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Description
This dissertation focuses on democracies governed by a Parliament. In such democracies, the executive branch consists of a subset of parties in the Parliament, called the Government. A key feature is that the Government is only indirectly determined by the voters' electoral decisions. This dissertation address how parliamentary characteristics and institutions influence the composition of the Government and government outcomes. The composition of the Government reflects the size and ideological make-up of the Government. Government outcomes reflect the length the Government survives and the policy consequences of the Government. The literature focuses on the former criterion. The view is that, in parliamentary democracies, longer Government duration should be associated with stability and better policies. The latter is important from the perspective of directly evaluating whether Governments make good or bad decisions from the perspective of voters. The first chapter of this dissertation develop a model of the government formation process, where parties care about and bargain over both policy and office benefits. The model generate predictions that matches important features of the data. The second chapter uses data from western European parliamentary democracies to estimate the parameters of the model in chapter one. The estimation results suggest that coalitions care about both ideology and office benefits, but more about office benefits. The third chapter studies which (existing) institutional environments lead to `good' government outcomes. The results have a number of important implications for constitutional design.
ContributorsHu, Lin, Ph.D (Author) / Hu, Lin (Thesis advisor) / Friedenberg, Amanda (Committee member) / Manelli, Alejandro (Committee member) / Chade, Hector (Committee member) / Silverman, Dan (Committee member) / Arizona State University (Publisher)
Created2014
Description
This paper discusses the matching between CEOs of different talent and firms of different size, by considering boards' costly monitoring of CEOs who have private information about firm output. By incorporating a costly state verification model into a matching model, we have a number of novel findings. First, positive assortative matching (PAM) breaks down as larger firms match with less talented CEOs when monitoring is sufficiently costly despite of complementarity in firms' production technology. More importantly, PAM can be the equilibrium sorting pattern for large firms and high talent CEOs even it fails for small firms and low talent CEOs, which implies that empirical applications relying on PAM are more robust by using samples of large firms. Second, under positive assortative matching, CEO compensation can be decomposed into frictionless competitive market pay and information rent. More talented CEOs extract more rent, which makes their wage even higher. Third, firm-level corporate governance depends on aggregate market characteristics such as the scarcity and allocation of CEO talent. Weak corporate governance can be optimal when CEO talent is sufficiently scarce. My analysis yields a number of empirical predictions on equilibrium sorting pattern, CEO compensation, and corporate governance.
ContributorsLi, Zhan, Ph.D (Author) / Chade, Hector (Thesis advisor) / Kovrijnykh, Natalia (Committee member) / Manelli, Alejandro (Committee member) / Arizona State University (Publisher)
Created2015
Description
This dissertation consists of three essays on public good provision.
The first chapter develops a model of charity’s choice of fundraising method under two dimensions of asymmetric information, quality and purpose. The main implication is a separating equilibrium where higher-quality charities choose to distinguish themselves by using a traditional fundraising method, while lower-quality ones exploit a low-stakes, take-it- or leave-it, ``checkout’’ method. An empirical application reinforced that charities of lower quality are more likely to adopt the checkout method. Despite this, consumers still choose to give in the equilibrium, due to the small requested amount of checkout donations, which disincentivizes serious thinking. Although exploited by lower-quality charities, the checkout method, along with purpose uncertainty, has the potential to alleviate the free-riding problem associated with public good provision and is, therefore, welfare improving.
The second chapter studies why corporations donate to charities and
how their donations affect social welfare. I propose that firms make donations out of an image reason. In a model where two firms compete with each other, charitable donation could attract consumers and also signal firm overall social responsibility. I show that there exists an equilibrium where the high responsibility firm overdonates,
resulting in a donation level closer to the socially optimal
one. This leads to higher consumer welfare due to higher private good
consumption as well as higher public good consumption when overdonation is prominent. Overall social welfare is enhanced. Empirical results support social image as an incentive for firms to donate.
The third chapter examines people's marginal willingness to pay for a change in local public good provision. We use a fixed effects hedonic model with MSA level data to study the effect of crime on local housing price. We explore the 1990s crime drop and use abortion data in 1970s and 1980s as an instrumental variable based on \citet*{donohue2001impact}. One result we find is that a decrease in murder of 100 cases per 10,000 people increases housing price by 70\%. We further translate this result into a value of a statistical case of homicide, which is around 0.4 million in 1999 dollars.
The first chapter develops a model of charity’s choice of fundraising method under two dimensions of asymmetric information, quality and purpose. The main implication is a separating equilibrium where higher-quality charities choose to distinguish themselves by using a traditional fundraising method, while lower-quality ones exploit a low-stakes, take-it- or leave-it, ``checkout’’ method. An empirical application reinforced that charities of lower quality are more likely to adopt the checkout method. Despite this, consumers still choose to give in the equilibrium, due to the small requested amount of checkout donations, which disincentivizes serious thinking. Although exploited by lower-quality charities, the checkout method, along with purpose uncertainty, has the potential to alleviate the free-riding problem associated with public good provision and is, therefore, welfare improving.
The second chapter studies why corporations donate to charities and
how their donations affect social welfare. I propose that firms make donations out of an image reason. In a model where two firms compete with each other, charitable donation could attract consumers and also signal firm overall social responsibility. I show that there exists an equilibrium where the high responsibility firm overdonates,
resulting in a donation level closer to the socially optimal
one. This leads to higher consumer welfare due to higher private good
consumption as well as higher public good consumption when overdonation is prominent. Overall social welfare is enhanced. Empirical results support social image as an incentive for firms to donate.
