Susanne Lohmann

The Dynamics of Informational Cascades: The Monday Demonstrations in Leipzig, East Germany, 1989–91

This article analyzes the dynamics of turnout and the political impact of five cycles of protest, consisting of forty-two mass demonstrations that occurred on Mondays in Leipzig over the period 1989–91. These demonstrations are interpreted as an informational cascade that publicly revealed some of the previously hidden information about the malign nature of the East German communist regime. Once this information became publicly available, the viability of the regime was undermined. The Monday demonstrations subsequently died a slow death as their informational role declined.

A Signaling Model of Informative and Manipulative Political Action.

I develop a signaling model of mass political action. I establish that rational, self-interested individuals may have incentives to engage in costly political action despite a free-rider problem. Their political actions are informative for a political leader who rationally takes a cue from the size of the protest movement. However, some information is trapped in extremist and rationally apathetic pockets of the society. Some extremists take political action regardless of their private information, to manipulate the political leaders decision. Others abstain hoping to benefit if the leader makes an uninformed decision. Rationally apathetic moderates abstain because, being nearly indifferent between the policy alternatives, they do not find it worthwhile to incur the cost of taking action. Only activist moderates take informative political action. The political leader discounts the observed turnout for extremist political action and shifts policy if the estimated number of activist moderates exceeds a critical threshold.

Divided government and U.S. trade policy: theory and evidence

If different parties control the U.S. Congress and White House, the United States may maintain higher import protection than otherwise. This proposition follows from a distributive politics model in which Congress can choose to delegate trade policymaking to the President. When the congressional majority party faces a President of the other party, the former has an incentive to delegate to but to constrain the President by requiring congressional approval of trade proposals by up-or-down vote. This constraint forces the President to provide higher protection in order to assemble a congressional majority. Evidence confirms that (1) the institutional constraints placed on the Presidents trade policymaking authority are strengthened in times of divided government and loosened under unified government and (2) U.S. trade policy was significantly more protectionist under divided than under unified government during the period 1949–90.

An Information Rationale for the Power of Special Interests

Political decisions are often biased in favor of special interests at the expense of the general public, and they are frequently inefficient in the sense that the losses incurred by the majority exceed the gains enjoyed by the minority. This article explains the bias in terms of information asymmetries and the free-rider problem. First, incumbents increase their reelection prospects by biasing policy toward groups that are better able to monitor their activities. Second, because smaller groups are better able to overcome the free-rider problem of costly monitoring, policy will be biased in their favor. Third, the effect of asymmetric monitoring on voter welfare is ambiguous. The inefficiencies created by the policy bias are offset by a positively valued selection bias: Incumbents of above-average quality are more likely to survive voter scrutiny than are low-quality types.

Clumsy Solutions for a Complex World

Successful solutions to pressing social ills tend to consist of innovative combinations of a limited set of alternative ways of perceiving and resolving the issues. These contending policy perspectives justify, represent and stem from four different ways of organizing social relations: hierarchy, individualism, egalitarianism and fatalism. Each of these perspectives: (1) distils certain elements of experience and wisdom that are missed by the others; (2) provides a clear expression of the way in which a significant portion of the populace feels we should live with one another and with nature; and (3) needs all of the others in order to be sustainable. ‘Clumsy solutions’– policies that creatively combine all opposing perspectives on what the problems are and how they should be resolved – are therefore called for. We illustrate these claims for the issue of global warming.

Rationalizing the Political Business Cycle: A Workhorse Model

An incumbent policymaker has incentives to expand the money supply prior to elections to stimulate the economy and thereby further her chances of re-election. In its original formulation, the Nordhaus political business cycle hypothesis relies on adaptive inflation expectations and naive retrospective voting. Copyright Blackwell Publishers Ltd 1998.

Party Identification, Retrospective Voting, and Moderating Elections in a Federal System: West Germany, 1961-1989

The hypotheses of retrospective voting and moderating elections rationalize some empirical regularities in U.S. presidential and congressional elections that posed a challenge for the party identification hypothesis. Here, these hypotheses are applied to the German federal system that is characterized by staggered national and Land (provincial) elections. They are tested using data on real GNP growth at the national and Land levels, party vote shares in national and Land elections, party seat shares in national and Land parliaments, and the party composition of national and Land governments over the time period 1961-1989. Perhaps surprisingly, all three hypotheses—party identification, retrospective voting, and moderating elections—find empirical support when applied to the German federal system. Although these hypotheses were formulated with reference to U.S. political institutions, they travel well—bar some modifications that take into account special features of the German political system.

Collective Action Cascades: An Informational Rationale for the Power in Numbers

Self-interested individuals pursue their goals rationally taking into account the constraints imposed by their environment and best-responding to the strategic behavior of other individuals: when applied to collective action, economic theory predicts undersupply. Meanwhile, the behavior of masses of people is described as excitable, emotional, irrational, suggestible, hypnotic, disorderly, and unpredictable: in practice, it seems, collective action is oversupplied, and erratically so. The contagious and volatile dynamics of collective action appear to defy rationalization. I conceptualize a social movement as a dynamic informational cascade. Turbulences emerge endogenously from rational individual behavior. Disorderly mass behavior is a by-product of a powerful decentralized mechanism of information aggregation. Copyright 2000 by Blackwell Publishers Ltd

The Case for Clumsiness

Most climatologists agree that by burning fossil fuels and engaging in other forms of consumption and production we are increasing the amount of greenhouse gases that float around in the atmosphere. These gases, in trapping some of the sun’s heat, warm the earth and enable life. The trouble is, some predict, that if we continue to accumulate those gases, over the course of the new century the average temperature on earth will rise and local climates will change, with possibly catastrophic consequences. Will this indeed happen? Does climate-change put the future of the world at risk? Can only a radical reallocation of global wealth and power rescue us from this threat? Or should people not be overly worried, as the steady march of technological progress will see us through in the end?

Partisan control of the money supply and decentralized appointment powers

Abstract The Deutsche Bundesbank is governed by a decision-making council consisting of a minority of federal government appointees and a majority of regional state appointees. The council of the future European Central Bank will have a similar composition. This article examines whether partially decentralized appointment powers can mitigate political business cycles in inflation and output growth resulting from the partisan control of the money supply.