WORKSHOP IN POLITICAL THEORY    AND POLICY ANALYSIS    Spring 1997 Colloquia     http://www.indiana.edu/~workshop/colloquia/spring1997_colloquia.html

Colloquia during Spring 1997:

Professor Larry Schroeder, School of Public and Environmental Affairs, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, April 28.  His presentation is entitled "Analyzing Institutional Arrangements for Rural Infrastructure."An Abstract of his paper is provided below.

April 21, 1997

Professor Barbara Allen, Department of Political Science, Carleton College, Northfield, MN, will be the guest speaker for the Workshop Colloquium on Monday, April 21, 1997. Her presentation is entitled "Federal Liberty and the Art of Association in Tocquevile's Analysis." An abstract of her paper is provided below.

April 14, 1997

Professor Mark Lichbach, Department of Political Science, Colorado University, Boulder, Co, will be the guest speaker for the Workshop Colloquium on Monday, April 14, 1997. His presentation is entitled "The Rebel's Dilemma and the Cooperator's Dilemma: Reflections on the Collective Action Problem." A summary of his presentation is provided below.

April 7, 1997

Professor Michael Mcginnis, Department of Political Science and the Workshop in Political Theory and Policy Analysis, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, April 7, 1997. His presentation is entitled "Rent-Seeking, Redistribution, and Reform in the Governance of Global Markets." An abstract of his paper is provided below.

March 10, 1997

Professor Toshio Yamagishi, Department of Behavioral Science, Hokkaido University, Sappora, Japan, will be the speaker for the Workshop Colloquium on Monday, March 10, 1997. His presentation in entitled "Trust and Gullibility." An abstract of his paper is provided below.

March 3, 1997

Professor Elmus Wicker, Department of Economics, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, March 3, 1997. His presentation is entitled "Were Panics of the National Banking Era Preventable?" An abstract of his paper is provided below.

February 24, 1997

Tony Matejczyk, Doctoral Student, Department of Political Science, Indiana University, will be the guest speaker. His presentation is entitled "Zoning Exceptions in Cities: Politics and Outcomes." An abstract of his paper is provided below.

February 17, 1997

Nahoko Hayashi, Visiting Scholar, Department of Behavioral Science, Faculty of Letters, Hokkaido University, Sapporo, Japan, will be the guest speaker. Her presentation is entitled "Selective Play: Social Embeddedness of Social Dilemmas." An abstract of her paper is provided below.

February 10, 1997

Professor Kerry Krutilla, School of Public and Environmental Affairs, Indiana University, will be the speaker for the Workshop Colloquium on Monday, February 10, 1997. His presentation is entitled "Environmental Policy and Rent Seeking." An abstract of his paper is provided below.

February 3, 1997

Doctoral student, Brian Collins, Department of Political Science, Indiana University, will be the speaker. His presentation is entitled "Reducing the Costs of Democracy: Economic Growth in US States, 1983-1992."

January 27, 1997

Professor Elinor Ostrom, Workshop in Political Theory and Policy Analysis, Indiana University, will be the speaker. Her presentation is entitled "Self-Governance of Common-Pool Resources."

January 20, 1997

Professor Burt Monroe, Department of Political Science, Indiana University, will be the guest speaker. His presentation is entitled "Information Aggregation Under Alternative Electoral Systems."

April 28, 1997

Professor Larry Schroeder, School of Public and Environmental Affairs, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, April 28.  His presentation is entitled "Analyzing Institutional Arrangements for Rural Infrastructure."An Abstract of his paper is provided below.

This paper (after further revision) is to be presented at a World Bank-sponsored Workshop on Rural Infrastructure next month.  The specific focus of the Workshop will be on institutional issues related to the development of rural water supply and rural roads in developing transition economies.  Since few of the participants in the Workshop will have had any formal introduction to analysis of institutional arrangements in the context of rural infrastructure investments, the intent of the paper is to review the concepts of institutional arrangements and the effects that they can have on the sustainability of rural infrastructure investments.

The paper illustrates how institutional arrangements can be crucial to sustaining investments in rural roads and water supply through their effects on the incentives of the long list of actors who generally play a role in rural infrastructure development.  It considers what is meant by institutions and institutional arrangements and how the arrangements affect the costs of providing and producing rural infrastructure.  Finally, the paper posits some general design principals based on both empirical observations and theory.

