S. decision-theoretic analysis and classic premises of democratic

S.

GagulovPPE/MPF171 BASIC ECONOMIC APPROACHESEMPLOYED BY POSITIVE POLITICAL THEORISTS: A BRIEF REVIEW Many of the recent results of the studies on theory of democracy inpolitical economy (in particular on the topic of voting behaviour) oppose to theassumptions of earlier decision-theoretic analysis and classic premises of democratictheory (for instance, to the argument that misinformation voters or voters relyingon biased information sources harm democratic practices)1.It was revealed that uninformed actors and low information voters (butrational) can draw meaningful inferences from the strategic situationstructures and the behaviour of other political actors2.This game-theoretic perspective concerns the issues of the revelation andaggregation of information about preferences. So the modest aim of this paperis to discuss a set of economic methods and approaches used in positive(formal) political theory. To fulfil this aim I will concisely review the relevantpart of argumentation of Austen-Smith & Banks3and  Austen-Smith4in their study of the issue of modelling collective decisions.The subfield of political economy viewed as a set of methodologicalapproaches can be defined as «the methodology of economics applied to theanalysis of political behavior and institutions»5. As such, formal,or positive, political theory (sometimes called public choice) has resultedfrom the use of economic methods in political economy.

The authors demarcate theseborrowed analytical models on two classes: direct and indirect approaches. The first distinguished category contains themodels of rational choice theory of individual decision making. This first directapproach extends individual models of rational choice to the whole socialcollectivity. Therefore, the models of rational choice theory suppose that «individual’spreferences are directly aggregated into a “social preference” which, as inindividual decision theory, is then maximized to yield a set of bestalternatives»6. Butin politics it is hardly conceivable that «only one individual’s preferences are relevant for anycollective choice»7.

Then the key question here is what are the proper aggregation rules that yieldbest social choices. The authors arguethat collective choices are strictly assigned to each individual list ofpreferences according to collective choice rule. While individual preferencesare aggregated into «collective», single preference in accord with a preferenceaggregation rule. As Austen-Smith puts it, the direct approach to social choice«can be described as the analysis of the abstract collective choice rulesdefined by the core of various preference aggregation rules»8.Austen-Smith mentions that at the collective level of analysis preferencetheory has only restricted explanatory and predictive power because collectivechoice can be justifiably treated in terms of rational choice theory only if environmentsare simple. The secondclass of economic approaches within formal political theory comprises theindirect models in which individuals actively make choices of their behaviourwhich, in their turn, form together resultant collective choices. Game-theoreticapproaches, unlike direct aggregation mechanisms, suppose that it is socialchoices that reflects structures of social games and presents the configurationof individual preferences. It is precisely actions of individuals, or strategicdecision, that is the subject of aggregation.

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The authors point out thatgame-theoretic approach dominates in formal theory because of its capability todevelop «predictive models» and to model «institutional details, uncertainty,and incomplete information»9.It is for that reason that the basicapproach to individual’s choices in politics is game theory.These two approaches explain how individual preferences can betransferred through aggregation procedure into group level and form collectivechoice rules. The demarcation line between them is fairly obscure, and the author’spivotal argument is that «this line, at times, should be obscure»10.And so, «any result concerning such collective rules must apply equally toboth»11.In political decision making, thus, both formal models are well combined andcomplement each other.

Austen-Smith & Banks argue that the keydistinguishing characteristics of these techniques is the compromise they made:«the principle “negative” result of the collective preference approach can beviewed as sacrificing existence of best collective alternatives in the nameof minimal democracy, whereas the principle “positive” result of the gametheory approach sacrifices minimal democracy in the name of existence of bestcollective alternatives»12.In that case significant distinction between two perspectives emerges only thereexist a claim that political collective choices should meet certain normativerequirements.The authors havesummed up that formal political theory and contemporary economic theory employthe same methodological instruments in order to formally analyse decisionmaking of rational agents – both political and economic – which actpurposefully to promote own socially constrained interests.  REFERENCES1.      D.

Austen-Smith, J. Banks. «SocialChoice Theory, Game Theory, and Positive Political Theory» // Annual Review ofPolitical Science.

?1, 1998.2.      D. Austen-Smith.

«Economic methodsin positive political theory». in «The Oxford Handbook of Political Science» editedby R. E. Goodin. New York: Oxford University Press, 2009.3.      B. R.

Weingast and D. A. Wittman. «Overviewof Political Economy: The Reach of Political Economy» in «The Oxford Handbookof Political Science» edited by R. E. Goodin.

New York: Oxford University Press,2009. 1 B. R. Weingastand D. A. Wittman. «Overview of Political Economy: The Reach of PoliticalEconomy» in «The Oxford Handbook of Political Science» edited by R.

E. Goodin. NewYork: Oxford University Press, 2009.

2 Ibid.3 D.Austen-Smith, J. Banks. «Social Choice Theory, Game Theory, and PositivePolitical Theory» // Annual Review of Political Science. ?1, 1998.4 D.Austen-Smith.

«Economic methods in positive political theory». in «The OxfordHandbook of Political Science» edited by R. E. Goodin. New York: Oxford UniversityPress, 2009.

5 B. R. Weingastand D.

A. Wittman. Op. cit.

P.785.6 D.Austen-Smith. Op. cit. P.814.

7 D.Austen-Smith, J. Banks. Op.

cit. P.260.8 D.Austen-Smith. Op.

cit. P.815.9 Ibid.

P.817.10 D.Austen-Smith, J. Banks.

Op. cit. P.

260.11 D.Austen-Smith.

Op. cit. P.817.12 D.Austen-Smith, J.

Banks. Op. cit. P.266.