EITM Institutions Week

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

2. My modal research strategy. • Combining methods fills gaps & widens the potential audience. • Formal theory built from multiple sources. • Laboratory Experiments. • General Population Experiments.

3. Science - KKV 7-8 1. The goal is inference. 2. The procedures are public. 3. The conclusions are uncertain. 4. The content is the method. • It is a social phenomenon.

4. Arguments • The currency of scientific communication. • The components of an argument are: • The Conclusion • The Premises • Value comes from explaining as much as possible with as little as possible.

5. The Uses of Experimentation Roth (1995) • Speaking to theorists. • Evaluate the reach of the logic for science. • Searching for facts. • Evaluate the soundness of premises. • Whispering in the ears of princes. • Evaluate the applicability of the argument for practitioners.

6. The Experimental Method • The Key: • Control over the objects of study. • Random Assignment of subjects to conditions. • Design a control group and treatment group whose controlled differences correspond to a difference in competing hypotheses.

7. Kinds of Experiments • Laboratory experiments. • Quasi-experiments. • Field experiments. • General population experiments.

8. McKelvey and Ordeshook (1984,85) • M. Is the assumption of perfect information necessary for the attainment of an election equilibrium at the median voter’s ideal point? • NH. No. • P. Voters can use cues. In this case, polls. Experimental results provide some support for the model. • C. Perfect information is not a necessary assumption.

9. McKelvey Ordeshook Experiment • Two candidates select their positions from points on a two-dimensional grid. • Candidates and “informed” voters observe these positions. “Uninformed” voters do not. • Two polls occur. Results for “informed” and uninformed voters are announced. • A final vote is cast and determines payoffs for the period. • The process repeats…

10. Morton (1993) • M. Observations do not match the median voter theorem’s predicted platform convergence. • NH. This is not a consequence of incompletely informed candidates. • P. Candidates care about policy and are incompletely informed. Experiments can show that such attributes yield divergence. • C. Platform divergence is significant when candidates are ideological and have incomplete information about voters.

11. Morton Experiment • Candidates’ payments based on spatial difference between winning outcome and own ideal point. • Artificial voters choose the policies closest to them. • Treatment 1. Complete Information. • Treatments 2 and 3. Probabilistic voters. • Treatment 4. Incomplete information, non-probabilistic. • Table 1: All four treatments display convergence, but to different degrees. • Theory supported, but winning still mattered.

12. Enhancing Voter Competence Arthur Lupia University of Michigan

13. Can We Trust the Voters? • The proposition that [the people] are the best keeper of their liberties is not true. They are the worst conceivable, they are no keepers at all. They can neither act, judge, think, or will John Adams, 1788. • “Overall, close to a third of Americans can be categorized as “know-nothings” who are almost completely ignorant of relevant political information -- which is not, by any means, to suggest that the other two-thirds are well informed….” From Critical Review 1999

14. Contemporary Evidence (Source: M-IS 1999) 1. Which party had the most members in the House of Representatives before the last presidential election? 61 2. What majority is required for the U.S. Senate to override a presidential veto -- 1/2+1, 3/5, 2/3 or 3/4? 49 3. Which of the two major political parties is more conservative in general? 64 4. How many members of the U.S Supreme Court are there? 22

15. Challenge • Fact: voters lack details. • Inferences: • Common: Voter incompetence. • Recent: Voters adapt. • When can people who lack information vote with competence?

16. Task & Tools Task: • Clarify the political consequences of limited information. Tools: 1. An exit poll.* 2. Game-theoretic models of communication & choice.* 3. Laboratory experiments. 4. Survey experiments.* 5. A comparison to other decision makers.

17. Definition • I define competence with respect to a task. • How correct must you be? • The task: make a binary choice. • A voter is competent if: • She makes the same choice she would have made given different (e.g., more) information.

18. Direct Democracy: An Ideal Venue • Used in most democracies. • Votes determine laws directly. • Where’s the party? • “Candidates” have little history. • High variance in • competition • quantity and quality of information

19. Example • Q: Can badly informed voters use elite endorsements to emulate the behavior of better-informed voters? • Background • High and fast increasing rates. • Industry anti-trust exempt. • Legislative stalemate. • Five competing initiatives. • Over $80 million spent. • Ralph Nader involved.

20. Result: Emulation A.Lupia. “Shortcuts versus Encyclopedias…”

21. Implications • Lack of detailed information  lack of competence. • To come: • People choose “short cuts” in predictable ways. • Under what conditions do voters use short cuts effectively?

22. Who Believes Whom? • Common explanations: • People are sheep. • Talk is cheap. • Certain attributes required. • E.g., heuristics • E.g., reputation, repetition • Common assumptions • People know each other. • Stimulus/response paradigm. • Personal character is the key. • External forces do not matter.

23. The Democratic Dilemma • M. Can individuals who are not “well informed about political affairs” make the same choices they would have made had they been “well informed?”

24. Theoretical Premises • An uncertain voter makes a binary choice. • A speaker says “better” or “worse.” • He can lie. • The voter is uncertain about the speaker’s interests and knowledge. • External forces may be present. • Verification. • Penalties for lying. • Observable costly effort.

25. Experimental Design:A Close Analogy of our Theory • Our experiments contained a principal and a speaker. • The principal’s job was to predict coin toss outcomes. The speaker made statements. • We paid each principal $1 for each correct prediction. • We varied the speaker’s knowledge, interests, and incentives. • Die roll to determine interests, knowledge. • Penalties for lying, costly effort, verification. • These variations defined our treatment and control conditions and were the means for evaluating our theory.

