The operation of markets and of politics are in practice deeply intertwined. Politi- cal decisions set the rules of the game for market competition and, conversely, market competitors participate in and influence political decisions. We develop an integrated model to capture the circularity between the two domains. We show that a positive…

Consider the following collective choice problem: a group of budget constrained agents must choose one of several alternatives. Can we design a simple budget balanced mechanism that: i) does not depend on the specific characteristics of the group, ii) does not require unaffordable transfers, and iii) implements utilitarianism if agents’…

This paper studies how an informed sender with state-independent preferences persuades receivers to approve his proposal with verifiable information. I find that every equilibrium outcome is characterized by each receiver’s set of approved states that satisfies this receiver’s obedience and the sender’s incentive-compatibility constraints. That…

This paper analyzes how changes in the concentration of political power affect long-run development. We study Brazil’s military dictatorship whose rise to power dramatically altered the distribution of power of local political elites. We document that municipalities that were more politically concentrated prior to the dictatorship in the 1960s…

We study the ability of elections to solve the dynamic programming problem of a representative voter in a dynamic citizen-candidate framework. We assume a finite number of states and general utilities and state transition probability, thereby allowing for non-trivial dynamics. We prove existence of equilibrium; we show that politicians may…

We develop a model of electoral accountability with mainstream and alternative media. In addition to regular high- and low-competence types, the incumbent may be an aspiring autocrat who controls the mainstream media and will subvert democracy if retained in office. A truthful alternative media can help voters identify and remove these…

Does motivated reasoning harm democratic accountability? Substantial evidence from political behavior research indicates that voters have "directional motives" beyond accuracy, which is often taken as evidence that they are ill-equipped to hold politicians accountable. We develop a model of electoral accountability with voters as motivated…

Do campaign contributions influence politicians? In this article, we study the impact of corporate donations on ideology and political rhetoric among candidates running for parliamentary seats. We construct a novel dataset that combines candidate manifestos with data on the amount and origin of the donations received by all the candidates to…

Many facts must be learned through intermediaries with special expertise or ac- cess to information, such as law enforcers, scientists, journalists, and public officials. This paper considers whether society can learn about such facts when intermediaries are devoid of ethical motives and make sequential public announcements. The answer depends…