S. decision-theoretic analysis and classic premises of democratic

S.
Gagulov
PPE/MPF171

 

BASIC ECONOMIC APPROACHES
EMPLOYED BY POSITIVE POLITICAL THEORISTS: A BRIEF REVIEW

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Many of the recent results of the studies on theory of democracy in
political economy (in particular on the topic of voting behaviour) oppose to the
assumptions of earlier decision-theoretic analysis and classic premises of democratic
theory (for instance, to the argument that misinformation voters or voters relying
on biased information sources harm democratic practices)1.
It was revealed that uninformed actors and low information voters (but
rational) can draw meaningful inferences from the strategic situation
structures and the behaviour of other political actors2.
This game-theoretic perspective concerns the issues of the revelation and
aggregation of information about preferences. So the modest aim of this paper
is to discuss a set of economic methods and approaches used in positive
(formal) political theory. To fulfil this aim I will concisely review the relevant
part of argumentation of Austen-Smith & Banks3
and  Austen-Smith4
in their study of the issue of modelling collective decisions.

The subfield of political economy viewed as a set of methodological
approaches can be defined as «the methodology of economics applied to the
analysis of political behavior and institutions»5. As such, formal,
or positive, political theory (sometimes called public choice) has resulted
from the use of economic methods in political economy. The authors demarcate these
borrowed analytical models on two classes: direct and indirect approaches. The first distinguished category contains the
models of rational choice theory of individual decision making. This first direct
approach extends individual models of rational choice to the whole social
collectivity. Therefore, the models of rational choice theory suppose that «individual’s
preferences are directly aggregated into a “social preference” which, as in
individual decision theory, is then maximized to yield a set of best
alternatives»6. But
in politics it is hardly conceivable that «only one individual’s preferences are relevant for any
collective choice»7.
Then the key question here is what are the proper aggregation rules that yield
best social choices.

The authors argue
that collective choices are strictly assigned to each individual list of
preferences according to collective choice rule. While individual preferences
are aggregated into «collective», single preference in accord with a preference
aggregation rule. As Austen-Smith puts it, the direct approach to social choice
«can be described as the analysis of the abstract collective choice rules
defined by the core of various preference aggregation rules»8.
Austen-Smith mentions that at the collective level of analysis preference
theory has only restricted explanatory and predictive power because collective
choice can be justifiably treated in terms of rational choice theory only if environments
are simple.

The second
class of economic approaches within formal political theory comprises the
indirect models in which individuals actively make choices of their behaviour
which, in their turn, form together resultant collective choices. Game-theoretic
approaches, unlike direct aggregation mechanisms, suppose that it is social
choices that reflects structures of social games and presents the configuration
of individual preferences. It is precisely actions of individuals, or strategic
decision, that is the subject of aggregation. The authors point out that
game-theoretic approach dominates in formal theory because of its capability to
develop «predictive models» and to model «institutional details, uncertainty,
and incomplete information»9.
It is for that reason that the basic
approach to individual’s choices in politics is game theory.

These two approaches explain how individual preferences can be
transferred through aggregation procedure into group level and form collective
choice rules. The demarcation line between them is fairly obscure, and the author’s
pivotal argument is that «this line, at times, should be obscure»10.
And so, «any result concerning such collective rules must apply equally to
both»11.
In political decision making, thus, both formal models are well combined and
complement each other. Austen-Smith & Banks argue that the key
distinguishing characteristics of these techniques is the compromise they made:
«the principle “negative” result of the collective preference approach can be
viewed as sacrificing existence of best collective alternatives in the name
of minimal democracy, whereas the principle “positive” result of the game
theory approach sacrifices minimal democracy in the name of existence of best
collective alternatives»12.
In that case significant distinction between two perspectives emerges only there
exist a claim that political collective choices should meet certain normative
requirements.

The authors have
summed up that formal political theory and contemporary economic theory employ
the same methodological instruments in order to formally analyse decision
making of rational agents – both political and economic – which act
purposefully to promote own socially constrained interests.

 

REFERENCES

1.      D. Austen-Smith, J. Banks. «Social
Choice Theory, Game Theory, and Positive Political Theory» // Annual Review of
Political Science. ?1, 1998.

2.      D. Austen-Smith. «Economic methods
in positive political theory». in «The Oxford Handbook of Political Science» edited
by R. E. Goodin. New York: Oxford University Press, 2009.

3.      B. R. Weingast and D. A. Wittman. «Overview
of Political Economy: The Reach of Political Economy» in «The Oxford Handbook
of Political Science» edited by R. E. Goodin. New York: Oxford University Press,
2009.

 

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

2 Ibid.

3 D.
Austen-Smith, J. Banks. «Social Choice Theory, Game Theory, and Positive
Political Theory» // Annual Review of Political Science. ?1, 1998.

4 D.
Austen-Smith. «Economic methods in positive political theory». in «The Oxford
Handbook of Political Science» edited by R. E. Goodin. New York: Oxford University
Press, 2009.

5 B. R. Weingast
and 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.