Donald Wittman

Why Democracies Produce Efficient Results

By applying the standard tools of microeconomic analysis, I argue that democratic markets work as well as economic markets. In particular, I show that previous work has greatly exaggerated the existence of principal-agent and informational problems in electoral markets and has drawn incorrect conclusions.

Candidate Motivation: A Synthesis of Alternative Theories

A formal model of electoral behavior is developed under the assumption that candidates have policy preferences as well as an interest in winning per se. This model is shown to have an equilibrium in a k-issue space when there are two candidates. The implications of this model are compared to the implications of the Downsian-type model where candidates are interested only in winning. Testable propositions are derived via the use of comparative statics. The results of recent studies are shown to coincide with the synthesis model but not the pure Downsian model.The theoretical model bridges the gap between formal theory and empirical research and unifies a variety of seemingly unrelated studies.

Parties as Utility Maximizers

The article introduces two models of political party decision making. Both models assume that the parties are solely interested in policy and that winning the election is just a means to that end. In one, the parties are competitive, while in the other the parties collude. The main result, in either case, is that the parties tend to be unresponsive to the interests of the voters.The models are analyzed in an intransitive case (an election concerned only with income distribution) and a transitive one (an election where all political attitudes can be put on a left-right continuum), and under the assumptions of perfect and imperfect information.With perfect information the intransitive case results in the parties ending up with all the income; while in the single peaked case neither party will have a position to the left (right) of the left (right) partys most preferred position whatever the attitudes of the voters.Finally it is shown that it is rational for the parties to collude and present similar platforms.

How a War Ends

This article discusses the necessary conditions for two countries at war to come to a settlement and explores how domestic and military costs, time preferences and attitudes toward risk affect the timing and the outcome of the peace. It views the termination of war as a process of rational calculations by the participants; unless both sides believe that they can be made better off by a settlement, the war will continue. An important result of this approach is that a reduction of hostilities may reduce the probability of a settlement taking place and thus prolong the war. It is also shown that increasing the probability of winning may not increase the probability of a settlement and that a country which only values the present need not be at a disadvantage in the negotiation.

THE MYTH OF THE RATIONAL VOTER

ABSTRACT While Bryan Caplan’s theory of rational irrationality is important and original, he does not actually demonstrate that the theory explains public opinion about economics. The theory holds that voters are aware of the insignificance of their votes, and therefore feel free to vote based on whatever beliefs they “prefer” to hold, regardless of whether or not these beliefs are true. Yet by voting, voters suggest that they do not, in fact, understand that the odds against their votes “counting” are astronomical. And by failing to vote in greater numbers for minor‐party or write‐in candidates, they confirm that they think that their votes may be decisive, and must thus be confined to one of the two candidates who might win. It is therefore implausible to think that voters don’t care whether they are voting based on true beliefs. A better explanation for voter “errors” may be that voters are simply ignorant (in this case, ignorant of economics). Yet even this thesis may be too strong, because Caplan’s data do not show all that much disagreement between voters and economists. Nor is it clear that these disagreements concern economics rather than xenophobia and, possibly, other non‐economic attitudes on the part of the public. In that case, however, it would still be true that, as Caplan argues, public policy reflects the views of the people—however blinkered or distasteful those views may be.

Nonmyopic Equilibria in 2×2 Games

In this paper we shall define a new concept of equilibrium in elementary normal-form, or matrix, games, based on the idea that players can look ahead and anticipate where a process might end up if they are allowed to make an indefinite number of sequential moves and countermoves from any outcome in a game. We call this concept a nonmyopic equilibrium and shall show how it differs from the more myopic equilibrium concepts of Nash and Stackelberg, which consider only unilateral deviations of players, or single best responses by players to another player’s strategy choice. We shall also point out that solution concepts in cooperative game theory are encumbered by a similar myopia. Because the concept of a nonmyopic equilibrium is a rather subtle one, we shall, after reviewing previous research in section 2, restrict our analysis to 2 x 2 ordinal games, in which each player can rank the four possible outcomes from best to worst. After defining this concept in section 3, and comparing it with other equiIibrium concepts in section 4, we shall show in section 5 that it exists in 37 of the 78 distinct 2 x 2 games (47 percent), generally coinciding with pure-strategy Nash equilibria in these games. In two of the 37 games, however, the nonmyopic equilibria do not

The Wealth and Size of Nations

This article provides a general theory explaining the geographic and population size and wealth of nations. Successful countries create conditions for high productivity in the economic sphere by enforcing property rights and providing social overhead capital and at the same time minimize political costs by creating a system of rules that reduce influence costs and allow for diverse preferences. Countries also need an effective military apparatus to protect their wealth from predation by other countries. Success in these endeavors may lead to immigration and geographical expansion, but an inability to meet these goals may lead to extensive emigration or breakup of the country. The argument is done within the context of a formal model that integrates spatial political costs with the benefits of spatially determined economic production and the effect of coercive transfers. The analysis is used to provide insight into secessions and mergers of nation-states.

Dispute Resolution, Bargaining, and the Selection of Cases for Trial: A Study of the Generation of Biased and Unbiased Data

SOCIAL scientists rely heavily on existing nonexperimental data in order to study behavior. But the generation of these data is itself a function of behavioral relations. Unless we understand these relations we may have an incorrect understanding of the underlying truth. For example, it may be in the interest of a government agency to underreport failures. Therefore, the agencys figures may give us a distorted view of the agencys success rate. The direction-if not the extent-of bias is obvious in this example. I consider here the relation between the set of disputes settled out of court and the set of disputes ending in trial. Only the latter set is systematically reported. The decision-making process that leads to the selection of a case for trial is shown to yield subtle and nonobvious relations between the characteristics of those cases that are tried and those cases that are settled. In turn, knowledge of these relations allows us to make more informed judgments about the implications of trial data. The article is also of interest to those whose research is not connected with law. The specific techniques used here are directly applicable to several other areas in economics, and the more general issue of data distortion is relevant to most nonexperimental empirical research. Only a very small percentage of disputes end in trial. Do the characteristics of the disputes ending in trial reflect the characteristics of the disputes that are settled out of court, or are there biases one way or the other? This article seeks to answer this question by providing a general model of litigant behavior.

Counter-intuitive results in game theory

Abstract General comparative game statics results are derived in order to provide testable hypotheses in game-like situations. These results run counter to ordinary economic intuition. It becomes necessary to initially define whether a situation represents perfect competition or monopoly on the one hand or a game-like situation on the other hand because these different assumptions lead to greatly differing results. Several empirical applications of the theory are suggested.

Punishment as retribution

The article is concerned with punishment as retribution. A number of reasonable assumptions concerning the punishment of criminals as well as the punishment of innocent individuals are made. These assumptions are consistent and from them a comprehensive ‘justice map’ is drawn. Several implications concerning justice are derived and there is an analysis as to where slack in the pursuit of justice is most likely to occur. It is then shown that all of the assumptions and consequently all the results can be derived from a simple utility maximization model. Throughout the paper, behavior consistent with the concept of retribution is presented and there is some comparison to other theories of punishment. More generally, the article can be seen as a building of a social welfare function. In contrast to other work on social welfare functions which begin with just methods of aggregating preferences, this article begins with just preferences.