Working papers (Manuscripts available upon request)

Machiavellian Fair Play: Electoral Incentives to Implement Programmatic Transfers

If a welfare transfers policy is programmatic (it is non-partisan, transparent and persisting), can politicians ever find electoral profit by implementing it? I study a probabilistic voting model in which an office-motivated incumbent politician, of high or low competence, can design a programmatic transfers policy that supports low income citizens but which shrinks the per-period budgets for public goods provision. In my model, public goods have an efficiency edge over transfers in the potential for welfare gains and in easing voters' problem of spotting incompetent politicians. I show that the incumbent faces a key trade-off when he decides a budget allocation: a hefty transfers policy decreases voters' chances at learning about his competence today, yet it also decreases the stakes of the election by attenuating voters' concern for having good politicians in office tomorrow. The solution to this trade-off depends on his electoral status with respect to his challenger: when voters estimate the challenger more likely to be incompetent, then the incumbent increases the stakes of the election at the cost of opening up information revelation; and when voters estimate the challenger more likely to be competent, then the incumbent decreases the stakes of the election at the cost of shutting down his chances at proving himself to the electorate. Finally, the paper discusses two theoretical implications for the empirical models that attempt to measure the causal effect of programmatic transfers on vote shares.

Merchants of Reputation: Privatization under Elites' Outside Lobbying

An economic elite wants to buy a public asset, whose control is within the authority of an office and legacy motivated incumbent politician. The elite wants the asset and they want it cheap. In the extensive margin, the incumbent decides whether to sell or not; in the intensive margin, he decides at what price to sell. The main contribution of the paper is to uncover how the intensive margin creates an incentive for the elite to invest in outside lobbying ex-ante so as to get the asset as cheap as possible. In my framework, outside lobbying is the elite's use of their media to attack or to threaten the incumbent: they can affect his electoral fortunes by manipulating voter's beliefs about his competence. I show that the elite's optimal lobbying strategies take two broad forms on the equilibrium path: if the incumbent is unwilling to privatize, then the elite employs threats; if he is willing to privatize, the elite employs attacks. The paper shows that even in the absence of traditionally studied channels of influence (like bribery), the elite can induce significant variability in the asset sale prices. Both the outside lobbying strategies and the privatization prices emerge endogenously in equilibrium.