The third chapter examines people's marginal willingness to pay for a change in local public good provision. We use a fixed effects hedonic model with MSA level data to study the effect of crime on local housing price. We explore the 1990s crime drop and use abortion data in 1970s and 1980s as an instrumental variable based on \citet*{donohue2001impact}. One result we find is that a decrease in murder of 100 cases per 10,000 people increases housing price by 70\%. We further translate this result into a value of a statistical case of homicide, which is around 0.4 million in 1999 dollars.
ContributorsTao, Ran (Author) / Silverman, Daniel (Thesis advisor) / Bishop, Kelly (Committee member) / Kuminoff, Nicolai (Committee member) / Arizona State University (Publisher)
Created2017
Description
I study the design of two different institutions to evaluate the welfare implications
of counterfactual policies. In particular, I analyze (i) the problem of assigning
students to colleges (majors) in a centralized admission system; and (ii) an auction
where the seller can use securities to determine winner’s payment, and bidders
suffer negative externalities. In the former, I provide a novel methodology to
evaluate counterfactual policies when the admission mechanism is manipulable.
In the latter, I determine which instrument yields the highest expected revenue
from the class of instruments that combines cash and equity payments.
of counterfactual policies. In particular, I analyze (i) the problem of assigning
students to colleges (majors) in a centralized admission system; and (ii) an auction
where the seller can use securities to determine winner’s payment, and bidders
suffer negative externalities. In the former, I provide a novel methodology to
evaluate counterfactual policies when the admission mechanism is manipulable.
In the latter, I determine which instrument yields the highest expected revenue
from the class of instruments that combines cash and equity payments.
ContributorsHernandez Chanto, Allan Roberto (Author) / Manelli, Alejandro (Thesis advisor) / Friedenberg, Amanda (Committee member) / Chade, Hector (Committee member) / Arizona State University (Publisher)
Created2017
Description
I study split-pie bargaining problems between two agents. In chapter two, the types of both agents determine the value of outside options -- I refer to these as interdependent outside options. Since a direct mechanism stipulates outcomes as functions of agents' types, a player can update beliefs about another player’s type upon receiving a recommended outcome. I term this phenomenon as information leakage. I discuss binding arbitration, where players must stay with a recommended outcome, and non-binding arbitration, where players are not obliged to stay with an allocation. The total pie is reduced if the outcome is an outside option. With respect to efficiency, I derive a necessary and sufficient condition for first best mechanisms. These are mechanisms that assign zero probability to outside options for every report received. The condition describes balanced forces in conflict (outside options) and is the same in the cases of binding and non-binding arbitration. I also show a strong link between conflict and information: when conflict exists, information leakage occurs. Hence, non-binding arbitration may seem more restrictive than binding arbitration. To analyze why this is the case, I solve for second best mechanisms with binding arbitration and find a condition under which they can be implemented under non-binding arbitration. Thus, I show that non-binding arbitration can be as effective as binding arbitration in terms of efficiency. I also examine whether the equivalence between binding and non-binding arbitration can cease to hold, and provide analysis of why this happens. In chapter three, the bargaining problem entails no uncertainty but rather envy. Players can feel envy about the allocation of the other player. The Nash Bargaining solution is obtained in this context and some comparative statics are shown. The introduction of envy makes the more envious party a tougher negotiator.
ContributorsGonzalez Sanchez, Eric Patricio (Author) / Manelli, Alejandro (Thesis advisor) / Chade, Hector (Committee member) / Schlee, Edward (Committee member) / Arizona State University (Publisher)
Created2020
Description
There is a growing consensus that environmental hazards and changing weather patterns disproportionately affect the poor, vulnerable, minority communities. My dissertation studies the nature of risk faced by vulnerable groups of individuals, how these risks affect their labor choice, income, consumption, and migration patterns. In Chapter 1, I study how seniors of different racial and income groups respond to information about hazardous waste sites in their neighborhood and their cleanup process. I find white seniors tend to move out at a higher rate when informed about the presence of a waste site as well as when the site is cleaned up compared to non-white seniors. This suggests that neighborhood gentrification exhibits inertia in the manifestation after the cleanup of Superfund sites. I find an assortative matching of seniors to neighborhoods based on their race and income, reinforcing findings in the environmental justice literature. Chapter 2 documents the effect of drought on labor choices, income, and consumption of rural households in India. I find that household consumption, as well as agricultural jobs, declines in response to drought. Further, I find that these effects are mediated by job skills and land ownership. Specifically, I find that households with working members who have completed primary education account for most of the workers who exit the agricultural sector. In contrast, I find that households with farmland increase their agricultural labor share post-drought. Cultural norms, relative prices, and land market transaction costs provide potential explanations for this behavior. Chapter 3 builds a simple model of household labor allocation based on reduced-form evidence I find in chapter 2. Simulation of the calibrated model implies that projected increases in the frequency of droughts over the next 30 years will have a net effect of a 1\% to 2\% reduction in agricultural labor. While small in percentage terms, this implies that 2.5 to 5 million individuals would leave agriculture. An increase in drought will also increase the size of the manufacturing wage subsidy needed to meet the goals of `Make in India’ policy by 20\%. This is driven by the need to incentivize landowners to reduce farm labor.
ContributorsBasu, Sayahnika (Author) / Kuminoff, Nicolai (Thesis advisor) / Bishop, Kelly (Thesis advisor) / Herrendorf, Berthold (Committee member) / Mueller, Valerie (Committee member) / Murphy, Alvin (Committee member) / Arizona State University (Publisher)
Created2021