Moral Cost, Commitment, and Committee Size

WZB, Markets and Political Economy Working Paper No. SP II 2003-31

19 Pages Posted: 21 Feb 2004  

Steffen Huck

University College London - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Social Science Research Center Berlin (WZB); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Date Written: December 2003

Abstract

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

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

Steffen Huck

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom
+44 207 679 5895 (Phone)
+44 207 916 2774 (Fax)

HOME PAGE: http://www.ucl.ac.uk/~uctpshu/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Social Science Research Center Berlin (WZB) ( email )

Reichpietschufer 50
Berlin, 10785
Germany

HOME PAGE: http://www.wzb.eu/mp/fff/people/kai_konrad.en.htm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

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