Abstract
Ancient Athens developed a constitutional democracy. A core, time invariant political economy problem is that of providing public services when wealth is imperfectly know. I model theoretically a unique institution developed in Ancient Athens known as the Antidosis. It allowed a citizen on the list of tax-payers to challenge a citizen not contributing to replace him and make the public goods contribution. The challenged citizen, rather than allow the claim to go before a jury trial, could choose to swap wealth with the accusing tax payer. I argue this acts as a screening mechanism and improves upon the asymmetric information problem the government has in identifying who is indeed those who have the highest wealth to provide the tax revenue to finance the public services.
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Notes
One can date the beginnings of constitutional governance to Drako in 621 B.C. as it is the first (known) time that the power of the elite in Ancient Athens was restrained. Alternatively, the Classical period in Athens is frequently dated from the introduction of Kleisthenes’ constitution in 508 B.C. This constitution was developed when the tyranny of Pisistratus (and his sons) was overthrown by the Athenian people with the help of Sparta. This tyranny was a departure from Solon’s constitution and Kleisthenes’ objective was to re-install the laws of Solon. Aristotle’s Constitution of Athens attempted to lay out the historical constitution of Solon. Thus, dating the origination of the unique constitutional democracy to Solon is appropriate. See Robinson (1997) for a discussion of other Greek societies who developed democratic governments as well. It is by far the best documented though.
It is worth qualifying the statement. Non-wealthy citizens made contributions as well. These contributions were typically through providing labor. Thus, the antidosis procedure is used for identifying the citizens who provide monetary payments to the public.
Throughout, modern terminology such as plaintiff, jury, trials, courtrooms, etc. will be used to ease the exposition. When possible the names of the Athenian institutions will be used. I do not engage in the debate over whether it is more proper to refer to trials being presided over by judges or jurors and I do not elaborate on the many procedural differences between modern courts and those in Classical Athens. For more details on Athenian courts, see MacDowell (1978) and McCannon (2010a, b, 2011).
Relatedly, the study of the formation of the polis has received separate attention (Lyttkens 2006).
Athens lost the Peloponnesian War in 404 B.C. The war dramatically reduced the elite’s wealth and with obvious losses to its labor force coupled with trade restrictions placed on Athens by Sparta, incomes can be expected to be significantly lower. Thus, the expansion in the tax base was done to lower the tax burden on the elites.
Hansen (1991) categorizes liturgies into three groupings: festivals, trierarchy, and proeisphora.
It is worth pointing out that, as noted by Hansen (1991), there is not any surviving historical account of the change in property actually taking place. This, though, can be expected since what is frequently observed is court speeches and the swapping of assets avoids this.
Halkos and Kyriazis (2010) also consider asymmetric information in Classical Athens. They model the conflict between Persia and Athens as a signaling game.
Of course, a third option is available. The citizen could simple concede and pay the tax. Since there is no evidence of a “trial penalty” to contesting the claim before a jury of Athenian citizens, an assumption that the probability of a jury verdict, not in favor of the citizen, is less than one results in going to trial dominating the concession. This does assume, though, that there is no benefit to taking on the liturgical responsibility. While public notoriety could be gained, the citizen could have volunteered for the liturgy, without having to be charged by the tax-payer. Thus, taking on the liturgy after being contested would be selected if there was a sufficient loss in social capital by challenging the responsibility. This issue is not addressed here.
A full development of the Bayesian Nash equilibrium would require identifying the set of \(w^{*}\) that satisfies the individual rationality and incentive compatibility requirements. See Bjerk (2007) or McCannon (2010a) for these derivations. To keep the analysis concise, I focus here on the payoffs and decision making of the parties to the dispute.
Formally, the Perfect Bayesian equilibria will be derived. As stated in footnote 8, to simplify the analysis the strategy selection of the jury is not presented here. To summarize, though, there exists a range of values of \(w^{*}\) that can be supported as Perfect Bayesian Nash Equilibria. The screening mechanism improves the quality of the information available to the jury. A jury who cares about accuracy will shift this interval to the left, allowing for more modest wealth discrepancies.
The theoretical model assumes implicitly that there is no cost to taking a case to trial. This assumption, while not affecting the main message of the work, is not inconsequential. Including a fixed cost would change the threshold value for the error term \(\upvarepsilon^{*}\). Additionally, in the Perfect Bayesian Nash Equilibria one would expect, then, that J’s willingness to convict will adjust. Therefore, the value of \(w^{*}\) changes.
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The paper has been improved from conversations and advice from Dan D’Amico, Geoffrey Lea, Andy Young, two anonymous referees, and participants of the Association of Private Enterprise Education meetings. I have also benefited from useful discussions on ancient institutions with George Bitros, Giuseppe Dari-Mattiacci, Rob Fleck, Andy Hanssen, Michael Gagarin, and Francesco Parisi. I appreciate all of these interactions.
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McCannon, B.C. Who pays taxes? Liturgies and the Antidosis procedure in Ancient Athens. Const Polit Econ 28, 407–421 (2017). https://doi.org/10.1007/s10602-017-9249-7
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DOI: https://doi.org/10.1007/s10602-017-9249-7