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The Democracy Effect: a weights-based identification strategy

Author

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  • Pedro Dal Bo
  • Andrew Foster
  • Kenju Kamei

Abstract

"Dal Bó, Foster and Putterman (2010) show experimentally that the effect of a policy may be greater when it is democratically selected than when it is exogenously imposed. In this paper we propose a new and simpler identification strategy to measure this democracy effect. We derive the distribution of the statistic of the democracy effect, and apply the new strategy to the data from Dal Bó, Foster and Putterman (2010) and data from a new real-effort experiment in which subjects’ payoffs do not depend on the effort of others. The new identification strategy is based on calculating the average behavior under democracy by weighting the behavior of each type of voter by its prevalence in the whole population (and not conditional on the vote outcome). We show that use of these weights eliminates selection effects under certain conditions. Application of this method to the data in Dal Bó, Foster and Putterman (2010) confirms the presence of the democracy effect in that experiment, but no such effect is found for the real-effort experiment."

Suggested Citation

  • Pedro Dal Bo & Andrew Foster & Kenju Kamei, 2019. "The Democracy Effect: a weights-based identification strategy," Working Papers 2019-4, Brown University, Department of Economics.
  • Handle: RePEc:bro:econwp:2019-4
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    Cited by:

    1. Kenju Kamei, 2019. "Cooperation and endogenous repetition in an infinitely repeated social dilemma," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(3), pages 797-834, September.
    2. Kenju Kamei & Thomas Markussen, 2020. "Free Riding and Workplace Democracy – Heterogeneous Task Preferences and Sorting," Discussion Papers 19-14, University of Copenhagen. Department of Economics.
    3. Yang, Xiaojun & Nie, Zihan & Qiu, Jianying & Tu, Qin, 2020. "Institutional preferences, social preferences and cooperation: Evidence from a lab-in-the-field experiment in rural China," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 87(C).
    4. Jacquemet, Nicolas & Luchini, Stéphane & Malézieux, Antoine, 2021. "Does voting on tax fund destination imply a direct democracy effect?," International Review of Law and Economics, Elsevier, vol. 67(C).
    5. Sausgruber, Rupert & Sonntag, Axel & Tyran, Jean-Robert, 2021. "Disincentives from redistribution: evidence on a dividend of democracy," European Economic Review, Elsevier, vol. 136(C).
    6. Kamei, Kenju, 2019. "Cooperation and Endogenous Repetition in an Infinitely Repeated Social Dilemma: Experimental Evidence," MPRA Paper 92097, University Library of Munich, Germany.
    7. Kenju Kamei, 2022. "Self-Regulatory Resources and Institutional Formation: A First Experimental Test," Keio-IES Discussion Paper Series 2022-014, Institute for Economics Studies, Keio University.
    8. Arno Apffelstaedt & Jana Freundt, 2022. "Corrupted Votes and Rule Compliance," ECONtribute Discussion Papers Series 137, University of Bonn and University of Cologne, Germany.
    9. Stein, Caroline & Untertrifaller, Anna, 2020. "The effect of ethical responsibility on performance," MPRA Paper 99176, University Library of Munich, Germany.
    10. Jensen, Thomas & Markussen, Thomas, 2021. "Group size, signaling and the effect of democracy," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 258-273.
    11. Mollerstrom, Johanna & Sunstein, Cass R., 2020. "How special is democracy?," Economics Letters, Elsevier, vol. 190(C).

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    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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