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Reciprocity and resistance to comprehensive reform

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Abstract

Comprehensive reforms often fail, despite being beneficial to society. Politicians may block comprehensive reforms in an attempt to form vote trading coalitions in which they benefit from a piecemeal reform at the expense of others. Because formal commitment devices for vote trading are frequently missing, trust and reciprocity among legislators can play an important role for vote trading. We investigate in a laboratory experiment whether legislators will impede comprehensive reforms in an attempt to form vote trading coalitions even if formal commitment devices for vote trading after reform failure are missing. We find that open ballots allow for vote trading without commitment, based on trust and reciprocity. In turn, legislators frequently reject efficient comprehensive reforms in such institutions.

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Notes

  1. For a comprehensive survey on resistance to reform see also Heinemann (2004).

  2. McKelvey and Ordershook also ran treatments in which any majority of participants could agree on passing or failing bills by signing an agreement card (with unrestricted discussion beforehand). In these treatments they mainly observe fair outcomes in three-player games and support for the competitive solution in five-player games.

  3. We do so in order to abstract from additional reasons affecting coalition formation such as overrepresentation of own preference intensities (see, e.g., Myerson and Satterthwaite 1983; Casella 2005; Jackson and Sonnenschein 2007; Engelmann and Grimm 2012).

  4. A copy of translated instructions can be found in the working paper version of this article at http://www.twi-kreuzlingen.ch/uploads/tx_cal/media/TWI-RPS-051-Fischbacher-Schudy-2010-05.pdf.

  5. For a risk-neutral subject, the probability of reward p r is sufficiently high if p r >1/3 because voting for another’s bill costs two points whereas reward yields six additional points.

  6. The proof of this proposition can be found in Appendix A.

  7. Proof of Proposition 2 can be found in Appendix B. Note also that due to the random matching procedure, there is no incentive for individual reputation building across periods, which might induce any additional motives for supporting monetarily unfavorable reforms.

  8. The number of observations in Table 3 is calculated as follows: In OpenBallotCR reform failure occurred in 158 out of 252 cases. In SecretBallotCR reform failure occurred in 97 out of 204 cases. Thus in total there exist 255 situations in the CR treatments in which two subjects can cast a vote for an unfavorable bill which yields (2×255)=510 observations. For the NoCR treatments the number of observations can be easily derived from the number of subjects (51+54=105). Two-thirds of 105 subjects make a decision in 12 periods which yields a total of 540 observations. Note further that we cluster on the matching groups in order to control for players’ experience.

  9. In order not to crowd the table unnecessarily we do not here include the regressions results for the third bill.

  10. This share has to be considered as a lower bound for efficiency concerns, because not accepting subsequent bills after one’s own bill failed can be caused by negative reciprocity too.

  11. To control for possible end-game effects, we also ran the regressions in Table 5 including a last period dummy. For both, reward and trust, the last period dummy is negative, but statistically insignificant. The coefficient of transparency is robust. For reward, the time trend variable is still negative but statistically insignificant. The coefficient of the interaction term (Period-1) × Comprehensive Reform Treatment is robust.

  12. The latter difference is not statistically significant (Probit with robust standard errors, p-val.>0.10).

  13. The latter difference is statistically significant (Probit with robust standard. errors, p-val.<0.10).

  14. We cannot infer whether the latter increase is due to positive signaling or because members preferring the third bill expect the second bill to be passed anyway and therefore have nothing to lose by voting for the second bill.

  15. Probit regressions with robust standard errors, p-values<0.06.

  16. To control for possible end-game effects, we also ran the regressions in Table 9 including a last period dummy. For reward (Open and Secret Ballot) and trust (Secret Ballot), the regression results are robust and the last period dummy is statistically insignificant. For trust in Open Ballot, the last period dummy is negative and statistically significant at the ten percent level.

  17. We thank an anonymous referee for pointing this out.

  18. See, for instance, Geng et al. (2011), who investigate how two different types of electoral campaigns (self-descriptions of personality and promises regarding prospective in-office behavior) affect choices by elected representatives. The authors find supporting evidence for the guilt aversion hypothesis (Charness and Dufwenberg 2006). When elections were promise-based elected candidates transferred more money to recipients than candidates selected by a random draw (although promises did not differ). Also, promises and beliefs on voter expectations were positively correlated but correlations between dictators’ second-order beliefs and their choices were weaker than predicted. Further, results from Weiss and Wolff (2013) cast doubt on the robustness of the finding that a voting mechanism may create or strengthen an entitlement effect in political-power holders.

