Rafael Hortala-Vallve Spoke on 'Team of Rivals: Learning about a Cabinet and its Shadow'

On June 2 a research seminar on political economy took place at HSE. Rafael  Hortala-Vallve (London School of Economics and Political Science) spoke on 'Team of Rivals: Learning about a Cabinet and its Shadow'. The report was co-authored by Torun Dewan (London School of Economics and Political Science).

Abstract:

We explore electoral accountability in a two-period model in which an incumbent government chooses whether to implement a policy with a known payoff or a "reform" policy that yields higher or lower payoffs (to voters and ministers) depending on whether the minister implementing it is competent or not. An opposition can also reveal information about its average competence via its choice of campaign. Voters cast their votes based on what they learn about the rival teams' relative competence and anticipate collective decisions made by an incoming cabinet. Although collective decision-making in the team induces a hold-up problem --ministers revealed as incompetent will veto the implementation of reform we show that electoral competition between rival teams, as in that between a cabinet and its shadow, provides levels of reform that are always too high from the voters perspective. This can provide perverse incentives for voters to select teams that are on average of lower competence than their opponents. An increase in the qualified majority rule threshold can, surprisingly, increase levels of reform.