WZB, Markets and Political Economy Working Paper No. SP II 2003-31
19 Pages Posted: 21 Feb 2004
Date Written: December 2003
Consider a committee that in the past has made a promise not confiscate the profits from a foreign investor. After the investment has taken place, there is a material benefit if the committee decides to default on the earlier promise. But there are also some small moral costs for those who vote in favor of default. We show that in such situations small committees are more likely to default than large committees. Thus, constituencies can decide about degrees of commitment by choosing committee sizes appropriately. Experimental data confirms our predictions.
Keywords: Coordination, commitment, democracy, voting
JEL Classification: D71, D72, H77
Suggested Citation: Suggested Citation
Huck, Steffen and Konrad, Kai A., Moral Cost, Commitment, and Committee Size (December 2003). WZB, Markets and Political Economy Working Paper No. SP II 2003-31. Available at SSRN: https://ssrn.com/abstract=505023 or http://dx.doi.org/10.2139/ssrn.505023