April 21, 1997

Professor Barbara Allen, Department of Political Science, Carleton College, Northfield, MN, will be the guest speaker for the Workshop Colloquium on Monday, April 21, 1997. Her presentation is entitled "Federal Liberty and the Art of Association in Tocquevile's Analysis." An abstract of her paper is provided below.

Tocqueville's Democracy chronicles the American experiment in self-government in a way that speaks to current scholarship in institutional analysis and development. Through his analysis we learn how institutional change can effect custom, habit, and, eventually, culture and the limitations placed by history and culture. All of the causes that contribute to maintaining a democratic republic in the United States, Tocqueville argued, can be reduced to three points: "1. The peculiar and accidental situation in which Providence has placed the Americans. 2. The laws. 3. The manners and customs of the people."

In the United States, Tocqueville asserted, the framework of the federal government could not be understood without knowing its history, particularly its relationship to the intermediate and antecedent institutions that comprise it.

Political practice determined the relationship of the states to the Union and the status of citizens within each arena of political action. Such political activity ultimately revealed the citizens' views of liberty, equality, duty, and right, as well as the institutions they had designed according to these beliefs.

While voluntary associations played a vital role in America, in other political circumstances self-organization was not such a salutary part of political life. Tocqueville believed that self-organization is a ubiquitous human response and is not necessarily indicative of sustained self-government. Private interests could be a sentinel of public right as James Madison intended, but self-interest could also promote factions, as he feared. Not all associations nurture an understanding of self-interest that is proper to socially responsible public engagement. The two orientations toward equality that Tocqueville identified with democracy produced two types of self-organized institutions: those with a democratic organizational structure and self-governing intentions and those whose structure was hierarchical and purpose was domination.

April 14, 1997

Professor Mark Lichbach, Department of Political Science, Colorado University, Boulder, Co, will be the guest speaker for the Workshop Colloquium on Monday, April 14, 1997. His presentation is entitled "The Rebel's Dilemma and the Cooperator's Dilemma: Reflections on the Collective Action Problem."

Over the past few years, I have published several books and articles that attempt to rationally reconstruct and critically evaluate the Collective Action Research Program (CARP). My rational reconstruction focuses on a typology -- Market, Community, Contract, and Hierarchy -- of the two dozen or more sets of solutions that have been proposed to the CA problem. My critical evaluation concentrates on a series of implications -- such as a Rikerian interpretation of CARP and the need to evaluate CA theories from Lakatosian and Popperian standards -- of this profusion of solutions. The goal of my talk is to stimulate a dialogue with members of the Workshop about our respective approaches to Mancur Olson's seminal problem.

April 7, 1997

Professor Michael Mcginnis, Department of Political Science and the Workshop in Political Theory and Policy Analysis, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, April 7, 1997. His presentation is entitled "Rent-Seeking, Redistribution, and Reform in the Governance of Global Markets." An abstract of his paper is provided below.

Governance is a set of services and a form of collective action. The basic premise of this paper is that the concept of governance needs to be broken down into its constituent service activities, each of which is provided by individuals or organizations specializing in the production or provision of that particular service. Since governance facilitates the operation of market exchange and other forms of interactions among the "consumers" of these governance services, any effort to arrange for this collective good necessarily confronts dilemmas of collective action. This paper draws on two efforts to systematize the multi-disciplinary literature on collective action. Lichbach (1995, 1996) organizes the full range of "solutions" to collective action dilemmas under four categories of Market, Contract, Hierarchy, and Community. Elsewhere I posit four "realms" of collective action, classifying organizations according to whether their primary activities are economic, coercive, social, or political (McGinnis 1996).

This paper justifies two general conclusions about the nature of governance of global markets. First, different sectors of the global political economy are characterized by different configurations of organizations, even though the same set of basic services are provided, in one manner or another, by the network of governance organizations in that sector. Whatever the configuration of governance, all experience similar tensions, including tendencies towards rent-seeking behavior even if governance services remain minimal. Second, the nature of the market in governance services implies that it is unreasonable to expect organizational forms that minimize transaction costs. This conclusion follows because of (1) the relative difficulty of entry into this market, given the many advantages held by pre-existing service organizations, and (2) some services that enhance adaptability to changing conditions also necessarily increase the costs of transacting. Of particular importance in this regard are the capacity for redistribution of resources and for reform of institutional arrangements.

