Rational choice theory

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Political conflicts, democratic institutions and public policy

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Live dates: 
Monday, 27 September 2021 to Tuesday, 11 January 2022
Live meetings: 
Mondays at 18.00 and Tuesdays at 12.00 (Romania)
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Aims and scope: 

This course deals with positive political economy and rational choice theory applied to the study of political conflicts, democratic institutions and public policy. How do political scientists resolve their differences about politics? Why do many rich artists support left-wing parties? Are there any real policy differences between mainstram political parties? Are parliaments intrinsecally unstable? Why do people bother to vote in a general election? Why is money so important in politics? Many of the general topics covered will be applied to the analysis of specific EU institutions. Why is the European Commission so powerful? Why is the court of justice of the EU more Europeanist than the council that appoints its judges? Why did the German government insist on central bank independence and fiscal discipline when creating the euro? Why do EU governments give development aid to support corrupt foreign leaders? Why is enlargement such a challenge for EU decision making? Why did the UK leave the EU?

The course starts with an introduction to the scientific method and how it helps us understand the causes of public choices. This part also includes a topic on the determinants of individual preferences. This is followed by a section on the aggreagation of preferences that analyses conflict and how it gets resolved (or not) through group decision making, introducing spatial models of voting and elections. A topic also discusses multidimensionality and voting cycles. The next part of the course deals with collective action problems and their solutions. It introduces the paradox of voting, and discusses the role of political parties and lobbies, with particular attention to the impact of money, information and media on voting behavior and public policy. The following part deals with institutions, and covers the behavior of parliamentary committees and legislatures, bureaucracies and courts, including the study of agenda setting and veto power, as well as principal-agent problems in politics. The next two topics deal with public policy, including the study of the welfare state and redistribution and electoral business cycles, as well as an introduction to selectorate theory and the domestic bases of foreign policy. The final part of the course deals with social choice and constitutional political economy, including the study of alternative voting rules and power indices, constitutional reform, and secession.

The course is addressed to students of political science and international relations who already have a certain background of political economy, political institutions and public policy. The conversational style of the courses is superb for presenting rational choice theory to tomorrow's political analysts. The course is designed to provide students with a solid conceptual understanding of the subject using modern positive methods and theories. It differs from all other introductory courses by encouraging students to apply these positive theories to the analysis of current phenomena with a direct impact on their daily lives. At the end of the semester, students will be able to use positive political theories to understand current issues such as the success of extremist parties, conflicts between presidents, governments, parliaments and courts, the power of interest groups, and the negotiation of international treaties. They will also have developed general analytical skills that will prove useful in further studies or non-academic careers. Weekly seminar questions and discussions on important topical issues will also encourage them to develop their ability to research independently, offer and receive peer review, and manage discussions with others to elucidate an issue.

Students are introduced to research through seminar questions about important current issues. They learn by researching these questions independently, by reading colleagues' answers, by critically reviewing these answers, by posting their own answers, and by receiving peer review. A point system measures learning progress and encourages students to participate.
INTRODUCTION: 1. Falsifiability and the scientific method. Focus on causality. Resolve scientific disputes with empirical evidence. Can we trust political predictions? 2. The concept of rationality. Decision theory and game theory. Rational choice, social choice and public choice. Basic interests, personal circumstances and policy preferences. Are anti-vaxxers rational? Politicians' motivation: office, policy or votes? PREFERENCE AGGREGATION: 3. Left and right. Spatial models of voting. Electoral competition and strategic behaviour. Hotelling's game. The median voter theorem. Proximity vs. directional voting. 4. Multidimensionality, paradoxes and voting cycles. Chaos theorems. Agenda setting. The empirical measurement of preferences. COLLECTIVE ACTION: 5. Political parties, interest groups and the logic of collective action. Elections, rational abstention and the paradox of voting. Why do people turn out to vote? 6. Lobbying: vote-buying, signaling, or the subsidisation of bias? The internal organisation of interest groups. INSTITUTIONS AND POLICY MAKING: 7. Legislative procedure. Veto power. Agenda-setting power. Parliamentary organisation. The power of parliamentary committees. Distributive and informational theories. 8. Executive and judicial power. The principal-agent problem, delegation and control. Models of bureaucracy. PUBLIC POLICY AND FOREIGN POLICY: 9. Social and economic policy. Redistribution of income. Public goods. Inflation and unemployment. The political business cycle: opportunistic and partisan cycles. 10. Selectorate theory and international politics. The selectorate. Winning coalition. Loyalty rule. The domestic bases of foreign policy. SOCIAL CHOICE AND CONSTITUTIONAL POLITICAL ECONOMY: 11. Majority rules, coalitions and power indices. Power and luck. I-power and p-power. Justice, social welfare and the square-root rule. Internal and external costs of decision making and an optimal majority rule. 12. The theory of clubs. The Exit-Voice-Loyalty (EVL) game. Voting with the feet. Secession. Why did the UK leave the EU? Why is taxing billionaires off limits? CONCLUSION: 13. Closing lecture. 14. Review.
Indicative reading: 
K A Shepsle, Analyzing Politics: Rationality, Behavior, and Instititutions. Suplimentary reading: P Dunleavy, Democracy, Bureaucracy and Public Choice; D Mueller, Public Choice III; G Tsebelis, Veto Players. Great works: A Downs, An Economic Theory of Democracy; M Olson, The Logic of Collective Action; W Niskanen, Bureaucracy and Representative Government. In Romanian: Miroiu, A. (2006). Fundamentele politicii, vol. 1 & 2. Polirom.
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