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We use a novel experimental design to reliably elicit subjects' strategies in an infinitely repeated prisoner's dilemma experiment with perfect monitoring. We find that three simple strategies repre‑ sent the majority of the chosen strategies: Always Defect, Tit‑for‑Tat, and Grim. In addition, we identify how the strategies systematically vary with the parameters of the game. Finally, we use the elicited strategies to test the ability to recover strategies using statistical methods based on observed round‑by‑round cooperation choices and find that this can be done fairly well, but only under certain conditions. (JEL C72, C73, C92)

A usual criticism of the theory of infinitely repeated games is that it does not provide sharp predictions since there may be a multiplicity of equilibria. To address this issue, we present experimental evidence on the evolution of cooperation in infinitely repeated prisoner's dilemma games as subjects gain experience. We show that cooperation may prevail in infinitely repeated games, but the conditions under which this occurs are more stringent than the subgame perfect conditions usually considered or even a condition based on risk dominance. (JEL C71, C73)

We analyze how economy-wide forces (i.e.shocks to terms of trade, technology and endowments) affect the intensity of social conflict. We see conflict phenomena such as crime and civil war as involving resource appropriation activities. We show that not all shocks that could make society richer will reduce conflict. Positive shocks to labor intensive industries will diminish social conflict, while positive shocks to capital intensive industries will increase it. The key requirement is that appropriation activities be more labor intensive than the economy. Our model can explain the positive association between crime and inequality, and the curse of natural resources; it predicts that aid in kind to war-ridden societies will have perverse effects, and offers guidance on how to integrate international trade policy and peacekeeping efforts. Including appropriation activities into a canonic general equilibrium model introduces a social constraint to policy analysis. Thus, we can also account for populist policies, apparently inefficient redistribution and "national development strategies". – conflict ; civil war ; crime ; social constraint ; populism ; trade policy ; inefficient redistribution

We present results from a novel experiment on the effect of a policy designed to encourage cooperation in a prisoner's dilemma game. We find that the effect of this policy on the level of cooperation is greater when it was chosen democratically by the subjects than when it was exogenously imposed. This difference remains after controlling for selection (those that choose the plicy may be more likely to be affected by it). We conclude that the treatment effect of policies may depend on whether they are endogenous or exogenous to the society on which they are imposed. Therefore, democratic institutions may have an effect on behavior in addition to the effect in terms of policy choice. More generally, our findings have implications for empirical studies of treatment effects in other contexts: the effect of a treatment may depend on whether it is endogenous or exogenous.

Dal Bó, Foster and Putterman (2010) show experimentally that the effect of a policy may be greater when it is democratically selected than when it is exogenously imposed. In this paper we propose a new and simpler identification strategy to measure this democracy effect. We derive the distribution of the statistic of the democracy effect, and apply the new strategy to the data from Dal Bó, Foster and Putterman (2010) and data from a new real-effort experiment in which subjects' payoffs do not depend on the effort of others. The new identification strategy is based on calculating the average behavior under democracy by weighting the behavior of each type of voter by its prevalence in the whole population (and not conditional on the vote outcome). We show that use of these weights eliminates selection effects under certain conditions. Application of this method to the data in Dal Bó, Foster and Putterman (2010) confirms the presence of the democracy effect in that experiment, but no such effect is found for the real-effort experiment.

We study political dynasties in the United States Congress since its inception in 1789. We document patterns in the evolution and profile of political dynasties, study the self-perpetuation of political elites, and analyze the connection between political dynasties and political competition. We find that the percentage of dynastic legislators is decreasing over time and that dynastic legislators have been significantly more prevalent in the South, the Senate and the Democratic party. While regional and party differences have largely disappeared over time, the difference across chambers has not. We document differences and similarities in the profile and political careers of dynastic politicians relative to the rest of legislators. We also find that legislators that enjoy longer tenures are significantly more likely to have relatives entering Congress later. Using instrumental variables methods, we establish that this relationship is causal: a longer period in power increases the chance that a person may start (or continue) a political dynasty. Therefore, dynastic political power is self-perpetuating in that a positive exogenous shock to a person.s political power has persistent effects through posterior dynastic attainment. Finally, we find that increases in political competition are associated with fewer dynastic legislators, suggesting that dynastic politicians may be less valued by voters.

We present a model where groups attempt to influence policies using both bribes (plata, Spanish for silver) and the threat of punishment (plomo, Spanish for lead). We then use it to make predictions about the quality of a country's public officials and to understand the role of institutions granting politicians with immunity from legal prosecution. The use of punishment lowers the returns from public office and reduces the incentives of high-ability citizens to enter public life. Cheaperplomoand more resources subject to official discretion are associated with more frequent corruption and less able politicians. This predicts that violence in a country will typically go together with corruption and worse politicians. Moreover, the possibility of punishment changes the nature of the influence game, so that even cheaperplatacan lower the ability of public officials. Protecting officials from accusations of corruption (immunity) willdecreasethe frequency of corruption if the judiciary is weak and may increase the quality of politicians. These predictions cannot emerge from a traditional model where only bribes are used.

We present a model where groups attempt to exert influence on policies using both bribes (plata, Spanish for silver) and the threat of punishment (plomo, Spanish for lead). We then use it to make predictions about the quality of a country's public officials and to understand the role of institutions granting politicians with immunity from legal prosecution. The use of punishment lowers the returns from public office and reduces the incentives of high ability citizens to enter public life. Cheaper plomo and more resources subject to official discretion are associated with more frequent corruption and less able politicians. Moreover, the possibility of punishment changes the nature of the influence game, so that even cheaper plata can lower the ability of public officials. Protecting officials from accusations of corruption (immunity) will decrease the frequency of corruption and may increase the quality of politicians if the judiciary is weak. These predictions are the opposite to those emerging from a model where only bribes are used. – lobbying ; threats ; quality of policymakers ; official immunity

We use a novel experimental design to identify the subjects' strategies in an infinitely repeated prisoners' dilemma experiment. We ask subjects to design strategies that will play in their place. We find that eliciting strategies has negligible effects on their behavior, supporting the validity of this method. We find the chosen strategies include some common ones such as Tit-For-Tat and Grim trigger. However, other strategies that are considered to have desirable properties, such as Win-Stay-Lose-Shift, are not prevalent. We also find that the strategies used to support cooperation change with the parameters of the game. Finally, our results confirm that long-run miscoordination can arise. (author's abstract)