6 - Political Economy Flashcards
Suggest two social choice problem
- Preference revelation
- Aggregating preferences
Explain social choice problem 1: preference revelation
Explain Gibbard-Satterthwaite Theorem
1) Explain the social choice problem 2: aggregating preferences
2) Which 3 conditions should consistent aggregation needs to fulfill?
1) Evaluate voting as a preference aggregator
2) Can voting produce a consistent aggregation of preferene?
Why voting equilibrium is not guaranteed?
(revise question)
Condorcet Paradox
- Majority voting does not lead to stable outcome
- Example:
- Voting on police spending by 3 individuals
- Can choose high (H), medium (M) or low (L) level of spendin
Explain Arrow’s impossibility theorem (1951)
Explain median voter theorem
Explain single-peaked preferences
Single-peaked preferences are a kind of preference relations. A group of agents is said to have single-peaked-preferences if:
- Each agent has an ideal choice in the set; and
- For each agent, outcomes that are further from his ideal choice are preferred less.
Median voter outcome in the public goods example: efficiency
**Taxation and Transfer
Derive the tax rate that maximises workers’ utility
MT Lecture 6 P.17
Explain corruption as an agency problem
Explain Olken (2006) experiment of a large anti-poverty program regarding corruption
Explain Bertrand (2007) experiment on corruption
Explain electoral accountability
Special-interest policies (Becker 1963)
When should government provide a service inhouse and when to contract it out?
New contract theory
Privatization vs state provision
Summary of Political economy
