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Dynamic Stability and Reform of Political Institutions

  • Roger Lagunoff

    (Georgetown University)

This paper studies dynamic, endogenous institutional change. We introduce the class of dynamic political games (DPGs), dynamic games in which future political aggregation rules are decided under current ones, and the resulting institutional choices do not affect payoffs or technology directly. A companion paper (Lagunoff (2005b)) establishes existence of Markov Perfect equilibria of dynamic political games. The present paper examines issues of stability and reform when such equilibria exist. Which environments tend toward institutional stability? Which tend toward reform? We show that when political rules are dynamically consistent and private sector decisions areinessential,reform never occurs: all political rules are stable. Roughly,private sector decisions are inessential if any feasible ``social' continuation payoff can achieved by public sector decisions alone. More generally, we identify sufficient conditions for stability and reform in terms of recursive self selection and recursive self denial,incentive compatibility concepts that treat the rules themselves as ``players' who can strategically delegate future policy-making authority to different institutional types. These ideas are illustrated in an example of dynamic public goods provision.

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Paper provided by EconWPA in its series Game Theory and Information with number 0505006.

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Length: 33 pages
Date of creation: 12 May 2005
Date of revision:
Handle: RePEc:wpa:wuwpga:0505006
Note: Type of Document - pdf; pages: 33
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Krusell, Per & Kuruscu, Burhanettin & Smith, Anthony Jr., 2002. "Equilibrium Welfare and Government Policy with Quasi-geometric Discounting," Journal of Economic Theory, Elsevier, vol. 105(1), pages 42-72, July.
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  9. William Jack & Roger Lagunoff, 2003. "Dynamic Enfrachisement," Working Papers gueconwpa~03-03-03, Georgetown University, Department of Economics.
  10. William Jack & Roger Lagunoff, 2006. "Social Conflict and Gradual Political Succession: An Illustrative Model," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 703-725, December.
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  12. Salvador BARBER?Author-Email: salvador.barbera@uab.es & Matthew O. JACKSON, 2003. "Choosing How to Choose: Self-Stable Majority Rules and Constitutions," UFAE and IAE Working Papers 596.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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  17. Salvador Barberà & Michael Maschler & Jonathan Shalev, 1998. "Voting for Voters: A Model of Electoral Evolution," Game Theory and Information 9804001, EconWPA.
  18. Roger Lagunoff, 2002. "Credible Communication in Dynastic Government," Working Papers gueconwpa~02-02-04, Georgetown University, Department of Economics.
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  26. repec:ebl:ecbull:v:28:y:2002:i:4:p:a0 is not listed on IDEAS
  27. Lagunoff, Roger, 2001. "A Theory of Constitutional Standards and Civil Liberty," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 109-32, January.
  28. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2012. "Consensual and Conflictual Democratization," Munich Reprints in Economics 20086, University of Munich, Department of Economics.
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