Please enable JavaScript.
Coggle requires JavaScript to display documents.
Politics of Public Policy, Prepared for: Prof. Eduardo Araral By: Talitha…
Politics of Public Policy
Theories and concepts
Game theory
Interest
Strict conflict
Zero-sum game
Pyrrhic victory
Hawk-Dove game, the chicken game
Commonality
Mutually beneficial
Coordination game: battle of sexes
Mutually harmful
Types of moves
Simultaneous (using game matrix/table)
Prisoner's dilemma
Sequential (using game tree)
Ultimatum game, dictator game
N of period
Once
Pure self-interest
Repeated/iterated
Reputation building
Assurance game
Information
Full
Asymmetric
Screening strategies
Signaling game
Red herrings
Smoke signals
Rules
Fixed
Can be manipulated
Type of agreement
Enforceable
Cooperative game theory
Non-enforceable
Non-cooperative game theory
Solving social dilemma
Repeated interaction
Others: tit for tat, monitoring, sanctioning, bargaining, reputation, hierarchical imposed norms, focal points, credible commitments, fairness rule, enforcable contract, behavioral insights/nudges
Axelrod's principles of cooperation
Be nice
Retaliate
Don't be envious
Rationality
Full rational self-interest
Rational actions & rational expectations
Market efficiency
Bounded rationality
Limited attention, emotion, habit and memory
Personal
Adaptation (thought is shaped by tasks)
Uncertainty (bad at assessing risks)
Trade-offs
Simon (1978): Satisficing criterion
Organizational
Organizational memory
Bottleneck in agenda-setting
Parallel-processing
Serial-processing
Emotional contagion
Identification
Policy system
Pro status-quo or relying on past solutions
Narrow conception of choice
Too much focus on single issue
Principal-agent problem
Rational choice
Theory of teams
Theory of incentives
Incentives problem
Adverse selection (hidden information)
Moral hazard (hidden action)
The need for coercion and the right incentives
Efficient vs. inefficient contract
Guarding the guardians
Design of oversight and control mechanism
Implication to the democratic system
Presidential system (stable)
Parliamentarian system (Accountable)
Hybrid system
Bell: The Chinese Model (hierarchical imposed norm)
Top: meritocracy
Bottom: democracy (villlage)
Middle: experimentation (state)
Collective actions
Olson's logic (full rational self-interest)
Free-rider and exploitation problem
Credible commitment
Norms and sanctions emergence
Trust but verify
Enforcement
Know your place under the sun
Assurance-problem framework
Interdependence of choice -- cooperation
Fairness motives
Institutions, cultures, values, belief and perception
Cross-national collective actions
Theory of commons
Hardin: Tragedy of the Commons --
1st gen.
theory of collective actions
Solution: privatization or full Leviathan
Ostrom: Managing common pool goods --
2nd gen.
theory of collective actions
Solution: self-governance, trust and reciprocity, policentricity
Araral: Hardin's argument works for large scale settings, Ostrom's critique is valid for small-scale settings like club goods -- potential for
3rd gen.
theory of collective actions?
Determinants
Group size
Composition
Publicness of goods
Aggregator technology
Institutional solution
Leading scholars
Olson
Hardin
Ostrom
Sandler
Axelrod
Holzinger
Philosophies
Utilitarianism
Historical background
Bentham -- benthamism
Modified by Mill, Sidgwick, Hare, Singer
Seek to maximize happiness, well-being, utility
a form of consequentialism, hedonism
Bentham: classical utilitarianism
Government to promote happiness of the society
Principle of utility
Hedonic calculus
Evil of the first and second order
Mill: utilitarianism
Higher and lower pleasures
"Proving" the principle of utility
Critiques
Naturalistic fallacy
Equivocation fallacy
The fallacy of composition
Sidgwick: common sense morality
3 methods
intuitionism
egoistic hedonism
universal hedonism
Recent development
Rashdall: ideal utilitarianism
Paley: act and rule utilitarianism
Hare: two-level utilitarianism
Harsanyi: preference utilitarianism
Popper: negative utilitarianism, minimazing pain
Libertarianism
Historical background
Belsham: libertarian inmetaphysics
Dejacque: libertarian communist
Tucker: libertarianism in the US
Seek to maximize autonomy and political freedom
Anarchism
Types
Left-libertarianism
Right libertarianism
Sterba: neo-libertarianism
Thaler & Sunstein: Libertarian paternalism
Contemporary libertarianism (in the US)
Critiques
Laissez faire capitalism does not always produce the best outcome
Philosophy of individualism and deregulation do not prevent abuse of power
Standing against democracy
Utopianism, tacit authoritarianism, vandalism towards feats of civilization
Thaler & Sunstein: Libertarian paternalism (nudging)
Public choice
Foundation
Taxation & public spending
Buchanan & Tullock (1962): framework within calculus of constitutional decision making and structures
Implementation of constitutional rule
Niskanen: bureaucracy
Political stance
Stigler (1971) & Peltzman (1976): government regulation
Rent-seeking behavior
Lobbying for special interests
Brennan & Lomasky: democratic irrationality
Instrumental interest
Expressive interest
Paradox of voting
Limitation
Samuelson: skepticism on efficacy of government choices
Pressman: politician and voting behavior
Downs, Fiorina, Tullock: voting behavior as the major problem in public choice
Government failures
Direct democracy
Paradox of voting
Referendum
Preference intensity & bundling
Representative government
Principal-agent problem
Myopic judgments based on electoral cycles
Sunk cost in gaining public's attention
Bureaucratic supply
Agency loss
competition and incentives to encourage innovation
Decentralized government
Implementation problem
Interorganizational cooperation
Mechanism design
Incentive compatibility
Maskin's implementable social choice theorems
Monotonicity
No veto power
Tirole: Restraining market power
for consumer's benefit
Sectoral regulations (regulate and monitor)
Antitrust
Patent and trademark
weak, unaccountable, and corrupt institution
Araral: TCM +MD; comprehensive approach including politics and uncertainties
Politics
Institutions
Opportunism
Transaction cost
Democratic theory
Basic tenets, ethical foundations
Domination vs. hierarchy
Controlling domination
Problems and critiques: voter ignorance, noise in social media
Presidential vs. parliamentary democracy
Policentricity
Ostrom, Tiebout, Warren: definition
Lacking single dominant political leader
Still work to provide public goods for the constituents
Many decision making centers, independent of each other
Interdependence: competition, contract, partnership, alliance, joint decision-makin council, collective development of solutions, etc.
