The Effects of Centralized Power and Institutional Legitimacy on Collective Action

65 Pages Posted: 2 Mar 2018

See all articles by Jose G. Castillo

Jose G. Castillo

ESPOL Polytechnic University, College of Social Sciences and Humanities

Zhicheng Xu

School of Economics, Henan University

Ping Zhang

Shenzhen University - School of Economics

Xiacheng Xu

Nanjing University of Science and Technology

Date Written: February 21, 2018

Abstract

Most observed institutional arrangements, observed in governments, firms, and other organizations, acknowledge the effectiveness of imposing sanctioning institutions and monitoring policies to achieve particular goals. Nevertheless, less attention has been paid to the influences of the delegation mechanism of sanctioning power, particularly, the legitimacy of the authority/institution, in centralized institutional arrangements. We report laboratory-experimental results that compare the performance of exogenous delegation versus the endogenous delegation of sanctioning power. The endogenous power distribution, defined as Democracy, weakly dominates the exogenous arrangement, the Leviathan, in terms of contribution levels and economic efficiency. However, the observed differences are not statistically significant, regardless of the effectiveness of the sanctions imposed. Democratic schemes are weakly preferred in centralized power environments, and existing evidence contradicts the belief of a robust causal relationship between indirect democratic institutions, collective action, and economic outcomes.

Keywords: public goods games, sanctioning institution, centralized power, representative democracy

JEL Classification: C92, D72, H41

Suggested Citation

Castillo, Jose G. and Xu, Zhicheng and Zhang, Ping and Xu, Xiacheng, The Effects of Centralized Power and Institutional Legitimacy on Collective Action (February 21, 2018). Available at SSRN: https://ssrn.com/abstract=3127775 or http://dx.doi.org/10.2139/ssrn.3127775

Jose G. Castillo (Contact Author)

ESPOL Polytechnic University, College of Social Sciences and Humanities ( email )

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Zhicheng Xu

School of Economics, Henan University ( email )

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Ping Zhang

Shenzhen University - School of Economics ( email )

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Shenzhen, Guangdong 518055
China

Xiacheng Xu

Nanjing University of Science and Technology ( email )

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Nanjing, Jiangsu 210094
China

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