Financial equilibrium, voting procedures, and coalition structures in allocational mechanisms

This thesis is comprised of three chapters, each of which is concerned with properties of allocational mechanisms which include voting procedures as part of their operation. The theme of interaction between economic and political forces recurs in the three chapters, as described below.

Chapter One demonstrates existence of a non-controlling interest shareholders' equilibrium for a stylized one-period stock market economy with fewer securities than states of the world. The economy has two decision mechanisms: Owners vote to change firms' production plans across states, fixing shareholdings; and individuals trade shares and the current production / consumption good, fixing production plans. A shareholders' equilibrium is a production plan profile, and a shares / current good allocation stable for both mechanisms. In equilibrium, no (Kramer direction-restricted) plan revision is supported by a share-weighted majority, and there exists no Pareto superior reallocation.

Chapter Two addresses efficient management of stationary-site, fixed-budget, partisan voter registration drives. Sufficient conditions obtain for unique optimal registrar deployment within contested districts. Each census tract is assigned an expected net plurality return to registration investment index, computed from estimates of registration, partisanship, and turnout. Optimum registration intensity is a logarithmic transformation of a tract's index. These conditions are tested using a merged data set including both census variables and Los Angeles County Registrar data from several 1984 Assembly registration drives. Marginal registration spending benefits, registrar compensation, and the general campaign problem are also discussed.

The last chapter considers social decision procedures at a higher level of abstraction. Chapter Three analyzes the structure of decisive coalition families, given a quasitransitive-valued social decision procedure satisfying the universal domain and ITA axioms. By identifying those alternatives X* ⊆ X on which the Pareto principle fails, imposition in the social ranking is characterized. Every coaliton is weakly decisive for X* over X~X*, and weakly antidecisive for X~X* over X*; therefore, alternatives in X~X* are never socially ranked above X*. Repeated filtering of alternatives causing Pareto failure shows states in X^n*~X^((n+1))* are never socially ranked above X^((n+1))*. Limiting results of iterated application of the *-operator are also discussed.

Voting games with incomplete information

We examine voting situations in which individuals have incomplete information over each others' true preferences. In many respects, this work is motivated by a desire to provide a more complete understanding of so-called probabilistic voting.

Chapter 2 examines the similarities and differences between the incentives faced by politicians who seek to maximize expected vote share, expected plurality, or probability of victory in single member: single vote, simple plurality electoral systems. We find that, in general, the candidates' optimal policies in such an electoral system vary greatly depending on their objective function. We provide several examples, as well as a genericity result which states that almost all such electoral systems (with respect to the distributions of voter behavior) will exhibit different incentives for candidates who seek to maximize expected vote share and those who seek to maximize probability of victory.

In Chapter 3, we adopt a random utility maximizing framework in which individuals' preferences are subject to action-specific exogenous shocks. We show that Nash equilibria exist in voting games possessing such an information structure and in which voters and candidates are each aware that every voter's preferences are subject to such shocks. A special case of our framework is that in which voters are playing a Quantal Response Equilibrium (McKelvey and Palfrey (1995), (1998)). We then examine candidate competition in such games and show that, for sufficiently large electorates, regardless of the dimensionality of the policy space or the number of candidates, there exists a strict equilibrium at the social welfare optimum (i.e., the point which maximizes the sum of voters' utility functions). In two candidate contests we find that this equilibrium is unique.

Finally, in Chapter 4, we attempt the first steps towards a theory of equilibrium in games possessing both continuous action spaces and action-specific preference shocks. Our notion of equilibrium, Variational Response Equilibrium, is shown to exist in all games with continuous payoff functions. We discuss the similarities and differences between this notion of equilibrium and the notion of Quantal Response Equilibrium and offer possible extensions of our framework.

Awakening a sleeping giant: The riddle of Latino political participation

For some time now, the Latino voice has been gradually gaining strength in American politics, particularly in such states as California, Florida, Illinois, New York, and Texas, where large numbers of Latino immigrants have settled and large numbers of electoral votes are at stake. Yet the issues public officials in these states espouse and the laws they enact often do not coincide with the interests and preferences of Latinos. The fact that Latinos in California and elsewhere have not been able to influence the political agenda in a way that is commensurate with their numbers may reflect their failure to participate fully in the political process by first registering to vote and then consistently turning out on election day to cast their ballots.

To understand Latino voting behavior, I first examine Latino political participation in California during the ten general elections of the 1980s and 1990s, seeking to understand what percentage of the eligible Latino population registers to vote, with what political party they register, how many registered Latinos to go the polls on election day, and what factors might increase their participation in politics. To ensure that my findings are not unique to California, I also consider Latino voter registration and turnout in Texas for the five general elections of the 1990s and compare these results with my California findings.

I offer a new approach to studying Latino political participation in which I rely on county-level aggregate data, rather than on individual survey data, and employ the ecological inference method of generalized bounds. I calculate and compare Latino and white voting-age populations, registration rates, turnout rates, and party affiliation rates for California's fifty-eight counties. Then, in a secondary grouped logit analysis, I consider the factors that influence these Latino and white registration, turnout, and party affiliation rates.

