IDEAS home Printed from https://ideas.repec.org/a/kap/pubcho/v55y1987i1p41-73.html
   My bibliography  Save this article

Cooperation and punishment under repeated majority voting

Author

Listed:
  • Dennis Epple
  • Michael Riordan

Abstract

In light of the extensive theoretical evidence suggesting absence of equilibrium in voting models, Tullock (1981) asks "Why So Much Stability?" Our results suggest the following answer: Political agents engaged in long-term relationships can sustain highly stable allocations if there are strongly held norms for punishment of defectors. Moreover, recent work by Cremer (1986) suggests that even if decisionmakers have finite horizons, significant cooperation is nevertheless feasible if institutions are indefinitely-lived. Our results show that a wide range of allocations can be sustained as equilibria by the threat of political banishment. The following anecdote suggests that something like a political banishment punishment has in fact been employed in practice: "Senator James L. Buckley...tried to delete forty-four public works projects at the committee stage in the Senate. The members voted down all his amendments except the ones cutting out projects in New York; these latter they adopted." Quoted from Mayhew (1974, pp. 91–92) who cites Reeves (1974) Ferejohn (1974, p. 114) cites an example in which Senator Proximre was similarly punished for supporting proposals to cut appropriations for the Department of the Interior—a House-Senate Conference Committee deleted the Senator's favored project from the Interior appropriations bill. Our results indicate not only that stable cooperative outcomes are possible but also that a wide range of allocations can be sustained. This is a liability rather than an asset; the theory provides weak predictions. One way to augment the model is to assume that the chosen contract is a member of the ex ante optimal set of feasible contracts. This assumption can be expected to give strong predictions. In our model, when the conditions of Proposition 3 are satisfied, the assumption that the ex ante optimal contract is chosen leads to a prediction of equal division of the cake each period. The assumption that the ex ante optimal contract is chosen is a natural one when agreements are indeed made "behind the veil of ignorance"; under such conditions the ex ante optimal contract would receive unanimous support. When individuals are differently situated at the time contracting occurs, the assumption of ex ante optimality of the contract might better be replaced by a characterization of the bargaining problem individuals confront in attempting to agree upon a contract. The analysis of Baron and Ferejohn (1986) is in this spirit. Our model has two related features, both of which may seem unrealistic: The punishment for defection from a cooperative agreement is eternal banishment, and punishment never occurs. Both features are inconsistent with at least the second of our two anecdotes. Less severe punishments than eternal banishment could no doubt be devised, e.g., temporary banishment. However, the range of cooperative agreements that could be supported by the weaker punishment would be smaller, and defection from agreements that would be supported by the weaker punishment would never occur. Thus, while a weaker punishment might seem more "realistic," the introduction of such a punishment in the current framework is artificial and does not alter the prediction that punishment never occurs in equilibrium. Similar problems arise in models of self-enforcing private agreements when there is neither uncertainty nor private information. To address these problems, Green and Porter (1984) developed a model of cartel enforcement with uncertainty and private information in which punishment occurs, and Abreu, Pierce, and Stachetti (1986) have shown that the optimal punishment period in the Green-Porter model is finite. (See also Porter (1983).) In the Green-Porter model, an unobserved random shock introduces variation in outcomes. However, since the shock is unobserved and individual actions are private information, the players cannot tell whether the variation is due to the random shock or to a defection by another player. If a sufficiently adverse outcome occurs, the punishment regime is invoked. However, since the punishment regime may (and in equilibrium will) be triggered by the random shock, it is in the players' interests to engage in a limited period of punishment and then revert to the cooperative regime. The introduction of uncertainty and private information in the model developed in this paper may also motivate occasional finite punishments. If our anecdotes are to serve as a guide, however, the identity of defectors in the political arena will sometimes be known—in contrast to the Green-Porter model in which the identity of defectors cannot be observed. This suggests that a somewhat different motivation for finite, observed punishments will be more appropriate in our setting than in the cartel setting studied by Green and Porter. We view this as a fruitful area for extension of the model. Copyright Martinus Nijhoff Publishers 1987

