Essays in Political Economy: Institutions and Voting Behavior

This dissertation contains three essays on political economy. Broadly speaking, the motivation behind the three essays is to understand from a theocratic perspective, how political institutions and the nature of the electorate affect the incentive of publicly elected officials. A novel aspect of the approach is in thinking about impact of non-standard assumptions on the behavior of the electorate.;The first essay, joint work with Chen Cheng, studies the extent of policy experimentation under decentralized vs. centralized governance. We examine the incentive for experimentation in an environment where there is uncertainty about the payoff of policies as well as the competence of policymakers. Voters form beliefs about the policymakers upon observing noisy signals. Policymakers are concerned about their reputation to the voters, where in the worst case, they are voted out. We show, in equilibrium, policymakers adopt a greater variety of policies under decentralization than under centralization. This prediction is robust to various deviations from Bayesian rationality on the part of the voters. In addition to predictions about politician's behavior, we evaluate the welfare consequences of decentralization in terms of information on policies (policy learning) and on policymakers (electoral accountability). we show that district homogeneity is an important factor in determining voter welfare. In particular, decentralization delivers greater welfare than centralization when districts are homogeneous, while the reverse holds when districts are heterogeneous.;The second essay, joint with Daniel Diermeier, investigates whether electoral control, which many argue to be the primary function of democracy, is feasible when voters exhibit behavioral biases. The model captures two main regularities of voting behavior found in empirical studies: voters are forgetful and are influenced by extraneous events beyond the control of public officials (e.g. rain fall). Specifically, it is assumed that the voters' propensities to reelect the incumbent is governed by a stochastic reinforcement process called the Law of Effect instead of strategic reasoning. Electoral control (i.e. public officials' incentive exercise effort) is examined in such an environment. We show that even in the context of low-rationality, electoral control of public officials can work well. However, the extent of control depends on the properties of the election and the electorate. The salience of negative extraneous events benefits electoral control, as the incumbent must exert greater effort to ensure reelection. Increasing the benefits of holding office also has a positive effect, while the degree of voter forgetfulness helps electoral control if and only if elections are held frequently.;The third essay, joint with Ricardo Pique, presents an alternative approach to modeling voting in multi-candidate elections. In particular, we examine strategic voting in the presence of ethical voters, who follow a group-welfare maximizing voting rule. This rule may require them to vote strategically, that is, to vote for a candidate other than the one they most prefer. The model delivers comparative statics on the degree of strategic voting with regard to various electoral parameters. We show that strategic voting is non-monotonic in the popularity of the Condorcet loser: the prevalence of strategic voting initially increases in the popularity of the Condorcet loser and then decreases. This observation reconciles the apparently contradicting empirical evidence and is robust to more general specifications of the model.