  19. See, e.g., Leibbrandt and Sääksvuori (2012).

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Acknowledgements

We would like to thank two anonymous referees as well as Katharine Bendrick, Lisa Bruttel, Gerald Eisenkopf, Franziska Föllmi-Heusi, Sabrina Teyssier, Verena Utikal, Irenaeus Wolff and participants of the ESA European Meeting 2009, the GfeW Meeting 2009, the annual meeting of the Verein für Socialpolitik 2011 and the Thurgau Experimental Economics Meeting 2012 for helpful thoughts and comments.

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Authors and Affiliations

  1. Thurgau Institute of Economics, University of Konstanz, Post Box 131, 78457, Konstanz, Germany

    Urs Fischbacher & Simeon Schudy

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  1. Urs Fischbacher
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  2. Simeon Schudy
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Correspondence to Simeon Schudy.

Appendices

Appendix A: Proof of Proposition 1

With the following two assumptions, we derive Proposition 1:

  1. (i)

    Legislators are reciprocal and do not support bills of legislators who turned down their own bill

  2. (ii)

    Legislators do not discriminate against particular counterparts, i.e., they treat agents differently only when they have different information about their behavior

Proposition 1

The approval of the second bill and the approval of the third bill are not more likely than the approval of the first bill.

Proof

If the first bill is not accepted then both the second and the third beneficiary have turned down the first bill. According to (i) the first beneficiary will not vote for any subsequent bill. Further, because of (ii), the third beneficiary will also vote against the second bill. Finally, the third bill also will be turned down because the third beneficiary did not support any preceding bill. Thus, it is not possible that the second or the third bill is approved more frequently than the first bill. □

Appendix B: Proof of Proposition 2

Assuming (i), (ii) and

  1. (iii)

    Subjects in the role of the third beneficiary do not vote more frequently for the first bill than subjects in the role of the second beneficiary,

we derive Proposition 2.

Proposition 2

The approval of the third bill is not more likely than the approval of the second bill.

Proof

We first prove the proposition for voting with partial information. Let us start with the case in which the first bill fails. As we have seen in the proof for Proposition 1, both the second and the third bills will be turned down in this case. We now turn to the case in which the first bill is approved. From (ii), the first beneficiary either votes for both or none of the subsequent bills. If she accepts both bills, both the second and third bills are approved. If she votes against the second and third bills, the second bill can fail only if the third beneficiary votes against it. However, in this case the third bill will also receive no support by the second beneficiary (due to (i)) and likewise will fail.

Let us now turn to the full information case. So far, we have shown that when a bill fails, the subsequent bills fail as well. This is not necessarily true in the full information condition. Here it is possible that the third beneficiary supports only the first beneficiary and receives reward from the first beneficiary whereas the second beneficiary does not support the first bill and receives support neither from the first beneficiary (due to (i)) nor from the third beneficiary because the third beneficiary knows that the second beneficiary turned down the first bill. Hence it is in general possible to observe the committee passing only the first and the third bills. We will now show that it is nevertheless not possible that the third bill is on average approved more frequently than the second due to (iii). Consider two different matching protocols: In matching 1, participant A is the first beneficiary, participant B is the second and participant C is the third beneficiary. Thus participant A received support from participant C and therefore also voted for participant C’s bill. In matching 2 instead the participants are matched differently so that participant A is still the first beneficiary, but participant C is now second beneficiary and participant B is now the third beneficiary. This means that participant A received support from participant C, who is now second beneficiary, and participant B, who is now third beneficiary, does not vote for the first bill, and due to (i) and (ii) does not receive any support. Thus with random matching we can conclude that on average the third bill cannot be approved more frequently than the second bill. □

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Fischbacher, U., Schudy, S. Reciprocity and resistance to comprehensive reform. Public Choice 160, 411–428 (2014). https://doi.org/10.1007/s11127-013-0097-3

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