EITM Institutions Week

1. EITM Institutions Week John Aldrich Duke University Arthur Lupia University of Michigan

2. Coalition Duration • M. Most parliamentary governments can end at any moment. • When they end has a broad societal impact. • Uncertainty about their demise is also consequential. • NH. The causes and consequences of coalition duration are inconsequential. • P. Some combination of preferences, institutions, and events determines the timing and nature of government termination. • C. These factors’ relevance depends on the “filter of bargaining.”

3. Empirical Evolution

4. Browne, et al (1986) • M. Why do governments dissolve before their time? • NH. Structural attributes largely determine a government’s duration. • P. Governance contains stochastic elements. • C. Stochastically occurring critical events explain more variation.

5. Browne Premises • The probability, p, of a critical event occurring in a given time interval is both low and invariant across time intervals ( a Poisson process). • Partition the CIEP into N intervals (Np=1). • P(X=r|N,p) = [e-Np(Np)r]/r! • P(X(t) dissolved|X(0) undissolved) = 1-e-Npt. • The baseline expectation is of a constant flow of events. • The stated null hypothesis is that observed distributions will not follow this model.

6. Browne Data • 238 cabinets from 12 European countries 1945-1980. • Caretaker governments excluded. • {Table: 643} BEL, FIN, ISR, ITA – observed Poisson. All fractional. • Others: varying success. • Cabinets with multiple members, minority governments possess less ability to deflect critical events. • Structural attributes approaches not rejected, but stochastic explanations improve explanations. • Unidentified, however, are the descriptive attributes of such events…

7. King, Alt, Laver and Burns (1990) • M. Structural attributes versus critical events. • NH. • A unified explanation explains no better. • No types of cabinets are more predictably durable than others. • The real story is country-specific. (Not in my country.) • P. Unified. Censoring – awareness of CIEP. Institutional variables that eliminate country-specific effects. • C. The approaches are reconcilable. Unified explanation superior.

8. KABL Premises • Critical Events: Yi = e-yi • Yi – a random variable describing cabinet duration length,  the rate of event occurrence • 1/  expected duration • Is cabinet durability constant for the entire history of a country? • KABL subscript the observation number. • Structural Attributes: Yi = xi + i • Could duration be generated by a normal distribution? • KABL Yi = ie-iyi • The termination hazard has systematic and stochastic components. • Durations are independent. • Governments lasting longer than 12 months before the CIEP ended partly because of its shadow.

9. King, Alt, et. al. Conclusions • Model 1.1. Browne et al. Baseline • Model 1.2. Censoring improves the fit. • Model 1.3. Include country and structural attributes. Even better fit. • Majority status increases duration. • Number of formation attempts reduce duration. • Model 2.1. Best Country attributes only model. • Models 2.2 -2.3 Structural attributes added. Improved fit. • Comparing best models, country-specific effects disappear. • Number of formation attempts corresponds to less durability. • Table 3 shows the fit.

10. Warwick (1992) • M. Are termination hazard rates constant? • NH. Yes. • P. Event history model applies. • What is the termination rate given survival at time t? • (t)=exp(’x(t))0(t) • (t) – hazard rate; 0(t) baseline rate after x considered. • Censor only involuntary terminations. • T1. Without other factors, (t)/t >0 for most countries. • T3. W/ other factors, baseline rate increases w/ term length.

11. Theoretical Evolution MWC (Riker), MCWC (Axelrod)

12. Baron (1991) • M. Do institutions affect coalition governance? • NH. An institutionless approach is sufficient. • P. A head of state chooses one of m or 3 parties to form a government. The parties have spatial policy preferences. They offer and evaluate proposals, stated policies implemented. • Quadratic preferences. N-dimensional. Complete information. • Subgame perfect Nash. (EF: 142). • C. Institutions affect government composition and action. • The coalition will consist of the largest and smallest parties.

13. Baron Specifics • Premises • Stationarity restriction – identical stage games • Two parties constitute a majority. • A series of cases is analyzed. • Conclusions • First offer is accepted. Offering party advantaged. • As selection likelihood increases, concessions decrease. • With probabilistic selection, extreme parties make more concessions. • Centrally located parties have greater policy leverage. • If fixed selection order, chosen party coalesces with “next” party.

14. Coalition Termination and the Strategic Timing of Parliamentary Elections Questions: • What determines the timing and nature of coalition terminations? • What factors affect government membership and portfolio allocation? • How do commonly-held beliefs about the likelihood and aftermath of coalition terminations affect party bargaining powers and negotiation strategies? • Can a theoretical approach that integrates legislative institutions, electoral considerations, and parliamentary decisions provide greater clarity than approaches that attend to only a subset?