In sum, those governance organizations that most effectively combine the provision of economic-productive, coercive-protective, and social-communal services are most likely to survive and prosper, since such organizations have a capacity for redistribution and reform that helps them adapt to the changes wrought by globalization.

March 10, 1997

Professor Toshio Yamagishi, Department of Behavioral Science, Hokkaido University, Sappora, Japan, will be the speaker for the Workshop Colloquium on Monday, March 10, 1997. His presentation in entitled "Trust and Gullibility." An abstract of his paper is provided below.

Does trust mean gullibility? The answer depends on the definition of trust. According to Rotter (1980), general trust or default expectation of other people's trustworthiness is independent of how one processes information about specific persons (gullibility in actual interactions).

Based on results from a series of experiments presented in this paper, I argue that general trust is supported by social intelligence, implying that high trusters are less gullible than low-trusters.

March 3, 1997

Professor Elmus Wicker, Department of Economics, Indiana University, will be the guest speaker for the Workshop Colloquium on Monday, March 3, 1997. His presentation is entitled "Were Panics of the National Banking Era Preventable?" An abstract of his paper is provided below.

Conventional wisdom has attributed the banking panics of the national banking era to special historical circumstances; structural weaknesses of the national banking system in conjunction with the normal seasonal flow of funds at crop moving time. Why the later has received so much attention is puzzling, since only three of the five panics occurred during the crop moving season and of these three, there is ample room for questioning whether there was a general banking panic in 1890! From the above diagnosis, the remedy emerged - the creation of the Federal Reserve System in 1913.

Could a purely voluntary association of New York Clearing House banks have averted the banking panics of the national banking era? We agree with Sprague who in 1910 maintained that the New York Clearing House (NYCH) lacked neither the knowledge nor the instruments to forestall banking panics.

We show that total reserves were adequate in all panics with the possible exception of 1873. The problems were an unequal distribution of reserves among the NYCH banks and no provision for the suspension of reserve requirements. The solution to these two problems resided in reserve pooling and the suspension of reserve requirements in emergencies. The NYCH may not have been the most effective institution for crafting a policy of collective action. What the argument of this paper demonstrates is that institutional failure and not the lack of knowledge nor the absence of policy instruments explains why the NYCH failed to prevent banking panics.

February 24, 1997

Tony Matejczyk, Doctoral Student, Department of Political Science, Indiana University, will be the guest speaker. His presentation is entitled "Zoning Exceptions in Cities: Politics and Outcomes." An abstract of his paper is provided below.

Abstract

This paper is about how ordinary citizens in urban settings use collective action to protect themselves from market dynamics. In cities, one of the main struggles that citizens face is how to control the use of land in their neighborhood to minimize the ill-effects or negative externalities from surrounding land uses. I examine the strategies that neighborhood organizations use over time to protect their jurisdictions from negative externalities that can be produced by land uses that require exceptions to the zoning code. I put forth and test a hypothesis that neighborhood organizations must, over time, mix oppositional or "nimby" stances on zoning exceptions with a willingness to compromise with developers in order for these neighborhood organizations to maintain their influence with the zoning boards, who rule on these cases. To test this hypothesis I employ primary-source data -- a random sample of over two hundred zoning cases from St. Paul, Minnesota. St. Paul is a city that has functioned as a laboratory for citizen participation -- by studying St. Paul it is possible to learn how institutionally "well-endowed" neighborhood organizations cope with difficult policy areas such as land use. This is an important question at a time in which devolution of governmental responsibilities to the local level is very much on the agenda of policymakers at all levels of government.

February 17, 1997

Nahoko Hayashi, Visiting Scholar, Department of Behavioral Science, Faculty of Letters, Hokkaido University, Sapporo, Japan, will be the guest speaker. Her presentation is entitled "Selective Play: Social Embeddedness of Social Dilemmas."An abstract of her paper is provided below.

