IDEAS home Printed from https://ideas.repec.org/a/sae/jothpo/v14y2002i4p409-438.html
   My bibliography  Save this article

A Principal-Agent Model of Elections with Novice Incumbents

Author

Listed:
  • Sugato Dasgupta

    (Michigan State University, Kenneth.Williams@ssc.msu.edu)

  • Kenneth C. Williams

    (Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi)

Abstract

The efficient aggregation of information is a prerequisite for the operation of a democratic system. In order for political office-holders to act responsively so that policy outcomes reflect public sentiments, sufficient levels of information about their actions must be aggregated within the electorate. This is fundamental since very few citizens will be aware of the office-holder’s actions. One way in which information is aggregated is through public opinion polls. This mechanism extracts information from informed citizens and transmits it in a manner so that collectively the electorate behaves as if it were fully informed. We examine this aggregation process within a principal-agent model of elections. We further assume novice incumbents whose choices are more uncertain than experienced public officials. A rational expectations equilibrium is specified in which uninformed citizens condition their beliefs on poll results. Laboratory experiments are conducted to test the predictions of the model. We find that, compared to competing models, a rational expectations hypothesis best explains the aggregation process.

Suggested Citation

  • Sugato Dasgupta & Kenneth C. Williams, 2002. "A Principal-Agent Model of Elections with Novice Incumbents," Journal of Theoretical Politics, , vol. 14(4), pages 409-438, October.
    • Handle: RePEc:sae:jothpo:v:14:y:2002:i:4:p:409-438
    DOI: 10.1177/095162902774006813
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/095162902774006813
    Download Restriction: no
    File URL: https://libkey.io/10.1177/095162902774006813?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sunder, Shyam, 1992. "Market for Information: Experimental Evidence," Econometrica, Econometric Society, vol. 60(3), pages 667-695, May.
    2. Radner, Roy, 1979. "Rational Expectations Equilibrium: Generic Existence and the Information Revealed by Prices," Econometrica, Econometric Society, vol. 47(3), pages 655-678, May.
    3. John Ledyard, 1984. "The pure theory of large two-candidate elections," Public Choice, Springer, vol. 44(1), pages 7-41, January.
    4. Plott, Charles R & Sunder, Shyam, 1982. "Efficiency of Experimental Security Markets with Insider Information: An Application of Rational-Expectations Models," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 663-698, August.
    5. Sanford J. Grossman, 1981. "An Introduction to the Theory of Rational Expectations Under Asymmetric Information," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(4), pages 541-559.
    6. Forsythe, Robert & Lundholm, Russell, 1990. "Information Aggregation in an Experimental Market," Econometrica, Econometric Society, vol. 58(2), pages 309-347, March.
    7. McKelvey, Richard D. & Ordeshook, Peter C., 1985. "Elections with limited information: A fulfilled expectations model using contemporaneous poll and endorsement data as information sources," Journal of Economic Theory, Elsevier, vol. 36(1), pages 55-85, June.
    8. Richard McKelvey & Peter Ordeshook, 1984. "Rational expectations in elections: some experimental results based on a multidimensional model," Public Choice, Springer, vol. 44(1), pages 61-102, January.
    9. Forsythe, Robert & Palfrey, Thomas R & Plott, Charles R, 1982. "Asset Valuation in an Experimental Market," Econometrica, Econometric Society, vol. 50(3), pages 537-567, May.
    10. Harrington Jr. , Joseph E., 1993. "The Impact of Reelection Pressures on the Fulfillment of Campaign Promises," Games and Economic Behavior, Elsevier, vol. 5(1), pages 71-97, January.
    11. Morton, Rebecca B., 1993. "Incomplete Information and Ideological Explanations of Platform Divergence," American Political Science Review, Cambridge University Press, vol. 87(2), pages 382-392, June.
    12. Plott, Charles R & Sunder, Shyam, 1988. "Rational Expectations and the Aggregation of Diverse Information in Laboratory Security Markets," Econometrica, Econometric Society, vol. 56(5), pages 1085-1118, September.
    13. Melvin J. Hinich & Michael C. Munger, 1992. "A Spatial Theory of Ideology," Journal of Theoretical Politics, , vol. 4(1), pages 5-30, January.
    14. Lupia, Arthur, 1994. "The Effect of Information on Voting Behavior and Electoral Outcomes: An Experimental Study of Direct Legislation," Public Choice, Springer, vol. 78(1), pages 65-86, January.
    15. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    16. Banks, Jeffrey S., 1990. "A model of electoral competition with incomplete information," Journal of Economic Theory, Elsevier, vol. 50(2), pages 309-325, April.
    17. John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
    18. Cukierman, Alex, 1991. "Asymmetric Information and the Electoral Momentum of Public Opinion Polls," Public Choice, Springer, vol. 70(2), pages 181-213, May.
    19. Robert Barro, 1973. "The control of politicians: An economic model," Public Choice, Springer, vol. 14(1), pages 19-42, March.
    20. Lucas, Robert Jr., 1972. "Expectations and the neutrality of money," Journal of Economic Theory, Elsevier, vol. 4(2), pages 103-124, April.