I find that California Latinos register and turn out at substantially lower rates than do whites and that these rates are more volatile than those of whites. I find that Latino registration is motivated predominantly by age and education, with older and more educated Latinos being more likely to register. Motor voter legislation, which was passed to ease and simplify the registration process, has not encouraged Latino registration . I find that turnout among California's Latino voters is influenced primarily by issues, income, educational attainment, and the size of the Spanish-speaking communities in which they reside. Although language skills may be an obstacle to political participation for an individual, the number of Spanish-speaking households in a community does not encourage or discourage registration but may encourage turnout, suggesting that cultural and linguistic assimilation may not be the entire answer.

With regard to party identification, I find that Democrats can expect a steady Latino political identification rate between 50 and 60 percent, while Republicans attract 20 to 30 percent of Latino registrants. I find that education and income are the dominant factors in determining Latino political party identification, which appears to be no more volatile than that of the larger electorate.

Next, when I consider registration and turnout in Texas, I find that Latino registration rates are nearly equal to those of whites but that Texas Latino turnout rates are volatile and substantially lower than those of whites.

Low turnout rates among Latinos and the volatility of these rates may explain why Latinos in California and Texas have had little influence on the political agenda even though their numbers are large and increasing. Simply put, the voices of Latinos are little heard in the halls of government because they do not turn out consistently to cast their votes on election day.

While these findings suggest that there may not be any short-term or quick fixes to Latino participation, they also suggest that Latinos should be encouraged to participate more fully in the political process and that additional education may be one means of achieving this goal. Candidates should speak more directly to the issues that concern Latinos. Political parties should view Latinos as crossover voters rather than as potential converts. In other words, if Latinos were "a sleeping giant," they may now be a still-drowsy leviathan waiting to be wooed by either party's persuasive political messages and relevant issues.

Essays on Correlated Equilibrium and Voter Turnout

This thesis consists of three essays in the areas of political economy and game theory, unified by their focus on the effects of pre-play communication on equilibrium outcomes.

Communication is fundamental to elections. Chapter 2 extends canonical voter turnout models, where citizens, divided into two competing parties, choose between costly voting and abstaining, to include any form of communication, and characterizes the resulting set of Aumann's correlated equilibria. In contrast to previous research, high-turnout equilibria exist in large electorates and uncertain environments. This difference arises because communication can coordinate behavior in such a way that citizens find it incentive compatible to follow their correlated signals to vote more. The equilibria have expected turnout of at least twice the size of the minority for a wide range of positive voting costs.

In Chapter 3 I introduce a new equilibrium concept, called subcorrelated equilibrium, which fills the gap between Nash and correlated equilibrium, extending the latter to multiple mediators. Subcommunication equilibrium similarly extends communication equilibrium for incomplete information games. I explore the properties of these solutions and establish an equivalence between a subset of subcommunication equilibria and Myerson's quasi-principals' equilibria. I characterize an upper bound on expected turnout supported by subcorrelated equilibrium in the turnout game.

Chapter 4, co-authored with Thomas Palfrey, reports a new study of the effect of communication on voter turnout using a laboratory experiment. Before voting occurs, subjects may engage in various kinds of pre-play communication through computers. We study three communication treatments: No Communication, a control; Public Communication, where voters exchange public messages with all other voters, and Party Communication, where messages are exchanged only within one's own party. Our results point to a strong interaction effect between the form of communication and the voting cost. With a low voting cost, party communication increases turnout, while public communication decreases turnout. The data are consistent with correlated equilibrium play. With a high voting cost, public communication increases turnout. With communication, we find essentially no support for the standard Nash equilibrium turnout predictions.

At Your Convenience: Facilitating Voting and Registration

This work proposes answers to methodological and substantive questions related to convenience voting. The first analytical chapter surveys the various research designs that have been proposed within this literature, and concludes that the field benefits from using all in conjunction. The next chapter uses matching to identify the relationship between disability status and political participation, and considers whether any forms of convenience voting mediate in the relationship. The final two analytical chapters examine how online voter registration, one of the most recent policy innovations, affects participation and vote share in American elections. The concluding chapter summarizes the findings presented herein, and briefly discusses the natural extensions of this work.

Death or taxes? The political economy of sanitation expenditure in nineteenth-century Britain

This thesis consists of three papers studying the relationship between democratic reform, expenditure on sanitation public goods and mortality in Britain in the second half of the nineteenth century. During this period decisions over spending on critical public goods such as water supply and sewer systems were made by locally elected town councils, leading to extensive variation in the level of spending across the country. This dissertation uses new historical data to examine the political factors determining that variation, and the consequences for mortality rates.

The first substantive chapter describes the spread of government sanitation expenditure, and analyzes the factors that determined towns' willingness to invest. The results show the importance of towns' financial constraints, both in terms of the available tax base and access to borrowing, in limiting the level of expenditure. This suggests that greater involvement by Westminster could have been very effective in expediting sanitary investment. There is little evidence, however, that democratic reform was an important driver of greater expenditure.

Chapter 3 analyzes the effect of extending voting rights to the poor on government public goods spending. A simple model predicts that the rich and the poor will desire lower levels of public goods expenditure than the middle class, and so extensions of the right to vote to the poor will be associated with lower spending. This prediction is tested using plausibly exogenous variation in the extent of the franchise. The results strongly support the theoretical prediction: expenditure increased following relatively small extensions of the franchise, but fell once more than approximately 50% of the adult male population held the right to vote.

Chapter 4 tests whether the sanitary expenditure was effective in combating the high mortality rates following the Industrial Revolution. The results show that increases in urban expenditure on sanitation-water supply, sewer systems and streets-was extremely effective in reducing mortality from cholera and diarrhea.