26. Move sequence: static dynamic Information: complete incomplete complete incomplete Appropriate Nash Equilibrium concept Generic Subgame perfect Bayesian Perfect Bayesian, sequential Equilibrium Concepts • The equilibrium concepts build upon those of simpler games. • Each subsequent concept, while more complex, also allows more precise conclusions from increasingly complex situations

27. Concept Comparison

28. Communication Games(Gibbons 174-5) • A signaling game involves two players (one with private information, the other without) and two moves (first a signal sent by the informed player, then a response by the uninformed player). • Cheap-talk game: a signaling game in which all messages are free. • The extent of communication is determined by the commonality of the players’ interests.

29. Signaling Game • A dynamic game of incomplete information involving two players: a Sender (S) and a Receiver (R). • Nature draws type ti for S from T={t1,…tI} according to distribution p(ti), where p(ti)>0 i and I p(ti)=1. • S observes ti, sends message mj from M={m1,…,mJ}. • R observes mj (not ti), chooses reaction ak from A={a1,…,aK}. • Payoffs: US(ti, mj, ak), UR(ti,mj,ak).

30. Perfect Bayesian Equilibrium • A perfect Bayesian equilibrium is a belief strategy pairing such that the strategies are sequentially rational given the beliefs and the beliefs are calculated from the equilibrium strategies by means of Bayes’ Theorem whenever possible. • A defection from the equilibrium path does not increase the chance that others will play “irrationally.” • Every finite n-person game has at least one perfect Bayesian equilibrium in mixed strategies.

31. Sequential Rationality • A pair of beliefs and strategies is sequentially rational iff from each information set, the moving player’s strategy maximizes its expected utility for the remainder of the game given its beliefs and all players’ strategies. • Sequential rationality allows a process akin to backwards induction on games of incomplete information.

32. Requirements for PBE in Extensive-Form Games • An information set is on the equilibrium path if it will be reached with positive probability  the game is played according to the equilibrium strategies. • On the equilibrium path, Bayes’ Rule and equilibrium strategies determine beliefs. • Off the path, Bayes’ Rule and equilibrium strategies determine beliefs where possible.

33. Terms • Separating strategy: each type ti Ti chooses a different action ai Ai. • Pooling strategy, all types choose the same action. • When deciding what to do,player i will have to think about what he or she would have done if each of the other types in Ti had been drawn.

34. Model Intuitions • W/o external forces, persuasion requires • perceived common interestsand • perceived speaker knowledge. • The model clarifies how external forces substitute for speaker attributes. • Absent sufficient prior information, competence requires that the perceptions be correct. • Institutions can help. The model clarifies when voters use short cuts effectively.

35. Summary of Results

36. Other design elements. • Quiz on instructions. • Means of communication controlled. • Multiple interactions -- independent payoffs, no added information about prior periods, no reputation effects. • Multiple principals -- independent payoffs for principals, no way for speaker to distinguish principals.

37. Lab Experiments • A subject is a voter or advisor. • The voter predicts coin tosses • Earns $1/correct prediction. • Advisor: “heads” or “tails.” • we vary perceptions: • hidden die rolls determine speaker interests & knowledge. • we vary “institutions.” • penalties for lying, costly effort, verification present in selected trials.

38. First Trials • Complete information. • Incomplete information. • No advice. • Incomplete information. • Advisor is paid for your success. • Incomplete information. • Advisor is paid for your failure.

39. “Bad” speaker results:Incentives matter. S-PFL: Trials w/ sufficient penalty for lying. S-V: Trials with sufficient verification probability. • If S-PFL or S-V, the model predicts persuasion and reasoned choice. • Otherwise, it predicts random behavior.

40. Summary:The Model in the Lab • All: Trials where model predicts persuasion and reasoned choice. • None: Model predicts none of the above. • P only: Model predicts persuasion only.

41. CATI Experiment N=1464 • “... talk show host [SENDER] [POSITION] spending money to build more prisons. What do you think? Is spending money to build prisons a good idea or a bad idea?” • “How much would you say that [SENDER] knows about what will happen if this country spends money to build more prisons -- a lot, some, a little, or nothing?” • “On most political issues would you say that you and [SENDER] agree all of the time, most of the time, only some of the time, or never?”

42. Random Selection

43. The Model Predicts Well in the Field • Effect of Treatment: • (%Yes|Heard Supports) - (%No|Heard Supports) • Left to Right: denotes declining perceptions of speaker trust (A>a>~a) and knowledge (K>k). • The model predicts declining effects as A,K decline.

44. Just Ideology? • Ideology and other effects depend on perceived agreement and knowledge. • The converse is not true. • Perceived knowledge & trust are the fundamental source effects.

45. A comparison. • Legislators are professionals. • They can deliberate. • But, • A legislature considers 100’s of bills. • Legislators delegate fact-finding and agenda control to committees. • Committees, in turn, delegate these tasks to civil servants and experts. • On most bills, most legislators base their choices on short cuts.

46. Implications • Citizen information processing has systematic components. Strategic considerations are fundamental. • People can choose competently despite incomplete information. • True in controlled (lab) and uncontrolled (CATI) environments. • Would electoral outcomes be different today? • Results imply different solutions. • Circulate endorsement information. • Make it easier to “follow the money.” • Complexity increases requirements.

47. Epilogue:AnEngineering Problem • To enhance competence, an utterance must win: • The battle of attention. • Stimulus X versus all other stimuli. • The battle of recall. • Attended X versus all other icons in memory. • Battles at the precipice of choice. • Recalled X versus embodied routine. • Key battle for most normative aims. • The incentives from public justification versus the ubiquity of instrumental adaptation in language use.

48. Epilogue: Theory Development • Integrate regularities in attention and recall with communicative incentives to design more effective devices. • Application: What aspects of content and context (presentation and design) affect attention, recall, and subsequent behaviors? • Key concepts: • Opportunity costs -- attention. • Storage tendencies – recall. • Persuasive incentives – choice.