    21. Kenneth Collier & Richard McKelvey & Peter Ordeshook & Kenneth Williams, 1987. "Retrospective voting: An experimental study," Public Choice, Springer, vol. 53(2), pages 101-130, January.
    22. Grofman, Bernard & Norrander, Barbara, 1990. "Efficient Use of Reference Group Cues in a Single Dimension," Public Choice, Springer, vol. 64(3), pages 213-227, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Markussen, Thomas & Tyran, Jean-Robert, 2017. "Choosing a public-spirited leader: An experimental investigation of political selection," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 204-218.
    2. Enriqueta Aragones & Thomas R. Palfrey, 2002. "The Effect of Candidate Quality on Electoral Equilibrium: An Experimental Study," UFAE and IAE Working Papers 530.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    3. Cesar Martinelli & Thomas R. Palfrey, 2017. "Communication and Information in Games of Collective Decision: A Survey of Experimental Results," Working Papers 1065, George Mason University, Interdisciplinary Center for Economic Science.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nuzzo, Simone & Morone, Andrea, 2017. "Asset markets in the lab: A literature review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 13(C), pages 42-50.
    2. Plott, Charles R. & Llewellyn, Morgan, 2015. "Information transfer and aggregation in an uninformed committee: A model for the selection and use of biased expert advice," European Journal of Political Economy, Elsevier, vol. 40(PB), pages 208-223.
    3. Cesar Martinelli & Thomas R. Palfrey, 2017. "Communication and Information in Games of Collective Decision: A Survey of Experimental Results," Working Papers 1065, George Mason University, Interdisciplinary Center for Economic Science.
    4. Jason Shachat & Anand Srinivasan, 2022. "Informational Price Cascades and Non-Aggregation of Asymmetric Information in Experimental Asset Markets," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 23(4), pages 388-407, November.
    5. Martin Barner & Francesco Feri & Charles R. Plott, 2005. "On the microstructure of price determination and information aggregation with sequential and asymmetric information arrival in an experimental asset market," Annals of Finance, Springer, vol. 1(1), pages 73-107, January.
    6. Tangerås, Thomas, 1998. "On the Role of Public Opinion Polls in Political Competition," Seminar Papers 655, Stockholm University, Institute for International Economic Studies.
    7. David M Pennock & Sandip Debnath & Eric Glover & C. Lee Giles, 2012. "Modelling Information Incorporation in Markets, with Application to Detecting and Explaining Events," Papers 1301.0594, arXiv.org.
    8. Kay-Yut Chen & Leslie R. Fine & Bernardo A. Huberman, 2001. "Forecasting Uncertain Events with Small Groups," Papers cond-mat/0108028, arXiv.org.
    9. Veiga, Helena & Vorsatz, Marc, 2009. "Price manipulation in an experimental asset market," European Economic Review, Elsevier, vol. 53(3), pages 327-342, April.
    10. Juan Carlos Berganza, 1998. "Relationships Between Politicians and Voters Through Elections: A Review Essay," Working Papers wp1998_9809, CEMFI.
    11. Yasushi Asako, 2015. "Campaign promises as an imperfect signal: How does an extreme candidate win against a moderate candidate?," Journal of Theoretical Politics, , vol. 27(4), pages 613-649, October.
    12. Juan Carlos Berganza, 2000. "Politicians, voters and electoral processes: an overview," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 501-543, September.
    13. Haifeng Huang, 2010. "Electoral Competition When Some Candidates Lie and Others Pander," Journal of Theoretical Politics, , vol. 22(3), pages 333-358, July.
    14. Kay-Yut Chen & Leslie R. Fine & Bernardo A. Huberman, 2004. "Eliminating Public Knowledge Biases in Information-Aggregation Mechanisms," Management Science, INFORMS, vol. 50(7), pages 983-994, July.
    15. Sugato Dasgupta & Kenneth C. Williams, 1995. "Search Behavior Of Asymmetrically Informed Voters: An Experimental Study," Economics and Politics, Wiley Blackwell, vol. 7(1), pages 21-41, March.
    16. Andrew Lo & Nicholas Chan & Blake LeBaron & Tomaso Poggio, 1999. "Information Dissemination and Aggregation in Asset Markets with Simple Intelligent Traders," Computing in Economics and Finance 1999 653, Society for Computational Economics.
    17. Lambert, Nicolas S. & Langford, John & Wortman Vaughan, Jennifer & Chen, Yiling & Reeves, Daniel M. & Shoham, Yoav & Pennock, David M., 2015. "An axiomatic characterization of wagering mechanisms," Journal of Economic Theory, Elsevier, vol. 156(C), pages 389-416.
    18. Sugato Dasgupta, 2009. "The disciplining role of repeated elections: some experimental evidence," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(2), pages 165-190.
    19. Lawrence Choo & Todd R. Kaplan & Ro’i Zultan, 2019. "Information aggregation in Arrow–Debreu markets: an experiment," Experimental Economics, Springer;Economic Science Association, vol. 22(3), pages 625-652, September.
    20. Brice Corgnet & Cary Deck & Mark DeSantis & Kyle Hampton & Erik O. Kimbrough, 2023. "When Do Security Markets Aggregate Dispersed Information?," Management Science, INFORMS, vol. 69(6), pages 3697-3729, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jothpo:v:14:y:2002:i:4:p:409-438. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.