B001243 - ECONOMICS OF INSTITUTIONS

Italian

Part 1: meaning and role of institutions; Role of Government and Market; Theories of public sector and bureaucracy.
Part 2: Voting systems; Choosing the voting rule; Manipulation; Political competition; Indices of voting power in weighted voting systems; Case studies: International organizations.
Part 3: efficiency assessment for public sector organisations and for non-market institutions

A) As for the First and second parts of the course:
1) Lecture notes
2) Hillman, A. Public Finance and Public Policy 2nd ed, CUP 2009 Chps.: 1, 2, 3, 6 e 10
3) Nurmi, H. Models of Political Economy, Routledge, 2006, Chps.: 6, 7, 8, 9, 10;
4) Taylor, A., Pacelli, A. Mathematics and Politics. Strategy voting Power and Proof, 2nd ed., Springer, 2008; Chps.: 1 and 3
5) Comap, For All Practical Purposes, Mathematical Literacy in Today’s World, W. H. Freeman and Company, New York, 2013, Chps. 9, 10, 11, 12 and 13;

B) As for the third part of the course: lecture notes

The course aims at making the students capable to understand, analyse and assess the functioning of complex organizations. Namely, students will acquire the following capabilities: a) assess voting systems taking into account the nature of the decision and the composition of the electoral body; b) develop a counterstrategy in reply to a potential strategic behaviour of opposing coalitions; c) gauge the distribution of voting power and its correspondence with a pre-specified distribution of voting rights; d) set a solution path for controversies among two or more institutions in line with the requirements of “fair division” theory of arbitrage; e) reporting, written or spoken, in line with the basics of scientific reasoning

The course is self contained and to this end the essential topics will be reviewed in the first lectures

Mainly front line lectures (70%), Case studies (30%)

Students should enroll to the course within the first week by accessing the E-Moodle platform. Non Attending students can also enroll in order to gain access to online material and lecture notes.
Enrolment on the E-Moodle platform is not a prerequisite in order to sit for the final examination

Those regularly attending lectures can take the final examination in the form of an essay on a topic previously agreed with the teacher.
Those not attending lectures will have to sit for a vival. They can download Lecture notes from E-Moodle platform.
The Syllabus for attending and non attending students is the same. For both attending and non-attending students the examination aims at:
1) testing the command over the relevant theory;
2) ascertaining the capability of consistently applying the theory to explain observed data and behaviour.

Markets and Government: The Prima Facie Case for the Market ; The Rule of Law; Efficiency and Social Justice. Institution and Governance: The Political Principal–Agent Problem; Government Bureaucracy; Life without Markets and Private Property . Public goods: Types of Public Goods;
Information and Public Goods; Cost-Benefit Analysis. Voting: The Median Voter and Majority Voting; Political Competition ; Voting on Income redistribution. The need for Government: Growth of Government and the Need for Government; Cooperation, Trust, and the Need for Government; Views on the Need for Government. Bargaining and coalitions: Classic solutions; Stability, core and bargaining sets; Values for n-person games; Applications to European institutions; Power and preferences. Decision making in committees : Basic concepts; Aggregating opinions; New systems, new winners. Theory of committee voting: Borda count: two ways out; Problems of Borda count; Condorcet’s paradox; Condorcet’s solutions; Problems of Condorcet’s intuition; Voting procedures; Positional methods and Condorcet criteria; Inconsistency of binary procedures; Non-monotonicity of multi-stage procedures; Choice procedures and performance criteria; Two social choice theorems; Voting as a game. Designing for elections and public goods provision: The majority rule; Majority and plurality; Single transferable vote; Quota and divisor methods; Proportionality of what? ; The general design problem; Optimizing the public goods provision;. What kind of government?: States as bandits; A just state; Redistribution and rent seeking; Suggested reading. Aspects of policy evaluation: Deciding the number of criteria; Majorities, positions, weights; Changes in alternative sets; Close and yet so far; One more criterion cannot do any harm, can it?; Forest and the trees; Voters are much the same as criteria. Political Power:. The Shapley-Shubik Index of Power; Calculations for the European Economic Community;. The Banzhaf Index of Power; Two Methods of Computing Banzhaf Power; The Power of the President;. The Chair’s Paradox. More on social choice : Social Welfare Functions; A Generalization of May’s Theorem; Arrow’s Impossibility Theorem; The Gibbard-Satterthwaite Theorem; Single Peakedness—Theorems of Black and Sen

As for the third part of the course: Theory and methods for efficiency evaluation using Data Envelopment Analysis