Power and authority
Regulate
Public goods provision
Taxing
Monocentricity
Contrast to polycentricity
Consequences
Economies of scale in collective goods provision
Speed of response to local public needs
public goods delivery in different level of aggregation
Polical theory of regulations
Interests
Demand for regulations
Supply for regulations
Views on regulations
Instituted to protect the benefit of public at large
the political process defies rational expectation
Historical foundation
Normative economics
Marginal cost pricing
Natural monopolies, needing to be regulated
Stigler (1962;1971): empirically tested the impacts of regulations, changing stance on regulations
Coercive powers
Held by government: taxing, distributing, banning or promoting
Economic actors will try to use these powers for their own benefits, e.g.: to avoid competition
Howlett, Ramesh, Perl (2009): policy situations by its cost-benefit distribution
Majoritarian politics
Client politics
Entrepreneurial politics
Interest-group politics
Spiller & Liao (2006): Role of interest groups
Buy
Lobby
Sue
Politics and policy reform
why is it political?
Distribute who gets what
Represent a selection of values
Distinct distributional consequences
Can impact a regime's political stability
Araral (2006)
Economist vs political scientist
Role of decision makers in the polcy process
Unique factors of policy and its influence
Political leadership
Attributes of the agenda
The rules of the games
Frameworks
Ostrom (2010): Institutional Analysis Development (IAD)
Howlett, Ramesh, Perl (2009) Cost-benefit distribution in regulation
Research methods
Qualitative approaches
Case study
Single
Several
Cross-case
Within-case
Many
Cross-case
Cross-case & within-case
Categories
Typical
Diverse
Extreme
Extreme X
Extreme Y
Deviant
Influential
Contrast
Pathway
Most-similar
Most-different
Random
Interview
In-depth interview
Interpretive interview
Oral histories
Focus-group interview
Focus group
Mixed methods
Combining several qualitative methods
Combining qualitative and quantitative methods
Process tracing
Tests of causation
Straw in the wind
Smoking gun
Hoop
Doubly decisive
Other methods
Discourse analysis
Narratives analysis
Document analysis
Content analysis
Thick narratives
Hermeneutic approach
Symposium
Qualitative comparative analysis (QCA)
Q methodology
Grounded theory
Quantitative approaches
Econometrics
Causal inference
Experimental (random)
Types
Field experiment
Laboratory experiment
Threats to validity
Common use
Behavioral economics
Prisoners' dilemma & public goods
Coordination and cooperation
Dynamics of bargaining
Experimental markets
Auction behavior
Individual choice
Political science
Voting & election
Committee and jury decision making
Coordination and cooperation
Aspects
Placebo effect (control group)
Randomization
Standardization
Generalized causal inference
Systematic review
Meta-analysis
Quasi-experimental
(non random)
Difference-in-differences (pre-post with/without comparison)
Regression discontinuity design (observable cut-off)
Case-control design
Panel analysis
Non-equivalent control group design
Correlational study
Methods
Ordinary least square (OLS)
Time-series analysis
Vector autoregression
Probit/logit
Examples
Wang, et al (2016): OLS, logit and probit
Montenegro & Araral (2020): Fixed effect regression
Araral, et al (2019): Logit model with maximum likelihood approach
Rodrik, et al (2002): OLS and IV (2SLS)
Transaction cost method
Historical context
Coase (1937): the nature of the firm
Coase (1960): the problem of social cost
rationality and self-interest
Opportunism
Game theory
Evaluative mechanism
Williamson: TC determines strategy
Making transaction
Deciding
Changing plans
Resolving disputes
After-sales
North: institution is key in determining TC
Categories
Search and information costs
Bargaining and decision costs
Policing and enforcement costs
Araral (2013): COW model to climate adaptation
Institutional decomposition and analysis
Decomposing institution
Law
Policy
Administration
Decomposing performance
Physical performance
Financial performance
Economic efficiency
Equity performance
Institutional linkages
Exogenous factors
Political system
Legal system
Demography
Economic development & policies
Resources & environment
Agent based modelling and simulation (ABMS)
Approaches
The hybrid approach
The IDE approach
The library-oriented approach
Agent model implementation
Tools
GIS
C
C++
Java
Phyton
Mathematica
MATLAB
Macro level programming with VBA language
Ms. Excel
Agent model design
Method of validation
Source if data
How to gain data? esp: behavior
Environment
Agents and roles
Problem
Elements
The agent's environment
Infrastructure
Characteristics of environment
Landscape
Location
A set of agents
Characteristics
Has varying state
Autonomous/self-directed
Self-contained
Heterogeneous
Goal-directed
Adaptive
Types
Interacting agents
"Soup" model (aspatial)
Geographic Information System (GIS)
Network typology
Euclidean 2D/3D space
Cellular Automata (CA)
Autonomous agents
Prepared for: Prof. Eduardo Araral
By: Talitha Chairunissa
