Efficient Political Equilibria and Resource Policy under a Myopic Government
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Despite its theoretical flexibility, most studies applying the dynamic common agency framework have adopted some restrictions on the preferences and the action space as a simpler way of characterising “truthful” equilibria mainly due to its dynamic complexity. In this paper, we present a simple two-period version of the overlapping generation model in order to study intergenerational conflicts in resource use. The model assumes usual non-linear preferences for interest groups and a short-lived government and we study, through simulation, the political equilibria in truthful strategies, as suggested by Bernheim and Whinston (1986). In contrast to the “Take It Or Leave It(TIOLI)” equilibrium analysed in Hwang and Magris(2005), the truthful equilibrium is efficient. The comparison between the truthful and the TIOLI equilibrium highlights the difference between the logic of political compromise and that of partisan politics.
Abstract
Despite its theoretical flexibility, most studies applying the dynamic common agency framework have adopted some restrictions on the preferences and the action space as a simpler way of characterising “truthful” equilibria mainly due to its dynamic complexity. In this paper, we present a simple two-period version of the overlapping generation model in order to study intergenerational conflicts in resource use. The model assumes usual non-linear preferences for interest groups and a short-lived government and we study, through simulation, the political equilibria in truthful strategies, as suggested by Bernheim and Whinston (1986). In contrast to the “Take It Or Leave It(TIOLI)” equilibrium analysed in Hwang and Magris(2005), the truthful equilibrium is efficient. The comparison between the truthful and the TIOLI equilibrium highlights the difference between the logic of political compromise and that of partisan politics.
참고문헌 (9)
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