Essays on conflict of interest in legislatures and firms.

摘要

Since the seminal paper by Baron and Ferejohn (1989), legislative bargaining games have been widely applied in public finance and comparative constitutional design. While most theoretical and applied studies until recently assume that legislative interaction ceases after a decision is reached, in reality it is common that legislation remains in effect until a new law is passed. I formally analyze this mechanism by modeling a committee which repeatedly has to make a multidimensional collective choice. In each period, one of the committee members is drawn at random to make a proposal, which is voted on by majority rule against a status quo alternative. The chosen policy then becomes the status quo in the next period. The central contribution of this dissertation is the treatment of a moving status quo when the policy has multiple dimensions. I show that these two components lead to powerful policy dynamics and rich welfare implications.; The first two chapters characterize equilibria in two related settings. In the first one, side payments are allowed and in the second one they are not. It turns out that side payments crucially affect equilibrium policy outcomes. My characterization of the equilibria reveals how the dynamics of policy is the outcome of different forces. One interpretation of my models is that of policy choice and government formation in Parliamentary democracies. In this context, I identify sources of policy inefficiency and the cause of surplus governments.; The third chapter turns from politics to the conflict of interests inside a firm. It provides an answer to the following question: Why do some firms give firm-specific equity-based pay to their rank-and-file employees? I present a multi-period model that links employee compensation to a speculative stock market. A central implication of the model is that a large equity-based pay to non-executive employees is accompanied by a large stock turnover rate. Using data of public firms in the U.S. from 1992 to 2002, I find strong empirical support for this prediction.