This paper provides the first systematic analysis of the link between economic, political, and social conditions and the global phenomenon of ISIS foreign fighters. We find that poor economic conditions do not drive participation in ISIS. In contrast, the number of ISIS foreign fighters is positively correlated with a country’s GDP per capita and Human Development Index (HDI). In fact, many foreign fighters originate from countries with high levels of economic development, low income inequality, and highly developed political institutions. Other factors that explain the number of ISIS foreign fighters are the size of a country’s Muslim population and its ethnic homogeneity. Although we cannot directly determine why people join ISIS, our results suggest that the flow of foreign fighters to ISIS is driven not by economic or political conditions but rather by ideology and the difficulty of assimilation into homogeneous Western countries. These conclusions are consistent with those of the related qualitative literature that relies on the personal profiles of a small and selected sample of ISIS foreign fighters.

This paper studies the effects that the revelation of information on the electorate’s preferences has on voters’ turnout. The experimental data show that closeness in the division of preferences induces a significant increase in turnout. Moreover, for closely divided electorates (and only for these electorates) the provision of information significantly raises the participation of subjects supporting the slightly larger team relative to the smaller team. We show that the heterogeneous effect of information on the participation of subjects in different teams is driven by the subjects’ (incorrect) beliefs of casting a pivotal vote. Simply put, subjects overestimate the probability of casting a pivotal vote when they belong to the team with a slight majority, and choose the strategy that maximizes their utility based on their inflated probability assessment. Empirical evidence on gubernatorial elections in the U.S. between 1990 and 2005 is consistent with our main experimental result. Namely, we observe that the difference in the actual vote tally between the party leading according to the polls and the other party is larger than the one predicted by the polls only in closely divided electorates. We provide a behavioral model that explains the main findings of our experimental and empirical analyses.

This paper focuses on the centralization program implemented in Israel in 2004 to analyze whether the administrative subordination of municipalities is an effective policy to deal with problems related to soft-budget constraint of lower level governments.  The results consistently show, for different specifications and samples of municipalities, that this program brought a substantial decrease of municipalities’ expenditures (mostly because of decreases on salary payments), and an increase of local property tax collection.  Our analysis shows that all of the fiscal impact of the program is due to the appointment of an accountant that reports directly to the central government, a relatively mild form of administrative subordination.  In contrast, more intrusive forms of subordination, like the central imposition of a recovery program, do not result in any substantial improvement of municipalities’ fiscal situation.  This leads us to conclude that a mild form of administrative subordination is an effective tool to cope with problems related to soft-budget constraints, whereas political subordination is not an effective tool to reach that goal.

This study investigates the effect of candidates’ expenditure on elections’ results focusing on run-off elections’ data. Our analysis, based on all run-off municipal elections in Israel between 1993 and 2008, shows that candidates’ share of the vote is not substantially affected by their campaign spending. This outcome contradicts recent results showing that, in a developing country where voting is compulsory, campaign expenditures have a significant effect on vote shares. Yet, it is in line with the evidence of earlier studies based on developed countries showing that the effect of campaign spending is limited. This leads us to suggest that campaign spending may be effective in developing countries with consolidating democracies because compulsory voting forces the relative poor population to turn out and vote, and this population is relatively more impressionable by campaign spending on media advertisements. 

Conventional wisdom suggests that a global increase in monetary rewards should induce agents to exert higher effort. In this paper we demonstrate that this may not hold in team settings. In the context of sequential team production with positive externalities between agents, incentive reversal might occur, i.e., an increase in monetary rewards (either because bonuses increase or effort costs decrease) may induce agents that are fully rational, self-centered money maximizers to exert lower effort in the completion of a joint task. Incentive reversal happens when increasing one agent’s individual rewards alters her best-response function and, as a result, removes other agents’ incentives to exert effort as their contributions are no longer required to incentivize the first agent. Herein we discuss this seemingly paradoxical phenomenon and report on two experiments that provide supportive evidence.

We design an experiment to study the effects of social identity on preferences over redistribution. The experiment highlights the trade-off between social identity concerns and maximization of monetary payoffs. Subjects belonging to two distinct natural groups are randomly assigned gross incomes and vote over alternative redistributive tax regimes, where the regime is chosen by majority rule. We find that a significant subset of the subjects systematically deviate from monetary payoff maximisation towards the tax rate that benefits their group when the monetary cost of doing so is not too high. These deviations cannot be explained by efficiency concerns, inequality aversion, reciprocity, social learning or conformity. Finally, we show that behavior in the lab helps explain the relationship between reported income and stated preferences over redistribution observed in survey data.

This paper presents an experimental study of the effects of polls on voters’ welfare. The analysis shows that polls have a different effect on closely divided and lopsided divided electorates. The data show that in closely divided electorates (and only for these electorates) the provision of information on the voters’ distribution of preferences significantly raises the participation of subjects supporting the slightly larger team relative to the smaller team. This causes a substantial increase on the frequency of electoral victories of the larger team. As a consequence, we observe a steep decrease in the welfare of the members of the smaller team because they vote more often and yet they loose the elections more frequently. Polls are detrimental to aggregate welfare in closely divided electorates because the decrease in the payoffs of the minority is stronger than the increase in the payoffs of the majority. In lopsided divided electorates polls don’t have a significant different effect on the voters’ turnout conditional on their team size. We do observe an increase on the frequency of electoral victories of the larger team after the provision of information, but this is in part due to smaller teams’ members voting less frequently and saving the participation costs. As a consequence, while polls have a negative effect on the relative payoffs of the minority for these electorates as well, they have a positive effect on total welfare.

This paper develops a positive theory of overlapping income taxation in a federation of states. The analysis provides a complete characterization of the equilibrium federal and states tax rates as functions of the level of total productivity dispersion between the states. The federal rate is increasing in the level of total productivity dispersion between the states, even if the income of the decisive voter at the federal level is above the mean income. Given that the individuals’ income is endogenously determined there exists a negative trade-off between the implemented federal tax rate and the resulting states’ tax rates, regardless of the pre-tax income of the decisive voter at the state level. Thus, high levels of productivity dispersion between the states cause a higher than optimal federal tax rate together with low states’ tax rates. It is also shown that a system of overlapping income taxation is not efficient. The resulting inefficiency might be exacerbated by the implementation of a federal matching grants program, contradicting previous results in the related normative literature.

This paper develops a political economy model that is consistent with the fact that democracies have a preference for increasing marginal tax rates on income. We present a model in which there is an exogenous set of political parties with preferences over the set of admissible tax schedules. This set contains virtually any increasing and piecewise linear continuous function. Each party decides whether or not to present a candidate for election. There is a fixed cost of running. The elected candidate implements one of her preferred tax policies. Our main results provide conditions under which a Strong Nash Equilibrium exists, and a tax schedule with increasing marginal tax rates is implemented in some Nash Equilibria and in any Strong Nash Equilibrium.

This paper develops a political economy model that is consistent with the fact that  democracies have a preference for increasing marginal tax rates on income. We present a model in which there is an exogenous set of political parties with preferences over the set of admissible tax schedules. This set contains virtually any increasing and piecewise linear continuous function. Each party decides whether or not to present a candidate for election. There is a fixed cost of running. The elected candidate implements one of her preferred tax policies. Our main results provide conditions under which a Strong Nash Equilibrium exists, and a tax schedule with increasing marginal tax rates is implemented in some Nash Equilibria and in any Strong Nash Equilibrium.