15. Lupia and Strom:Null Hypotheses 1. All important determinants of coalition politics are unique to, and embedded in, particular political systems. 2. Preferences alone explain coalition behavior. 3. If cooperation among potential coalition partners is mutually advantageous, then a coalition will form and survive.

16. Premises • Parties care about seats, power within a coalition, and with whom they coalesce. • The value of governing is party-specific and coalition specific. • Utility from the status quo: • Party 1: s1 +(c1g12) • Party 2: s2+((1-c1)g21) • Out party: so • Governments can end at any moment and in multiple ways. • Dissolution Utility: bi-Ei. • Replacement Utility: • Offer-making party i: si +(cijgij)-Ki • Offer-accepting party j: sj+((1-cij)gji) • Post-replacement out party: sp • Subgame perfect NE.

17. Conclusions • Conditions A, B, and C imply… • Favorable electoral prospects are neither necessary or sufficient for replacement or termination. • In coalition governments, a party’s size need not directly effect government composition or action. • Bargaining advantages attributed to size are due to walk-away values. • Largest-smallest or minimum winning coalitions need not form. • Bargaining dynamics determine the impact of “critical events.” • Implication: An event’s impact depends heavily on the election cycle.

18. Backward Induction Step 1. The game’s final stage results in dissolution  i,j and x{i,j,o} s.t. si+sj>.5 and bi-Ei>si+cigix and bj-Ej>sj+cjgjx. Step 2. The out party accepts the second party’s offer  • Rejection implies election and co2  (bo- Eo-so)/(go2) • Rejection sustains the status quo and co2> 0.

19. Crux of Lemma 2 proof • From Lemma 1 and the common knowledge, the out party can deduce whether or not its refusal of the second party's offer will lead to an election. • If rejection implies election, then the out party receives so+co2go2 if it accepts and bo-Eo otherwise. • The out party should accept so+co2go2 bo-Eo • Subtracting so from both sides and dividing by go2 produces the requirement co2  (bo- Eo-so)/(go2) • If rejection sustains the status quo, then the out party receives so+co2go2 if it accepts and so otherwise. • The out party should accept  co2go2> 0. • Subsequent lemmas: same logic, more contingencies to manage.

20. Walk Away Values • A walk away value is what a person can gain without an agreement with other players. • Who gets what depends on the walk away values of potential coalition partners. • Walk away values are why size need not equal power in coalition bargaining.

21. Premises Party A has 49 seats. Party B has 48 seats. Party C has 4 seats. Any coalition including C produces value. Any coalition without C produces no value. Results C has the fewest seats, but the largest walk-away value. The only sustainable outcome involves a contract giving party C almost all of the power. Example

22. Conclusions • Favorable electoral prospects are neither necessary or sufficient for replacement or termination. • In coalition governments, a party’s size need not directly effect government composition or action. • Bargaining advantages attributed to size are due to walk-away values. • Bargaining dynamics determine the impact of “critical events.” • Implication: An event’s impact depends heavily on the election cycle.

23. Diermeier and Stevenson (2000) • M. Can institutional and bargaining considerations improve empirical work on cabinet termination? • NH. Critical events, structural attributes, non-strategic approaches or static models are sufficient to answer the question. • P. Stochastic version of Lupia and Strom. • C. Dissolution hazards increase. Replacement hazards do not.

24. Diermeier and Stevenson Key Assumptions • For all parties, si, ci, and ki are constant, negotiation costs are the same for all parties and not “too high.” • For all parties, as the CIEP approaches, coalition values decline. • Electoral prospects are Poisson RVs. •  time until CIEP. >0. • i,j and ’<, gij() – gij(’)>0. • Implication: The termination hazard is ()=(+o())(s,c,gij()) • The initial coalition is a Nash Equilibrium. • If no event, parties weakly prefer SQ.

25. Diermeier and StevensonTheoretical Conclusions • Modified conditions A and B imply... • Hazard rates for pooled terminations are strictly monotonically increasing as the CIEP approaches. [p1] • Hazard rates for dissolutions are strictly monotonically increasing as the CIEP approaches. [p2] • The same is not true for replacement hazards. • Must know more about electoral prospects. • These predictions are different than Browne, other previous empirical work.

26. Diermeier and StevensonEmpirical Conclusions • No censoring. Data similar to Browne, Warwick, KABL. • Pooled hazards: After big initial spike, HR increasing as CIEP approaches. • Dissolution hazards: after the spike and a flat region, HR increasing as CIEP approaches. • The same is not true for replacement. [F6-8]. • Strategic approach promising. Further progress requires more dynamic models. • Ignoring the bargaining filter yields incorrect predictions.

27. Institutions • If an institutional, preference, or country-specific factor is to affect a coalition’s contract, it must affect a pivotalactor’s walk away value. • Institutions that affect walk away values • formateur rules (e.g., change in Israel) • size/composition rules • internal party rules • independence of the judiciary and civil service