Taxation and pricing when consumers value freedom

Suppose that beyond valuing the goods he consumes, a person also values freedom, which increases with the number of different bundles he can afford. We show that citizens may therefore favor proportional taxes over lump-sum taxes, progressive taxes over proportional taxes, quantity rationing over price increases, and fixed fees allowing unlimited use of a service.See, for instance, Nozick (1974) and Rawls (1971), although they disagree on the meaning of freedom.     

Optimal coalition size when making proposals is costly

Though some costs of proposing legislation are borne by individual congressmen, the benefits accrue to many. To encourage legislators to incur these costs, members may wish to form coalitions which are larger than a minimum majority, and they may want to allow the proposer of a policy to incorporate private benefits into his proposal.We gratefully acknowledge the comments of anonymous referees, N. Baigent, A. DeVany, B. Grofman, and N. Stoughton. We are solely responsible for any remaining errors. The Securities and Exchange Commision, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed here are those of the authors and do not necessarily reflect the views of the Commission or the authors' colleagues on the Staff of the Commission.     

On Optimal Rules of Persuasion

A speaker wishes to persuade a listener to accept a certain request. The conditions under which the request is justified, from the listener's point of view, depend on the values of two aspects. The values of the aspects are known only to the speaker and the listener can check the value of at most one. A mechanism specifies a set of messages that the speaker can send and a rule that determines the listener's response, namely, which aspect he checks and whether he accepts or rejects the speaker's request. We study mechanisms that maximize the probability that the listener accepts the request when it is justified and rejects the request when it is unjustified, given that the speaker maximizes the probability that his request is accepted. We show that a simple optimal mechanism exists and can be found by solving a linear programming problem in which the set of constraints is derived from what we call the L‐principle.     

LEGISLATIVE TURNOVER,FISCAL POLICY,AND ECONOMIC GROWTH: EVIDENCE FROM U.S. STATE LEGISLATURES

Increased turnover among legislators can make them short‐sighted, affecting fiscal policy and economic growth. We exploit the exogenous variation in legislative turnover induced by term limit laws and by redistricting in the 50 U.S. states, finding that increased turnover increases capital spending by state governments, which may be designed to constrain future governments. The changes may cause long‐run distortions in the economy, reducing long‐term economic growth. (JEL H72, H73, H76)     

On the Trail of Courageous Behavior

This article is an examination of courageous behavior as manifested in the activities of American whistleblowers and environmental activists in the United States, Israel, and the former Czechoslovakia. It examines how these dissenters against illegal or unethical behavior were able to sustain their demand for accountable behavior by government and industry. The article, which draws upon interviews with sixty-four whistle-blowers and one hundred and forty activists, union officials, business executives and journalists, focuses on the significance of social capital in generating protest; the whistleblowers' and activists' strong cultural commitment to the efficacy of action; their determination to accumulate the evidence and expertise; their ability to secure strategically placed allies; and their mechanisms for overcoming fear and intimidation. The authors conclude by indicating the significance of sociology in analyzing, legitimizing, and publicizing the contributions of courageous individuals to the creation and maintenance of a democratic society.     

AN EXPRESSIVE VOTING THEORY OF STRIKES

Union members may vote for a strike even if they do not expect to thereby increase their wages. For under majority voting any one member's vote for a strike is unlikely to be decisive. A union member who obtains a non-infinitesimal emotional benefit from the act of voting for a strike may therefore vote in its favor. This hypothesis can explain the existence of strikes and the conditions which make strikes especially likely.