^{\tau}z_{i}=U_{i}(z,\tau)[/math]. Extensive form is the same as before for closed rule.
Structure of game:
- P is drawn (which implies a ratio of B/T).
- A random legislator is chosen to distribute B. Note that per the above, all T are distributed equally no matter what.
- Legislators vote against the status quo, in which everyone gets nothing and is taxed nothing.
Stationarity implies members are paid their continuation value in equilibrium in exchange for their votes. [math]\delta v(g,t), \forall t\in\Tau[/math]
Proposition 1: With closed rule the stationary EQM has the following properties:
- (i) Inefficient pork barrel programs will be adopted. Inefficiency is increasing in [math]n[/math]
- (ii) Possible set of programs is increasing in [math]\delta[/math].
- (iiii) coalitions are minimum winning.
- (iv) There is proposal power.
- (v) 1st proposal is always selected.
Derivation of proposition 1:
- [math]z_{i}\gt \delta\bar{V}[/math]. [math] b_{i}-T/n\geq\bar{V} \implies b_{i}\geq T/n+\delta\bar{V}[/math].
- Proposal will be accepted if [math](n-1)/2[/math] members vote yes, therefore proposals will be of the form of: Keep [math]B-\frac{n-1}{2}(\frac{T}{n+\delta\bar{V}}[/math]. Give [math]T/n +\delta\bar{V}[/math] to [math](n-1)/2[/math] others, and the rest zero.
- [math]\bar{V}=P(selected)E[Value of being selected|p^{\ast})+P(not selected)(value of not being selected)[/math].
- [math]\bar{V}=\frac{1}{n}(B-\frac{n-1}{2}(T/n+\delta\bar{V}))+\frac{n-1}{n}(\frac{1}{2}(T/n+\delta\bar{V}) +\frac{1}{2}(-T/n))[/math]. Solve for [math]\bar{V}=\frac{B-T}{n}[/math].
- Offer is [math]T/n+\frac{\delta(B-T)}{n}=\frac{\delta B-(1-\delta)T}{n}[/math].
... unfinished. Sorry.
Open rule:
- Never get universalism w/ inefficient program.
- Inefficent program minimum winning coalition (MWC).
- Amendments shift power to voters with inefficiency.
- Set of proposals which are adopted is smaller.
