Essays on Voting and Ex-Ante Incentives

Paula Mäkelä

Research output: ThesisDoctoral ThesisCollection of Articles

Abstract

In the first two essays of this thesis we consider an agent seeking a renewal of his fixed-term employment contract. The renewal depends on the outcome of a review performed by a committee of principals. Depending on the agent's past performance, some principals find it optimal to reappoint the agent while the others do not. In particular, each principal has a private threshold that reflects the minimum requirements the agent should have fulfilled in order to become reappointed. All principals agree, however, that the better the agent has performed, the greater their payoff from the reappointment. Each principal reviews a different part of the agent's performance, and the final decision on the renewal is made collectively by voting. In the first essay of this thesis we analyze a scenario where all communication is prohibited. The contributions of the essay are twofold. First, we show that informative voting constitutes an equilibrium whenever the number of votes required for the reappointment is sufficiently high. Second, we show that the game possesses a responsive equilibrium under all voting rules. In the second essay of this thesis we then allow the principals to engage in a pre-vote deliberation. We establish the necessary conditions under which the game with communication possesses a fully revealing equilibrium. We then compare the principals' expected payoffs in the fully revealing equilibrium to their expected payoffs in the pure voting game. In contrast to common conception, we find that in some circumstances, the principals' expected payoffs in the pure voting game actually exceed those in the game with communication. That is, it may sometimes be in the principals' best interest to waive the opportunity to communicate and just vote. The underlying intuition is that the coordination failures that prevail in the pure voting game may actually force the agent to perform at a level beyond that in the game with communication. In the third essay we return to study a pure voting game, but modify the above framework by adding uncertainty into the principals' ability to review the agent's performance. In this revised setup, we show that for large committees, non-unanimous voting rules fully aggregate the available information and eliminate all decision-making errors. As a result, the agent's incentives are not distorted by the voters' inability to efficiently aggregate information and his optimal strategy thus coincides with the one that is socially optimal. For committees of reasonable sizes, we find that the agent's incentives may feature non-monotone behavior with respect to both the voter's threshold of reasonable doubt and the voting rule. This suggests that the agent is provided with maximal incentives by a committee whose standards are strict but yet attainable.
Translated title of the contributionEssays on Voting and Ex-Ante Incentives
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Välimäki, Juuso, Supervising Professor
Publisher
Print ISBNs978-952-60-6250-1
Electronic ISBNs978-952-60-6251-8
Publication statusPublished - 2015
MoE publication typeG5 Doctoral dissertation (article)

Keywords

  • Voting
  • incentives
  • communication

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