Abstract

Past research on prisoner's dilemmas has traditionally dealt with isolated dyadic relations in which the two partners were "forced" to play with each other, and the wider context in which they are embedded has not been seriously paid attention to. Realizing the limitations of dealing with only isolated dyadic relations, some researchers set out to expand the scope of the research by dealing with n-person rather than two-person relationships. This expansion has been quite fruitful and has produced a large body or research called social dilemma research (see Dawes, 1980; Messick & Brewer, 1983; Yamagishi, 1995a, for reviews of social dilemma research). While this avenue has been quite successful as is clearly seen in the quality and variety of research presented in the above review articles, majority of the social dilemma or n-person dilemma literature remains to be characterized with the aforementioned "forced choice" paradigm. That is, n-person groups studied in the social dilemma literature are typically closed groups, and theoretical implications of the possibility of joining in and leaving the groups are not explored there. This traditional research paradigm may be called the "forced play" paradigm (Hayashi, 1995a) in the sense that players are "forced" to interact with a particular set of partners. Although the exit option was included in some of earlier studies of social dilemmas (e.g., Marwell & Schumitt, 1972; Orbell, Schwartz-Shea & Simmons, 1984) it was in the late 80's that social dilemma researchers, though small in number yet, started systematic research efforts to explore theoretical implications of the option for leaving the relationship and choosing a new partner. Resulting research paradigm may be called the "selective play" paradigm (Orbell & Dawes, 1991; Hayashi, 1995a). The purpose of this paper is to explore theoretical implications of this emerging new paradigm. An additional purpose of this chapter is to provide a chance for the English speaking reader to be exposed to a literature on selective play published or reported in Japanese.

January 20, 1997

Professor Burt Monroe, Department of Political Science, Indiana University, will be the guest speaker. His presentation is entitled "Information Aggregation Under Alternative Electoral Systems." An abstract is provided below.

Abstract

This paper examines the information aggregation properties, under game-theoretic assumptions, of voting under several alternative electoral systems. I first analyze two-alternative voting systems, pursuing the "game-theoretic Condorcet Jury Theorem" agenda initiated by Austen-Smith and Banks (1996); this analysis corroborates their (methodological) point, but draws more favorable conclusions about majority rule than has been inferred from their analysis. I then analyze multiple alternative electoral systems; this can be compared with preference aggregation analyses of the same systems, as well as with the statistical approach to the multiple alternative information aggregation problem that has been developed in the field of psychometrics. In both cases, significant new insights about the information aggregation properties of voting emerge.

Professor Elinor Ostrom, Workshop in Political Theory and Policy Analysis, Indiana University, will be the speaker. Her presentation is entitled "Self-Governance of Common-Pool Resources." An abstract of her paper is provided below.
Abstract

The extant theory of common-pool resources that presumed that external authorities were needed to impose new rules on those appropriators trapped into producing excessive externalities on themselves and others has now been shown to be a special theory of a more general theoretical structure. For appropriators to contemplate changing the institutions they face, they have to conclude that the expected benefits from an institutional change will exceed the immediate and long-term expected costs. When appropriators cannot communicate and have no way of gaining trust through their own efforts or with the help of the macroinstitutional system within which they are embedded, the predication of the earlier theory is likely to be empirically supported. Ocean fisheries, the stratosphere, and other global commons come closest to the appropriate empirical referents. If appropriators can engage in face-to-face bargaining and have autonomy to change their rules, they may well attempt to organize themselves. Whether they organize depends on attributes of the resource system and the appropriators themselves that affect the benefits to be achieved and costs of achieving them. Whether their self-governed enterprise succeeds over the long-term depends on whether the institutions they design are consistent with design principles underlying robust, long-living self-governed systems. The theory of common-pool resources has progressed substantially during the past half century. There are, however, many challenging puzzles to be solved.

Doctoral student, Brian Collins, Department of Political Science, Indiana University, will be the speaker. His presentation is entitled "Reducing the Costs of Democracy: Economic Growth in US States, 1983-1992."
Abstract

This paper works from the assumption that state governments in the US can either improve or undermine their state's economic growth. State governments are likely to adopt policies to support electoral coalitions at the expense of economic growth. This economic cost of democracy can be reduced, however. I propose that a contestable market for economic governance can constrain government opportunism. Institutional arrangements that facilitate low cost replacement of incumbent governments through relocation or electoral replacement provide the underpinnings of this contestable market and the resultant improvement in economic performance. I examine the relationship between growth in the gross state product of US states from 1983-1992 and four institutions: majority rule in state legislatures, voting eligibility requirements, interstate banking regulations, and territorial boundaries. My findings generally support my argument, but raise some questions about the relationship of state political economy versus international political economy. In particular, I would like to reserve some discussion for the issue of whether the EU can learn something from the US states in a federal system.

