by David P Myatt and Chris Wallace.

Download the Paper in PDF Format.

forthcoming: Economic Journal 119(534), pp. 61-90, January 2009.

Abstract: A classic collective-action problem arises when private actions generate common consequences; for example, the private provision of a public good. In the context of a collective-action game, this paper asks: what shapes of public-good production function work well in the long run? Here, the “long run” corresponds to the behaviour of players engaged in a strategy-revision process which allows play to evolve over time, and hence move between equilibria. Welfare-maximising public-good production functions are those which yield nothing when the combined effort of players falls below some threshold, but otherwise maximally exploit the production-possibility frontier. Such production functions lead to games with multiple equilibria: coordinated teamwork is an integral component of successful collective actions. However, the optimal threshold is not too ambitious: when strategy revisions approximate best replies, it corresponds to the output that an individual who pays all private costs but enjoys only private bene?ts would be just willing to provide.

by Torun Dewan and David P Myatt.

Download the Paper in PDF Format.

American Political Science Review, 102(3), pp. 351–368, August 2008.

Abstract: What is leadership? What is good leadership? What is successful leadership? Answers emerge from our study of a formal model in which followers face a coordination problem: they wish to choose the best action while conforming as closely as possible to the actions of others. Although they would like to do the right thing and do it together, followers are unsure about the relative merits of their options. They learn about their environment and the likely moves of others by listening to leaders. These leaders bridge differences of opinion and become coordinating focal points. A leader’s influence increases with her judgement (her sense of direction) and her ability to convey ideas (her clarity of communication). A leader with perfect clarity enjoys greater influence than one with a perfect sense of direction. When followers choose how much attention to pay to leaders, they listen only to the most coherent communicators. However, power-hungry leaders who need an audience sometimes obfuscate their messages, but less so when their followers place more emphasis on conformity than on doing the right thing.

In their Notes from the Editor section of the August 2008 issue of the APSR, the co-editors summarized the paper:

If party competition is important, of course, so too is party leadership, and this is the problem taken up by Torun Dewan and David P. Myatt in “The Qualities of Leadership: Direction, Communication, and Obfuscation.” Making public statements is doubtless one of the defining characteristics of a political leader. But to which leaders will people pay attention? To explore this question, the authors introduce a model in which leaders vary in how correct they are about policy and also in how precisely they can state that policy in their public statements. Their audience cares about the right policy but also about unity: Each person wants every other person as much as possible to support the same or similar policy. A public who cares mainly about unity might thus listen to a leader who states his policy clearly even though it could very well be wrong. A public who cares mainly about the correct policy would rather listen to a less clear but more correct leader. One interesting implication of their model is that if a leader wants to get as much public attention as possible, and not cede her audience to other leaders, the leader might purposefully obfuscate and make her public statements less clear, so that the audience would be compelled to spend more time figuring out what she is saying.

by Chris Wallace and David P Myatt.

Download the Paper in PDF Format.

Review of Economic Studies, 75(2), pp. 499-527, April 2008.

Abstract:  This paper studies collective-action games in which the production of a public good requires teamwork. A leading example is a threshold game in which provision requires the voluntary participation of m out of n players. Quantal-response strategy revisions allow play to move between equilibria in which a team successfully provides, and an equilibrium in which the collective action fails. A full characterization of long-run play reveals the determinants of success; these include the correlation between players’ costs of provision and their valuations for the good. The addition of an extra “bad apple” player can “spoil the barrel” by destabilizing successful teams and so offers a rationale for limiting the pool of possible contributors.

by David P Myatt and Chris Wallace.

Download the Paper in PDF Format.

Games and Economic Behavior, 62(1), pp. 67-76, January 2008.

Abstract: A public good is produced if and only if a volunteer provides it. There are many pure-strategy Nash equilibria in each of which a single player volunteers. Noisy strategy revisions (for instance, quantal responses) allow play to evolve. Equilibrium selection is achieved via the characterisation of long-run play as revisions approximate best replies. The volunteer need not be the lowest-cost player: relatively high-cost, but nonetheless “reliable” players may instead produce the public good. More efficient players provide when higher values are associated with lower costs. Voluntary open-source software provision offers a contemporary application.

JEL Classification: C72, C73, and H41.

Keywords: Volunteer’s dilemma; Public goods; Evolution; Equilibrium selection; Quantal response.

by Torun Dewan and David P Myatt.

Download the Paper in PDF Format.

American Political Science Review, 101(4), pp. 827-845, November 2007.

Abstract: Party activists face a coordination problem: a critical mass—a barrier to coordination—must advocate a single policy alternative if the party is to succeed. The need for direction is the degree to which the merits of the alternatives respond to the underlying fundamentals of the party’s environment. An individual’s ability to assess the fundamentals is his sense of direction. These three factors—the barriers to coordination, the need for direction, and an individual’s sense of direction—combine to form an index of both the desirability and the feasibility of leadership. We offer insights into Michels’ Iron Law: a sovereign party conference gives way to leadership by an individual or oligarchy if and only if the leadership index is sufficiently high. Leadership enhances the clarity of intraparty communication, but weakens the response of policy choices to the party’s environment. Our model can also be applied to the coordination problems faced by instrumental voters in plurality-rule elections, and so relates to the psychological effect of Duverger’s Law.

