Gary J. Miller

The Transformation of the Republican and Democratic Party Coalitions in the U.S.

Because the space of policies is two-dimensional, parties in the United States are coalitions of opposed interests. The Republican Party contains both socially conservative and socially liberal groups, though both tend to be pro-business. The increasing dominance of the social conservatives has angered some prominent Republicans, even causing a number of them to change party allegiance. Over time, the decreasing significance of the economic axis may cause the Republican Party to adopt policies that are analogous to those proposed by William Jennings Bryan in 1896: populist and anti-business. In parallel, the Democratic Party will increasingly appeal to pro-business, social liberals, so the party takes on the mantel of Lincoln.

Dealing With the Paradox of Embeddedness: The Role of Contracts and Trust in Facilitating Movement Out of Committed Relationships

In conditions of social uncertainty—i.e., when exchanges are subject to the hazards of opportunism—committed relationships promote both the shadow of the future and the shadow of the past necessary for cooperation. For this reason, some argue that exchanges can be selfgoverned without the need of legal enforcement and other formal controls. While this conclusion is correct when the value of a long-term relationship does not vary much over time, we provide new experimental evidence showing that it is invalid when individuals face high exchange value uncertainty—i.e., when there are constantly new opportunities to transact with more valuable partners outside committed circles. Under both social and exchange value uncertainty, a reduction in commitment can potentially increase exchange performance, at the cost of a potential reduction in cooperation. By creating safeguards in market exchanges, contract enforcement can make individuals more willing to move out of committed relationships and into relationships with higher exchange value.

Rational Choice and Dysfunctional Institutions

As stated elsewhere in this issue, we cannot claim to explain an institutions origin just by the functions it serves. In part thismay be because of the cognitive limitations of those actors who are instrumental in institutional formation and institutional change. But even more clearly, it is the case that rational instrumental choice does not imply functional institutions. Just as rational choice in a prisoners dilemma may result in inefficient policies, rational choice by actors with conflicting preferencesfor institutions may result in institutions that are suboptimal. Examples of rational choice explanations of dysfunctional institutions are provided in the area of bureaucracy, regulation, healthcare, and budgeting. I argue that the paradoxes and impossibility results of rational choice theory offer the best insights currently available into the persistent inefficiencies of the world ofpolitics.

Universalism in Experimental Committees

Most rational choice theories of committee decision making predict a process of competitive coalition formation leading to a minimum winning coalition. Committee experiments reported to date tend to support these theories. However, both theories and committee experiments are contradicted by the evidence of real-world legislatures making distributive decisions; these decisions are characterized by coalitions of the whole providing virtually all members with a share of distributive benefits. The results in this article help to resolve this contradiction by showing that if the committee experimental design includes a universalistic alternative which provides a high level of expected benefits for committee members, it will be selected. Competitive coalition formation occurs in experimental settings which do not include such an alternative. The results call into question the generality of ordinalist theories of competitive coalition formation.

Solutions to Principal-Agent Problems in Firms

There are many settings in which one economic actor (the principal) delegates authority to an agent to act on her behalf .T h ep r imary reason for doing so is that the agent has an advantage in terms of expertise or information. This informational advantage, or information asymmetry, poses a problem for the principal—how can th ep rincipa lb e sure that the agent has in fact acte di n her best interests? Can a contract be written defining incentives in such a way that the principal can be assured that the agent is taking just the action that she would take, had sh et he information availabl et o the agent? Solving this problem is a matter of some concern for patients dealing with their doctors, clients dealing with their lawyers, or celebrities dealing with their publicists. It i sa lso a crucial concern for business firms dealing with their employees. Especially in the twenty-first century, employees are often hired precisely because they have information availabl et hat is unavailabl et o t he managers of a firm. Making sure that employee expertise is put to wor ki nt he interest of the firm can make the difference between success and bankruptcy–as illustrate db yt h er elative performance of Southwest Airlines compared to much of the rest of the airlines industry. This paper examines the large principal-agency literature as it relates to management patterns i nt he firm. A powerful conclusion emerges, not from any one segment of the literature as much as from a bird’s-eye view of the literature as a whole, that there is no unique “solution” to the principal-agent problems in a firm. Instead, a Coasean “contingency” theory can be constructe di nw hich different conditions inside the firm (characterized by production technology, severity of information asymmetry, and relative risk-preferences of principals and agents) call for different “solutions” to th ep rincipal-agent problems. While the first significant papers in principal-agency theory were developed independentl yo f Coasian theory, thi sc hapter of the Handbook will try to establish that there is a natural connection between the two. Coase (1937) hypothesized that transactions may be structured in different ways—in particular, some can be better managed via hierarchy within a firm rather than b yt he market between firms. This insight has led, in recent years, to a larg ea nd successfu ll iterature on the “boundaries of the firm”—examining when transactions are best