Suggested Citation

  • Dennis Epple & Michael Riordan, 1987. "Cooperation and punishment under repeated majority voting," Public Choice, Springer, vol. 55(1), pages 41-73, September.
  • Handle: RePEc:kap:pubcho:v:55:y:1987:i:1:p:41-73
    DOI: 10.1007/BF00156810
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/BF00156810
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
    2. Thomas Romer & Howard Rosenthal, 1978. "Political resource allocation, controlled agendas, and the status quo," Public Choice, Springer, vol. 33(4), pages 27-43, December.
    3. Green, Edward J & Porter, Robert H, 1984. "Noncooperative Collusion under Imperfect Price Information," Econometrica, Econometric Society, vol. 52(1), pages 87-100, January.
    4. Epple, Dennis & Spatt, Chester, 1986. "State restrictions on local debt : Their role in preventing default," Journal of Public Economics, Elsevier, vol. 29(2), pages 199-221, March.
    5. Buchanan, James M & Bush, Winston C, 1974. "Political Constraints on Contractual Redistribution," American Economic Review, American Economic Association, vol. 64(2), pages 153-157, May.
    6. Gordon Tullock, 1981. "Why so much stability," Public Choice, Springer, vol. 37(2), pages 189-204, January.
    7. Peter Coughlin, 1986. "Elections and income redistribution," Public Choice, Springer, vol. 50(1), pages 27-91, January.
    8. Porter, Robert H., 1983. "Optimal cartel trigger price strategies," Journal of Economic Theory, Elsevier, vol. 29(2), pages 313-338, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lars P. Feld & Justina A.V. Fischer & Gebhard Kirchgässner, 2010. "The Effect Of Direct Democracy On Income Redistribution: Evidence For Switzerland," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 817-840, October.
    2. B. D. Bernheim & S. N. Slavov, 2009. "A Solution Concept for Majority Rule in Dynamic Settings," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 33-62.
    3. Baron, David P. & Bowen, T. Renee & Nunnari, Salvatore, 2017. "Durable coalitions and communication: Public versus private negotiations," Journal of Public Economics, Elsevier, vol. 156(C), pages 1-13.
    4. Dahm, Matthias & Glazer, Amihai, 2015. "A carrot and stick approach to agenda-setting," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 465-480.
    5. Slavov Sita Nataraj, 2006. "Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-37, October.
    6. Tasos Kalandrakis, 2007. "Majority Rule Dynamics with Endogenous Status Quo," Wallis Working Papers WP46, University of Rochester - Wallis Institute of Political Economy.
    7. Matthias Dahm & Amihai Glazer, 2012. "How An Agenda Setter Induces Legislators to Adopt Policies They Oppose," Working Papers 111211, University of California-Irvine, Department of Economics.
    8. Kalandrakis, Anastassios, 2004. "A three-player dynamic majoritarian bargaining game," Journal of Economic Theory, Elsevier, vol. 116(2), pages 294-322, June.
    9. Jan Zapal, 2014. "Simple Markovian Equilibria in Dynamic Spatial Legislative Bargaining," CERGE-EI Working Papers wp515, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    10. Grüner, Hans Peter, 2003. "Inequality and Political Consensus," CEPR Discussion Papers 4159, C.E.P.R. Discussion Papers.
    11. Dahm, Matthias & Glazer, Amihai, 2010. "Repeated Agenda Setting and the Unanimous Approval of Bad Policies," Working Papers 2072/151549, Universitat Rovira i Virgili, Department of Economics.
    12. Harms, Philipp & Zink, Stefan, 2003. "Limits to redistribution in a democracy: a survey," European Journal of Political Economy, Elsevier, vol. 19(4), pages 651-668, November.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:pubcho:v:55:y:1987:i:1:p:41-73. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.