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Full-Text Articles in Economic Theory
Political Legitimacy In Historical Political Economy, Avner Greif, Jared Rubin
Political Legitimacy In Historical Political Economy, Avner Greif, Jared Rubin
ESI Working Papers
Political legitimacy has long been recognized in the social sciences as an integral component of governance. It encourages obedience without the threat of force, thus lowering governing costs and improving the efficacy of policies. This chapter begins by overviewing the extensive literature on political legitimacy, classifying studies by whether they are based on the beliefs (regarding the legitimacy of the authority) or effectiveness (good governance is legitimate governance). Among the studies focusing on beliefs, most take legitimacy as an exogenous element of political authority. We develop a conceptual framework to study how beliefs regarding political legitimacy form endogenously and impact …
Who Withdraws First? Line Formation During Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia
Who Withdraws First? Line Formation During Bank Runs, Hubert János Kiss, Ismael Rodriguez-Lara, Alfonso Rosa-Garcia
ESI Working Papers
We study how lines form in front of banks. In our model, depositors choose first the level of effort to arrive early at the bank and then whether or not to withdraw their deposit. We argue that the informational environment (i.e., the possibility of observing the action of others) affects the emergence of bank runs and should, therefore, influence the line formation. We test this prediction experimentally. While the informational environment has no effect on the line formation when we look at the average level of effort, our findings suggest that the reasons to arrive early at the bank varies …
Trustors’ Disregard For Trustees Deciding Intuitively Or Reflectively: Three Experiments On Time Constraints, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
Trustors’ Disregard For Trustees Deciding Intuitively Or Reflectively: Three Experiments On Time Constraints, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
ESI Working Papers
Human decisions in the social domain are modulated by the interaction between intuitive and reflective processes. Requiring individuals to decide quickly or slowly triggers these processes and is thus likely to elicit different social behaviors. Meanwhile, time pressure has been associated with inefficiency in market settings and market regulation often requires individuals to delay their decisions via cooling-off periods. Yet, recent research suggests that people who make reflective decisions are met with distrust. If this extends to external time constraints, then forcing individuals to delay their decisions may be counterproductive in scenarios where trust considerations are important. In three Trust …
Economics Students: Self-Selected In Preferences And Indoctrinated In Beliefs, Antonio M. Espín, Manuel Correa, Alberto Ruiz-Villaverde
Economics Students: Self-Selected In Preferences And Indoctrinated In Beliefs, Antonio M. Espín, Manuel Correa, Alberto Ruiz-Villaverde
ESI Working Papers
There is much debate as to why economics students display more self-interested behavior than other students: whether homo economicus self-select into economics or students are instead “indoctrinated” by economics learning, and whether these effects impact on preferences or beliefs about others’ behavior. Using a classroom survey (n>500) with novel behavioral questions we show that, compared to students in other majors, econ students report being: (i) more self-interested (in particular, less compassionate or averse to advantageous inequality) already in the first year and the difference remains among more senior students; (ii) more likely to think that people will be unwilling …
The Ideological Roots Of Institutional Change, Murat Iyigun, Jared Rubin
The Ideological Roots Of Institutional Change, Murat Iyigun, Jared Rubin
ESI Working Papers
Why do some societies fail to adopt more efficient institutions in response to changing economic conditions? And why do such conditions sometimes generate ideological backlashes and at other times lead to transformative sociopolitical movements? We propose an explanation that highlights the interplay--or lack thereof--between new technologies, ideologies, and institutions. When new technologies emerge, uncertainty results from a lack of understanding how the technology will fit with prevailing ideologies and institutions. This uncertainty discourages investment in institutions and the cultural capital necessary to take advantage of new technologies. Accordingly, increased uncertainty during times of rapid technological change may generate an ideological …
Humans’ (Incorrect) Distrust Of Reflective Decisions, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
Humans’ (Incorrect) Distrust Of Reflective Decisions, Antonio Cabrales, Antonio M. Espín, Praveen Kujal, Stephen Rassenti
ESI Working Papers
Recent experiments suggest that social behavior may be shaped by the time available for decision making. It is known that fast decision making relies more on intuition whereas slow decision making is affected by reflective processes. Little is known, however, about whether people correctly anticipate the effect of intuition vs. reflection on others’ decision making. This is important in everyday situations where anticipating others’ behavior is often essential. A good example of this is the extensively studied Trust Game where the trustor, by sending an amount of money to the trustee, runs the risk of being exploited by the trustee’s …
When Income Depends On Performance And Luck: The Effects Of Culture And Information On Giving, Pedro Rey-Biel, Roman M. Sheremeta, Neslihan Uler
When Income Depends On Performance And Luck: The Effects Of Culture And Information On Giving, Pedro Rey-Biel, Roman M. Sheremeta, Neslihan Uler
ESI Working Papers
We study how giving depends on income and luck, and how culture and information about the determinants of others’ income affect this relationship. Our data come from an experiment conducted in two countries, the US and Spain, which have different beliefs about how income inequality arises. We find no cross-cultural differences in giving when individuals are informed about the determinants of income, but when uninformed, Americans give less than Spanish. Culture and information not only affect individual giving, but also the determinants of giving and the beliefs about how income inequality arises. Beliefs partially moderate cross-cultural differences in giving.
Do Liars Believe? Beliefs And Other-Regarding Preferences In Sender-Receiver Games, Roman M. Sheremeta, Timothy W. Shields
Do Liars Believe? Beliefs And Other-Regarding Preferences In Sender-Receiver Games, Roman M. Sheremeta, Timothy W. Shields
ESI Working Papers
We examine subjects‟ behavior in sender-receiver games where there are gains from trade and alignment of interests in one of the two states. We elicit subjects‟ beliefs, risk and other-regarding preferences. Our design also allows us to examine the behavior of subjects in both roles, to determine whether the behavior in one role is the best response to the subject‟s own behavior in the other role. The results of the experiment indicate that 60 percent of senders adopt deceptive strategies by sending favorable message when the true state of the nature is unfavorable. Nevertheless, 67 percent of receivers invest conditional …