Gilat Levy

Decision Making in Committees: Transparency, Reputation, and Voting Rules

In this paper I analyze the effect of transparency on decision making in committees. I focus on committees whose members are motivated by career concerns. The main result is that when the decision-making process is secretive (when individual votes are not revealed to the public), committee members comply with preexisting biases. For example, if the voting rule demands a supermajority to accept a reform, individuals vote more often against reforms. Transparent committees are therefore more likely to accept reforms. I also find that coupled with the right voting rule, a secretive procedure may induce better decisions than a transparent one. (JEL D71, D72)

Anti-herding and strategic consultation

In this paper I analyze how careerist decision makers aggregate and use information provided by others. I find that decision makers who are motivated by reputation concerns tend to ‘anti-herding’, i.e., they excessively contradict public information such as the prior or others’ recommendations. I also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless. Moreover, advisers to the decision maker may not report their information truthfully. Even if the advisers care only about the outcome, they bias their recommendation since they anticipate inefficient anti-herding behavior by the decision maker.

The Politics of Public Provision of Education

Public provision of education is usually viewed as a form of redistribution in kind. However, does it arise when income redistribution is feasible as well? I analyze a two-dimensional model of political decision-making with endogenous political parties. Society chooses both the tax rate and the allocation of the revenues between income redistribution and public education. Agents differ in their income and in their age, where young agents prefer public education and the old prefer income redistribution. I find that when the cohort size of the young is not too large then public education arises as a political compromise between the rich and the young segment of the poor. They collude in order to reduce the size of government (which benefits the rich) and target some of its resources to education (which benefits the young poor). When the cohort size of the young is too large, however, income redistribution crowds out public provision of education in the political equilibrium.

It Takes Two: An Explanation of the Democratic Peace

In this paper, we provide an explanation of the democratic peace hypothesis, i.e., the observation that democracies rarely fight one another. We show that in the presence of information asymmetries and strategic complements, the strategic interaction between two democracies differs from any other dyad. In our model, two democracies induce the highest probability of peaceful resolution of conflicts. But it takes two for peace; one democracy involved in a conflict does not necessarily increases the probability of a peaceful resolution compared to a conflict between two non-democratic regimes.

Does Polarisation of Opinions Lead to Polarisation of Platforms? The Case of Correlation Neglect

In this paper we question the common wisdom that more polarized voters’ opinions imply larger policy polarization. We analyze a voting model in which the source of the polarization in voters’ opinions is “correlation neglect”, that is, voters neglect the correlation in their information sources. Our main result shows that such polarization in opinions does not necessarily translate to policy polarization; when the electoral system is not too competitive (that is, when there is some aggregate noise in the election’s outcome), then voters with correlation neglect may induce lower levels of policy polarization compared with rational electorates.

Dynamic legislative decision making when interest groups control the agenda

We consider dynamic decision making in a legislature, in which in each period legislators vote between the status quo (previous periodʼs policy) and a new bill. However, the agenda formation process is captured by interest groups, that is, the new bill on the agenda is determined by an all-pay auction among these groups. We show that convergence to the median voter of the legislature arises if interest groups are patient enough but not necessarily otherwise. We characterize the bound on the speed of convergence in a family of stationary equilibria in which policy bounces between right-wing and left-wing policies. We also show that convergence may be faster if organized interest groups represent only one side of the policy space, e.g., when only business and not consumer interests are organized.

Information diffusion in networks with the Bayesian Peer Influence heuristic

Repeated communication in networks is often considered to impose large information requirements on individuals, and for that reason, the literature has resorted to use heuristics, such as DeGroots, to compute how individuals update beliefs. In this paper we propose a new heuristic which we term the Bayesian Peer Influence (BPI) heuristic. The BPI accords with Bayesian updating for all (conditionally) independent information structures. More generally, the BPI can be used to analyze the effects of correlation neglect on communication in networks. We analyze the evolution of beliefs and show that the limit is a simple extension of the BPI and parameters of the network structure. We also show that consensus in society might change dynamically, and that beliefs might become polarised. These results contrast with those obtained in papers that have used the DeGroot heuristic.

Liberty, Equality and Religiosity

Presentado el 22 de mayo de 2014 en la Conference on Axioms, Results and Methods in Normative Economics, celebrada del 22 al 24 de mayo de 2014 en Granada (Espana). Presentado el 9 de junio de 2014 en el International Economic Association 17th World Congress, celebrado del 6 al 10 de juni de 2014 en el Dead Sea (Jordania). Presentado como conferencia en el Department of Economics, Universita di Bologna. Presentado como conferencia en el Departamento de Fundamentos de Analisis Economico de la Universidad de Alicante el 31 de octubre de 2014. Presentado como conferencia el 2 de diciembre de 2015 en el Economics & Political Science (EPS) Seminars de INSEAD, The Business School for the World.