“A Theory Waiting to Be Discovered and Used”: A Reanalysis of Canonical Experiments on Majority-Rule Decision Making

The paper offers a reassessment of canonical attempts to address a fundamental question about majority rule: what is the relationship between the preferences held by the participants and the outcomes that emerge from their interactions? Previous work, based on the analysis of abstract spatial models or relying on data from real-world spatial experiments, has yielded a mass of contradictory findings. Our work applies a new technique for estimating the uncovered set, a concept that describes a fundamental constraint on majority rule: given the preferences of decision makers, which outcomes can emerge from majority-rule decision making? By applying the uncovered set to a series of previous experiments on majority rule, we show that their seemingly bizarre and incompatible findings are in fact consistent with a clearly specified theory of how sophisticated individuals make decisions in majority-rule settings.

Committees and the core of the Constitution

An ongoing debate in the formal theory of legislatures involves the question of why these institutions (apparently) manifest so much stability. That is, why do the institutions not continually upset policies adopted only a short time before? A large number of answers have been advanced. This paper proposes that the stability derives from the interaction of two factors, (i) the fundamental constitutional rules (bicameralism, executive veto, and veto override) that structure the legislative process, and (ii) the committee systems endowed with veto powers that many American legislatures have developed. This interaction, we argue, can create a core — a set of undominated points — so large that even a substantial change in the legislatures members (reflecting electoral outcomes, for example) will be unlikely to shift its location enough for the status quo to be upset.

Closing the Deal: Negotiating Civil Rights Legislation

Our investigation of the Senate politics of four major civil rights acts indicates that they did not result from winning coalitions bulldozing helpless minorities, nor did they result from some unpredictable chaotic process. These critical bills were the result of a flexible, multidimensional coalition-building process that proceeded by offering amendments carefully constructed to split off pivotal members of the winning coalition. Ideal point estimates of U.S. senators reveal that this coalitional negotiation process led to outcomes at some distance from the first choice of the winning coalition, testimony to significant compromise, both in early proposals and in refinements. This negotiation process resulted in outcomes apparently constrained by the boundaries of the uncovered set (McKelvey 1986; Miller 1980). “Closing the deal” in the U.S. Senate meant finding an outcome that could withstand robust attacks on pivotal coalition members—and that meant finding an outcome in the uncovered set.

The Institutional Effect on Majority Rule Instability: Bicameralism in Spatial Policy Decisions

The purpose of this paper is to report on experiments that test for an independent effect of bicameralism on legislative stability. The experiments are designed to test the theory of the bicameral core (Hammond and Miller 1986), which demonstrates that a bicameral legislature is more apt to have stable undominated policy choices than a unicameral legislature with the same number of legislators holding the same preferences.

Response to long-distance relocation in Asian elephants (Elephas maximus) : monitoring adrenocortical activity via serum, urine, and feces

Understanding how elephants respond to potentially stressful events, such as relocation, is important for making informed management decisions. This study followed the relocation of eight Asian elephants from the Cocos (Keeling) Islands to mainland Australia. The first goal of this study was to examine patterns of adrenocortical activity as reflected in three different substrates: serum, urine, and feces. We found that the three substrates yielded very different signals of adrenocortical activity. Fecal glucocorticoid metabolites (FGM) increased as predicted post-transport, but urinary glucocorticoid metabolites (UGM) were actually lower following transport. Serum cortisol levels did not change significantly. We suggest that the differences in FGM and UGM may reflect changes in steroid biosynthesis, resulting in different primary glucocorticoids being produced at different stages of the stress response. Additional studies are needed to more thoroughly understand the signals of adrenocortical activity yielded by different substrates. The second goal was to examine individual variation in patterns of adrenal response. There was a positive correlation between baseline FGM value and duration of post-transfer increase in FGM concentration. Furthermore, an individuals adrenocortical response to relocation was correlated with behavioral traits of elephants. Elephants that were described by keepers as being “curious” exhibited a more prolonged increase in FGM post-transfer, and “reclusive” elephants had a greater increase in FGM values. Future research should investigate the importance of these personality types for the management and welfare of elephants.