This paper presents a new model of political parties. I assume that the role of parties is to increase the commitment ability of politicians vis-à-vis the voters. Whereas a politician running alone can only offer his ideal policy, the set of policies that a party can commit to is the Pareto set of its members. I show that the commitment mechanisms provided by the institution of parties has no effect when the policy space is unidimensional; the policies parties can induce in equilibrium arise also when politicians are running independently. However, when the policy space is multidimensional, politicians use the vehicle of parties to offer equilibrium policies that they cannot offer in their absence. Journal of Economic Literature Classification Numbers: D72, C71.

In this paper we analyze elections when voters underestimate the correlation between their information sources (“correlation neglect”). We find that this cognitive bias can improve political outcomes. We show that the extreme beliefs which result from correlation neglect induce some voters to base their vote on information rather than on political preferences. We characterize conditions on the distribution of preferences under which this induces higher vote shares for the optimal policies and better information aggregation. (JEL D72, D83)

In this paper I analyze the e¤ect of the transparency of the decision making process in committees on the decisions that are eventually taken. I focus on committees whose members are motivated by career concerns, so that each member tries to enhance his own reputation. When the decision making process is secretive, the individual votes of the committee members are not exposed to the public but only the …nal decision. Thus, individuals are evaluated according to the group's decision. I …nd that in such a case, group members are induced to comply with preexisting biases. For example, if the voting rule demands a supermajority to accept a reform, individuals vote more often against reforms and exacerbate the conservatism of the voting rule. When the decision making process becomes transparent and individual votes are observed, this e¤ect disappears and such committees are then more likely to accept reforms. I also …nd that coupled with the right voting rule, a secretive procedure may induce better decisions than a transparent one.

In this paper I analyze how careerist decision makers aggregate and use information provided by others. I find that decision makers who are motivated by reputation concerns tend to 'anti-herding', i.e., they excessively contradict public information such as the prior or others' recommendations. I also find that some decision makers may deliberately act unilaterally and not consult advisers although advice is costless.Moreover, advisers to the decision maker may not report their information truthfully.Even if the advisers care only about the outcome, they bias their recommendation since they anticipate inefficient anti-herding behavior by the decision maker.JEL Classification Numbers: D82; D83.

Abstract:The paper analyzes the relation between religious beliefs, religious participation and social cooperation. In particular, we focus on religions that instill beliefs about the connection between rewards and punishments and social behaviour. We show how religious organizations arise endogenously, analyze their e¤ect on social interactions in society and identify a "spiritual" as well as a "material" payo¤ for being religious. We show that religious groups that are more demanding in their rituals are smaller, more cohesive, and are composed of individuals whose beliefs are more "extreme". We use our framework to analyze the response of individual beliefs and religious membership to correlated shocks in society, such as natural disasters or periods of prosperity.1 Department of Economics, LSE. Email: g.levy1@lse.ac.uk; r.razin@lse.ac.uk. We thank Stephen Hansen for valuable research assistance, and the editor of this journal and two anonymous referees for helpful comments.The ESRC (grant number RES-000-22-1856) and the ERC (grant number 210385) provided …nancial support.

In this paper I analyze the e¤ect of the transparency of the decision making process in committees on the decisions that are eventually taken. I focus on committees whose members are motivated by career concerns, so that each member tries to enhance his own reputation. When the decision making process is secretive, the individual votes of the committee members are not exposed to the public but only the …nal decision. Thus, individuals are evaluated according to the group's decision. I …nd that in such a case, group members are induced to comply with preexisting biases. For example, if the voting rule demands a supermajority to accept a reform, individuals vote more often against reforms and exacerbate the conservatism of the voting rule. When the decision making process becomes transparent and individual votes are observed, this e¤ect disappears and such committees are then more likely to accept reforms. I also …nd that coupled with the right voting rule, a secretive procedure may induce better decisions than a transparent one.

Public provision of education is usually viewed as a form of redistribution in kind. However, does it arise when income redistribution is feasible as well? I analyze a two-dimensional model of political decision-making with endogenous political parties. Society chooses both the tax rate and the allocation of the revenues between income redistribution and public education. Agents differ in their income and in their age, where young agents prefer public education and the old prefer income redistribution. I find that when the cohort size of the young is not too large then public education arises as a political compromise between the rich and the young segment of the poor. They collude in order to reduce the size of government (which benefits the rich) and target some of its resources to education (which benefits the young poor). When the cohort size of the young is too large, however, income redistribution crowds out public provision of education in the political equilibrium. Copyright (c) 2005 Massachusetts Institute of Technology.

We analyze a cheap talk game, a-la Crawford and Sobel (1982), in a multidimensional state and policy space. A feature of the multidimensional state space is that communication on one dimension often reveals information on others. We show how this feature imposes bounds on communication.