Carlo Prato

Procedural Choice in Majoritarian Organizations

A puzzling feature of self-governing organizations is persistent majority support for restrictive, seemingly non-majoritarian, procedures, e.g., chairs and committees. This paper provides a theory of self-enforcing majoritarian commitment to restrictive procedures. We ask (i) why majorities consent to restrictive procedures in the first place, (ii) why restrictive procedures survive challenges thereafter, and (iii) with what policy consequences. In the model a risk-averse majority allocates procedural rights to increase procedural efficiency, i.e., reduce the procedural uncertainty of free-for-all bargaining. An equilibrium procedure is generally asymmetric and restrictive, generating non-majoritarian policy bias. Still, a majority may persist in endorsing it so as to avoid amplifying procedural and policy uncertainty.

Rational Ignorance, Elections, and Reform

We analyze a model of electoral competition with costly political communication. A representative voter elects one between two candidates, who compete by choosing (1) whether or not to commit to a reform (whose implementation is costly for them) and (2) how intensely to campaign on the issue they choose. Candidates have private information regarding their competence and the reform is benecial to the voter only if implemented by a competent politician. Elections thus serve the dual purpose of screening competent candidates and providing incentives to carry out welfare-improving change. The key innovation is that a candidate successfully communicates her platform to the voter only if both exert eort as in Dewatripont and Tirole (2005). After characterizing the conditions for a separating equilibrium to arise, we show that reforms are implemented with positive probability and, if implemented, benet the voter only if the voter’s gain from policy changes is in an intermediate range. When this gain is too small, the voter cannot provide enough electoral incentives. When the gain is too large, he faces the risk of policy failure. Moreover, benecial reformsThis paper studies how economic conditions affects the likelihood of reform. Using a novel theory of the electoral process where successful communication of candidates’ platforms requires effort from both candidates and a representative voter, we show that candidates’ platform choices depend critically on the voter’s gain from reform. When her gain from reform is low, no candidate proposes policy change; when it is high, non-competent politicians run on harmful reformist platform. In line with empirical findings, our model rationalizes why reforms occur rarely in good and bad times and why crises can lead to delayed and botched reforms. JEL Classification: D72, D78, D83.

The Hidden Cost of Direct Democracy: How Ballot Initiatives Affect Politicians' Selection and Incentives

Citizen initiatives and referendums play an important role in modern democracies, from treaty ratifications in the European Union to gay marriage in California, to the control of foreign workers in Switzerland. Departing from the classic opposition between direct and representative democracy, we study the equilibrium effects of direct democracy institutions on the incentives and selection of elected officials. We find that facilitating direct democracy induces a negative spiral on politicians’ role and contribution to society, which may dominate any direct benefit. The theory offers predictions on reelection probabilities and politicians’ performance consistent with recent evidence from the US states.

Electoral Competition and Policy Feedback Effects

This paper studies a dynamic model of electoral competition where two parties (or candidates) compete for power over redistribution and over public employment/public good provision. Parties only have diverging preferences over redistribution. Nevertheless, since public employment aects voters’ long run political preferences, they commit and implement socially suboptimal policies to improve their long term electoral strength. We investigate the non-institutional and institutional determinants of the resulting distortions in platforms and implemented policies. We nd that more forward looking voters or more political persistence increase distortions. Consensual constitutions (as opposed to majoritarian) are associated with more platform divergence (only when the horizon is nite), less inecient public good provision, and more redistribution. A mixed constitution can improve welfare over both. Finally, the model’s empirical implications {in particular, on the relationship between inequality and redistribution{ are consistent with the available evidence.

A Bargaining Model of Endogenous Procedures

This paper endogenizes policymaking procedures in a multilateral bargaining framework. A procedure specifies players’ proposal power in bargaining over one-dimensional policies. In procedural bargaining players internalize the procedures’ effects on subsequent policy bargaining. In policy bargaining players’ utilities are continuous, strictly concave, and order-restricted. The paper provides equilibrium characterization, existence, and uniqueness results for this two-tier bargaining model. Although the procedural choice set is multidimensional, sequentially rational procedures feature “limited power sharing” and admit a total order. In equilibrium, endogenous procedures and policies are strategic complements.

Citizens United: A Theoretical Evaluation

Following the 2010 U.S. Supreme Court’s decision on Citizens United v FEC, interest groups engaging in outside spending can receive unlimited contributions from unions and corporations. Critics of the decision have rejected the notion, espoused by the majority opinion, that outside spending does not corrupt or distort the electoral process. Fewer, however, have examined the decision’s implications under the Court’s assumptions. Using a game-theoretic model of electoral competition, we show that informative outside spending from a group whose policy preferences are partially aligned with the electorate may reduce voter welfare. This negative effect is more likely to arise when the value of the interest group’s information is large, or congruence between voters and the interest group is high. Further, the regulatory environment produced by the Court’s decision is inefficient: the electorate would be better off if either outside spending were banned or coordination between candidates and the interest group allowed.