Professor Kerry Krutilla, School of Public and Environmental Affairs, Indiana University, will be the speaker for the Workshop Colloquium on Monday, February 10, 1997. His presentation is entitled "Environmental Policy and Rent Seeking." An abstract of his paper is provided below.

Abstract

The absence of clearly-specified rights is the raison d'etre of environmental policy. Environmental policy specifies rights, through a Coasean style delineation of alienable and transferable property rights, through government intervention which establishes de jure use rights, or through a variety of other cultural and/or institutional arrangements with which regular Workshop participants are quite familiar.

The delineation of rights creates winners and losers. In the unidirectional externality context, polluters are threatened with some loss of their freedom to pollute, while pollution recipients enjoy the prospect of some reduction of environmental damage they previously experienced. Although regulation-induced output and price effects can create supernormal rents, targeted polluters at least have an incentive to shape environmental regulation to minimize the impact, while parties suffering environmental damages, all else constant, have an incentive to lobby for pollution restrictions. This divergence of interests can create political conflict around the formulation of environmental policy.

It is a curious anomaly that the economics literature has largely ignored the normative dimensions of this conflict. This fact can be attributed to the powerful influence of the Coase theorem, in which the distributional ramifications of the property-rights definition have traditionally been assumed away. Instead, the Coase literature, and the environmental economics literature it has so strongly influenced, have traditionally focused on the efficiency properties of policy instruments after the rights are defined. It is our view that this focus of the Coase and derivative literatures is too narrow for adequate policy assessment. The fact that agents may have a greater incentive to rent-seek over the rights distribution than to bargain post the rights assignment is one indication of the possible importance of rent-seeking expenditure in a *fully specified* normative policy assessment. Further, there may be interactive effects between the economic consequences of policy and the degree of rent-seeking around the policy formulation itself, which are relevant for policy assessment. Consider the case where a market for pollution permits, if established, is likely to be hampered by low volume trading, informational asymmetries, and other impediments to market efficiency. This context provides an additional incentive to rent-seek at the policy formulation stage, since, under these conditions, polluters cannot attenuate economic losses through efficient ex post trading. The extra resources agents would spend, under these circumstances, to lobby against the adoption of the permit trading policy offers an additional rationale for choosing some other policy instrument. This kind of policy-relevant detail is lost in the usual approach, which assumes away the distributional consequences of the rights delineation.

Our paper focuses on the *omitted variable* in most environmental policy assessments -- the degree of rent-seeking around the rights definition. To do so, we stylize the problem to assume away efficiency differences post the rights assignment -- the opposite approach of the conventional literature -- allowing us to sharpen the focus on ex ante rent-seeking. In this context, we develop a model in which, for a given compensation regime, agents can either strike a Coase bargain or devote expenditures to probabilistically influence the establishment of a particular environmental policy. A reduced-form expression is then derived which shows the impact of four parameters on nash rent-seeking expenditures: the distribution of rights between the polluter and the pollution recipient; rent-seeking costs; the level of environmental damages; and the relative political leverage of agents. Perhaps our most significant finding is that, when information is perfect and the costs of organizing both rent-seeking and bargaining are zero, agents will always rent-seek, rather than bargain, and the aggregate level of rent seeking will be positively related to the degree to which the property rights are distributed to the externality-bearing party -- holding other parameters constant. Equilibrium rent-seeking expenditures are independent, per se, of whether the environmental policy instrument involves a property rights assignment, direct government regulation, incentive-based mechanisms, or an entitlement auction. These results cast doubt on the standard efficiency ranking of these policy instruments in the conventional environmental economics literature.

We also find that rent seeking will be directly proportional to the level of environmental damages, holding other parameters constant, and will increase the more symmetric is the political leverage of agents -- indicating the economic price of a democratic process in which agents have roughly the same degree of political influence to contest the use of valuable environmental resources. A fuller development and discussion of these findings will be deferred for the presentation.