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Public Economics Workshop - Thomas Fujiwara

Fri, 10/13/2017 - 11:40am

Thomas Fujiwara

Princeton University

115 Ives Hall

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We present findings that are difficult to reconcile with theories of multilateral bargaining and coalition formation. When applied to legislatures, such theories predict that parties’ seat shares determine their bargaining power. Using data from 2,898 municipal Spanish elections in which two parties tie in the number of seats, we show that the party with slightly more general election votes is substantially more likely to appoint the mayor (form the government). Given that tied parties should, on average, have equal bargaining power, this identifies a norm prescribing that “the most voted should form government.” This norm binds behavior even when its prescription goes against other natural considerations, such as parties’ programmatic affinity. Voters punish, in future elections, second most voted parties that appoint the mayor, suggesting that they enforce the norm. We also document a similar second-versus-third most voted effect, compare the effect of the norm to that of obtaining an additional seat, and provide suggestive evidence of similar norms from 28 national European parliaments. A model where elections play a dual role (aggregating information and disciplining incumbents) and different equilibria (norms) can occur is consistent with our results and yields additional predictions.

Event Categories: Public Economics