In his Notes from the Editor section of the November 2007 issue of the APSR, Editor Lee Sigelman summarized the paper:

Harry S. Truman once remarked, “Men make history, and not the other way around. In periods where there is no leadership, society stands still. Progress occurs when courageous, skillful leaders seize the opportunity to change things for the better.” Thus, a key to understanding politics is understanding leadership. Torun Dewan and David P. Myatt help us do just that in “Leading the Party: Coordination, Direction, and Communication.” Dewan and Myatt use formal modeling tools to analyze the extent to which leaders can coordinate mass action. This question not only has important theoretical implications but also can aid our understanding of the real, day-to-day policy world.

by David P Myatt.

Download the Paper in PDF Format.

Review of Economic Studies 74(1), pp. 255-281, January 2007.

Abstract: In a plurality-rule election, a group of voters must coordinate behind one of two challengers in order to defeat a disliked status quo. Departing from existing work, the support for each challenger must be inferred from the private observation of informative signals. The unique equilibrium involves limited strategic voting and incomplete coordination. This is driven by negative feedback: an increase in strategic voting by others reduces the incentives for a voter to act strategically. Strategic-voting incentives are lower in relatively marginal elections, after controlling for the distance from contention of a trailing preferred challenger. A calibration applied to the U.K. General Election of 1997 is consistent with the impact of strategic voting and the reported accuracy of voters’ understanding of the electoral situation.

by Torun Dewan and David P Myatt.

Download the Paper in PDF Format.

American Political Science Review, 101(1), pp. 63-77, February 2007.

Abstract: Empirical evidence suggests that a prime minister benefits from firing ministers who are involved in political scandals. We explore a model in which scandals are positively related to policy activism, so that a prime minister may wish to protect a minister from resignation calls. We find that protection can sometimes discourage activism: it enhances the value of a minister’s career and hence encourages him to “sit tight” by moderating his activities. On the other hand, an exogenous increase in exposure to scandals may lead a minister to “live for today” by pursuing controversial policies. The prime minister’s ability to protect ministers is limited by her short-term incentive to fire. She may, however, enhance her credibility by building a collective reputation with the cabinet; the heterogeneity of cabinet membership plays an important role.

In his Notes from the Editor section of the Feburary 2007 issue of the APSR, Editor Lee Sigelman summarized the paper:

If offered the opportunity to purchase an improved public image for a small price, rational politicians presumably would get in line to buy. Yet in “Scandal, Protection, and Recovery in the Cabinet,” Torun Dewan and David P. Myatt argue that prime ministers face a dilemma when they are considering firing cabinet members who are involved in scandals. The dilemma arises in the prime minister’s choice between protecting or sacrificing cabinet members, for scandal might erupt from personal misbehavior or from the pursuit of policy initiatives that the prime minister favors. In the age of the negative campaign, the line between policy and personal considerations is not clearly demarcated. Importantly, Dewan and Myatt are interested not just in whether a prime minister should fire a cabinet member, though that tactical issue is interesting in itself. Rather, they probe the conditions under which governments can successfully implement a policy agenda. Thus, beyond the important insights that it offers into both parliamentary and presidential cabinet governance, this analysis offers some important and nonobvious lessons for broader considerations of governmental effectiveness.

by Justin P Johnson and David P Myatt,

Download the Paper in PDF Format.

RAND Journal of Economics, 37(3),  Autumn 2006.

Abstract: We study a Cournot industry in which each firm sells multiple quality-differentiated products. We use an upgrades approach, working not with the actual products but instead with upgrades from one quality to the next. The properties of single-product models carry over to the supply of upgrades, but not necessarily to the supply of complete products. Product line determinants and welfare results are presented. Strategic commitment to product lines is considered; firms may well choose to compete head-to-head.

by Justin P Johnson and David P Myatt.

Download the Paper in PDF Format.

American Economic Review, 96(3), pp 756-784, June 2006.

Abstract: 

We propose a framework for analyzing transformations of demand. Such transformations frequently stem from changes in the dispersion of consumers’ valuations, which lead to rotations of the demand curve. In many settings, profits are a U-shaped function of dispersion. High dispersion is complemented by niche production, and low dispersion is complemented by mass-market supply. We investigate numerous applications, including product design; advertising, marketing and sales advice; and the construction of quality-differentiated product lines. We also suggest a new taxonomy of advertising, distinguishing between hype, which shifts demand, and real information, which rotates demand.

JEL: D8, L1, M3

by David P Myatt and Chris Wallace.

Download the Paper in PDF Format.

Games and Economic Behavior, 48 (1), pp. 124-138, 2004.

Abstract: Equilibrium selection in coordination games has generated a large literature. Kandori, Mailath and Rob (Econometrica, 1993) and Young (Econometrica, 1993) studied dynamic models of aggregate behaviour where agents best-respond to observations of population play. Crucially, infrequent mistakes (“mutations”) allow agents to take actions contrary to current trends and prevent initial configurations from determining long-run play. An alternative approach is offered here: Trembles are added to payoffs so that with some probability it is optimal to act against the ?ow of play. The long-run distribution of population behaviour is characterised; modes correspond to stable Bayesian Nash equilibria. Allowing the variance of payoff trembles to vanish (a purification process) a single equilibrium is played almost always in the long run. Kandori, Mailath, and Rob, and Young, showed that the number of contrary actions required to escape an equilibrium determines selection; here, the likelihood that such actions are taken is equally important.