Many democratic societies have become more politically polarized, with the U.S. being the main example. The origins of this phenomenon are still not well-understood and subject to debate. To provide ...insight into some of the mechanisms underlying political polarization, we develop a mathematical framework and employ Bayesian Markov chain Monte-Carlo (MCMC) and information-theoretic concepts to analyze empirical data on political polarization that has been collected by Pew Research Center from 1994 to 2017. Our framework can capture the evolution of polarization in the Democratic- and Republican-leaning segments of the U.S. public and allows us to identify its drivers. Our empirical and quantitative evidence suggests that political polarization in the U.S. is mainly driven by strong political/cultural initiatives in the Democratic party.
Political campaigns involve, in the simplest case, two competing campaign groups which try to obtain a majority of votes. We propose a novel mathematical framework to study political campaign ...dynamics on social networks whose constituents are either political activists or persuadable individuals. Activists are convinced and do not change their opinion and they are able to move around in the social network to motivate persuadable individuals to vote according to their opinion. We describe the influence of the complex interplay between the number of activists, political clout, budgets, and campaign costs on the campaign result. We also identify situations where the choice of one campaign group to send a certain number of activists already pre-determines their victory. Moreover, we show that a candidate's advantage in terms of political clout can overcome a substantial budget disadvantage or a lower number of activists, as illustrated by the US presidential election 2016.
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DOBA, IZUM, KILJ, NUK, PILJ, PNG, SAZU, SIK, UILJ, UKNU, UL, UM, UPUK
Abstract What happens when banks compete with deposit and loan contracts contingent on macro‐economic shocks? The private sector insures the banking system efficiently against crises through such ...contracts when failing banks go bankrupt. When risks are large, banks may shift part of the risk to depositors who receive state‐contingent contracts. In contrast, when failing banks are rescued, new phenomena such as risk magnification emerge. Depositors receive noncontingent contracts, while loan contracts demand high repayment in good times and low repayment in bad times. Banks overinvest and generate large macro‐economic risks, even if the underlying productivity risk is small or zero.
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BFBNIB, CEKLJ, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
4.
Forms of new democracy Gersbach, Hans
Social choice and welfare,
06/2024, Volume:
62, Issue:
4
Journal Article
Peer reviewed
Open access
In the third decade of the 21st century, digitization and artificial intelligence, global events, challenges from authoritarian states, and difficulties of particular democracies to function properly ...confront democracy with a new series of challenges and opportunities that will force it to reinvent itself. The last decades have produced an accelerating flow of ideas for new forms of democracy. We survey a long period in the quest for such new forms and point to next inventions for such forms. We suggest to experiment with new ways for democracy to extend the choice of democratic processes that can be implemented in real-life situations, with the beneficial side-effect that democracy might remain the only sustainable structure for self-governing societies.
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EMUNI, FIS, FZAB, GEOZS, GIS, IJS, IMTLJ, KILJ, KISLJ, MFDPS, NLZOH, NUK, OILJ, PNG, SAZU, SBCE, SBJE, SBMB, SBNM, UKNU, UL, UM, UPUK, VKSCE, ZAGLJ
Evidence suggests that banks tend to lend a lot during booms and very little during recessions. We propose a simple explanation for this phenomenon. We show that instead of dampening productivity ...shocks, the banking sector tends to exacerbate them, leading to excessive fluctuations of bank credit, output, and asset prices. Our explanation relies on three ingredients that are characteristic of modern banks' activities: moral hazard, high exposure to aggregate shocks, and the ease with which capital can be reallocated to its most productive use. At the competitive equilibrium, banks offer privately optimal contracts to their investors, but these contracts are not socially optimal: banks reallocate capital excessively upon aggregate shocks. This is because banks do not internalize the impact of their decisions on asset prices. We examine the efficacy of possible policy responses to these properties of credit markets, and derive a rationale for macroprudential regulation in the spirit of a Net Stable Funding Ratio.
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BFBNIB, FZAB, GIS, IJS, KILJ, NLZOH, NUK, OILJ, SAZU, SBCE, SBMB, UL, UM, UPUK
A returning political phenomenon is the impact of “office seekers” in democracies. We examine the consequences when the public faces a new type of two-dimensional uncertainty: whether a politician is ...competent, and whether a politician is concerned about the consequences of public utility decisions (statesman) or about public opinion (office seeker). We identify new timing distortions, as both competent and incompetent office seekers may take hasty or excessively delayed decisions in order to imitate statesmen or competent office holders. Thus, the public may benefit by disregarding the candidates’ competence and by reelecting candidates based solely on its belief as to whether a politician is a statesman. This “curse of competence” may explain why politicians are so concerned about being perceived as statesmen and why we may expect the largest distortions for credence policies.
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