Karl-Martin Ehrhart () (University of Karlsruhe) Roy Gardner () (Indiana University Bloomington) Juergen von Hagen () (University of Bonn) Claudia Keser () (IBM T.J. Watson Research Center)
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This paper studies budget processes, both theoretically and experimentally. We compare the outcomes of bottom-up and top-down budget processes. It is often presumed that a top-down budget process leads to a smaller overall budget than a bottom-up budget process. Ferejohn and Krehbiel (1987) showed theoretically that this need not be the case. We test experimentally the theoretical predictions of their work. The evidence from these experiments lends strong support to their theory, both at the aggregate and the individual subject level.
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Paper provided by Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington in its series Caepr Working Papers with number
2006-009.
Karl-Martin Ehrhart & Roy Gardner & Jürgen von Hagen & Claudia Keser, 2006.
"Budget Processes: Theory and Experimental Evidence,"
Discussion Papers
146, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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Find related papers by JEL classification: H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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