Political Economy for Public Policy

426 Pages·2016·4.419 MB·English

by  Ethan Bueno de Mesquita

POLITICAL ECONOMY
FOR PUBLIC POLICY
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POLITICAL ECONOMY
FOR PUBLIC POLICY
Ethan Bueno de Mesquita
PRINCETONUNIVERSITYPRESS
PrincetonandOxford
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Copyright c 2016byPrincetonUniversityPress
!
PublishedbyPrincetonUniversityPress,41WilliamStreet,
Princeton,NewJersey08540
IntheUnitedKingdom:PrincetonUniversityPress,6OxfordStreet,
Woodstock,OxfordshireOX201TW
press.princeton.edu
AllRightsReserved
LibraryofCongressCataloging-in-PublicationData
Names:BuenodeMesquita,Ethan,author.
Title:Politicaleconomyforpublicpolicy/EthanBuenodeMesquita.
Description:Princeton,N.J.:PrincetonUniversityPress,2016.
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Includesbibliographicalreferencesandindex.
Identifiers:LCCN2015047630 ISBN9780691168739(hardcover:alk.paper)
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ISBN9780691168746(pbk.)
Subjects:LCSH:Economics. Politicalplanning. Policysciences.
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Classification:LCCHB71.B7852016 DDC330–dc23LCrecordavailableat
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http://lccn.loc.gov/2015047630
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ThisbookhasbeencomposedinITCStoneSerifandAvenirLTStd
Printedonacid-freepaper.
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TypesetbyNovaTechsetPvtLtd,Bangalore,India
PrintedintheUnitedStatesofAmerica
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Formyparents,ArleneandBruceBuenodeMesquita
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Summary of Contents
PolicyApplications xvii
Preface xix
Introduction 1
I
NORMATIVEFOUNDATIONS 11
1
NormativeFrameworks 13
2
CollectiveGoals 51
3
ParetoConcepts 74
SummingUpNormativeFoundations 95
II
SOCIALDILEMMAS 97
4
Externalities 99
5
CoordinationProblems 150
6
CommitmentProblems 173
SummingUpSocialDilemmas 191
III
CONSTRAINTSONGOODGOVERNANCE 193
7
StrategicAdjustment 197
8
DynamicInconsistency 218
9
TheNeedforInformation 244
10
InfluenceoverElectedOfficials 282
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viii SummaryofContents
11
Institutions,Incentives,andPower 305
SummingUpConstraintsonGoodGovernance 328
ConcludingReflectionsonPoliticsandPolicy 331
IV
APPENDICESONGAMETHEORY 335
A
Utility,Strategic-FormGames,andNashEquilibrium 337
B
Extensive-FormGames 362
Bibliography 385
IndexofReferencedAuthors 393
GeneralIndex 396
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Contents
PolicyApplications xvii
Preface xix
ForWhomIsThisBookWritten? xx
AWordonToneandTechnicality xx
Acknowledgments xxi
Introduction 1
ThreeGoals 4
TheRoleofModels 5
WhyRationality? 7
I
NORMATIVEFOUNDATIONS 11
1
NormativeFrameworks 13
1.1 WhatIsaNormativeFramework? 15
1.1.1 Privatevs.PublicMorality 16
1.2 Utilitarianism 17
1.2.1 WhyBeaUtilitarian? 18
1.2.2 SomeProblemsforUtilitarianism 21
1.3 Egalitarianism 27
1.3.1 EqualityofOutcomes 28
1.3.2 EqualityofOpportunity 32
1.4 KantianDeontology 37
1.4.1 DeontologyandtheChallengestoUtilitarianism 39
1.4.2 ChallengesforDeontologicalThinking 39
1.5 Libertarianism 41
1.5.1 WhyBeaLibertarian? 43
1.5.2 SomeProblemsforLibertarianism 44
1.6 Takeaways 45
1.7 FurtherReading 46
1.8 Exercises 47
2
CollectiveGoals 51
2.1 RationalIndividuals 52
2.2 AggregationProcedures 53
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x Contents
2.3 EvaluativeCriteriaforAggregationProcedures 55
2.3.1 TransitivityofSocialPreferences 56
2.3.2Unanimity 57
2.3.3IndependenceofIrrelevantAlternatives 58
2.4 Arrow’sTheorem 60
2.5 SocialDecisionsInsteadofSocialPreferences 61
2.6 ThePublicInterest? 63
2.6.1 OnlyTwoAlternatives:May’sTheorem 63
2.6.2RulingOutSomeCollectionsofPreferences:TheMedian
VoterTheorem 64
2.6.3IntensityofPreferences 69
2.6.4Agreement 70
2.7 Takeaways 70
2.8 FurtherReading 71
2.9 Exercises 71
3
ParetoConcepts 74
3.1 ParetoConcepts 75
3.2 FromParetoEfficiencytoParetoImprovements 76
3.3 AModelofPoliciesandPreferences 77
3.3.1 ActionsandTransfers 77
3.3.2QuasiLinearity:ABridgefromParetoEfficiencyto
ParetoImprovement 78
3.4 ABridgeTooFar? 84
3.4.1 LimitedTransfersandDistributionalConcerns 84
3.4.2NonQuasiLinearPreferences 85
3.5 RelationshiptoCost-BenefitAnalysis 87
3.6 AreParetoImprovementsUnambiguouslyinthe
PublicInterest? 89
3.7 Takeaways 90
3.8 FurtherReading 91
3.9 Exercises 91
3.10Appendix:ProofofTheorem3.3.1 93
SummingUpNormativeFoundations 95
II
SOCIALDILEMMAS 97
4
Externalities 99
4.1 CollectiveAction 101
4.1.1 TheSocialDilemma 104
4.1.2 Interpretations 104
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