Notes
What is Politics?
Matt Golder & Sona Golder
Pennsylvania State University
What is Politics?
Notes
Politics is the subset of human behavior that involves the use of power or
influence.
Power is involved whenever individuals cannot accomplish their goals
without either trying to influence the behavior of others or trying to
wrestle free from the influence exerted by others.
Exit, Voice, and Loyalty
Notes
Game-theoretic model of Albert Hirschman’s (1970)
famous Exit, Voice, and Loyalty framework.
A simple model that captures the key elements of many political situations.
Exit, Voice, and Loyalty
Notes
Game-theoretic model of Albert Hirschman’s (1970)
famous Exit, Voice, and Loyalty framework.
A simple model that captures the key elements of many political situations.
Who has power, where does it come from, and when is it used?
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
The state increases taxes
The state imposes a ban on handguns.
The Supreme Court rules that prayer in public schools is unconstitutional.
The quality of peaches at your local fruit stand declines.
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
The state increases taxes
The state imposes a ban on handguns.
The Supreme Court rules that prayer in public schools is unconstitutional.
The quality of peaches at your local fruit stand declines.
Politics is frequently about winners and losers.
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
1
exit: accept the deleterious change and optimize in the new
environment.
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
1
exit: accept the deleterious change and optimize in the new
environment.
2
voice: do not accept the deleterious change and seek to ‘persuade’ the
state to reinstate the original environment.
Exit, Voice, and Loyalty
Notes
How will a citizen react to a deleterious change in her environment?
1
exit: accept the deleterious change and optimize in the new
environment.
2
voice: do not accept the deleterious change and seek to ‘persuade’ the
state to reinstate the original environment.
3
loyalty: accept the deleterious change and make no change to her
pre-existing behavior.
Exit, Voice, and Loyalty
52
Notes
Principles of Comparative Politics
Table 3.1
Exit, Voice, and Loyalty
Stimulus
Exit
Voice
Loyalty
Your state increases
taxes.
Reallocate portfolio
to avoid tax
increase
Organize tax revolt
Pay taxes, keep your
mouth shut
There is a decline in the
quality of peaches at
the local fruit stand.
Buy mangoes, or
buy peaches
somewhere else
Complain to the store
owner
Eat peaches, keep
your mouth shut
The Supreme Court
rules that prayer in
public schools is
unconstitutional.
Homeschool your
children
Lobby the government
to change the
Constitution
Keep your children in
the public school
system, keep your
mouth shut
Your state outlaws
handguns.
Move to Idaho
Join the NRA or a
militia group to put
pressure on the state to
allow handguns
Turn in your
handguns, keep your
mouth shut
on what she expects to happen when she chooses one of these options. In order for the citizen to know what to do, she needs to know what the state would do if she used voice. On the
one hand, the fact that the citizen complains or protests might cause the state to respond
positively to the citizen. This would lead to a tax reduction and the restoration of the citizen’s
original environment. On the other hand, the state might simply ignore the citizen’s use of
voice. If the state did ignore her, then the citizen would have to decide what to do next. After
all, even though the citizen’s use of voice failed, she would still have the choice of exiting or
remaining loyal. What should the citizen do? What should the state do?
The problem facing the citizen and state is complicated because the citizen’s choice of
what to do depends on what she thinks the state will do, and the state’s choice of what to do
depends on what it thinks the citizen will do. This strategic aspect of social interactions is
the essence of politics. Game theory is a fundamental
tool that political scientists use for analyzing these types
Game theory is a fundamental tool for analyzing
strategic situations.
of strategic situations in which the choices of one actor
depend on the choices made by other actors.3 ThroughIn a strategic situation, the choices of one actor
out this book, we will use game theory as a conceptual
depend on the choices made by other actors.
tool to analyze, and better understand, a variety of
What Should You Do?
3. In addition to political science, game theory is also widely applied in biology, economics, anthropology, sociology, social
psychology, computer science, philosophy, and many other fields. Those students interested in learning more about game
theory might want to begin by consulting Morrow (1994), Dixit and Skeath (1999), Dutta (1999), or Osborne (2004).
How should the citizen respond to a deleterious change in her environment?
Notes
What Should You Do?
Notes
How should the citizen respond to a deleterious change in her environment?
Much presumably depends on what the citizen thinks the state will do.
What Should You Do?
Notes
How should the citizen respond to a deleterious change in her environment?
Much presumably depends on what the citizen thinks the state will do.
This is where game theory might helps us.
Game Theory
Notes
Game theory is a fundamental tool for analyzing strategic situations.
In a strategic situation, the choices of one actor depend on the choices made
by other actors.
We can think of the decisions to be made by the citizen and the state as a
game.
Games
Notes
A game is a situation in which an individual’s ability to achieve her goals
depends on the choices made by other actors.
Games have players and rules about how decisions are made.
The basic rule is that players choose to do what they believe is in their best
interest.
Payoffs
Notes
The interests of players are reflected in the payoffs associated with the different
outcomes of the game.
The payoffs in a game indicate how the players value each of the possible
outcomes.
Players prefer outcomes with higher payoffs.
80
Chapter 4:ofThe
Principles
Comparative
Origins of the
Politics
Modern State
Generic Game I
Figure 3.10
1, −1
Up
Game Forms
Player 2
Up
Down
Player 1
2, 0
Notes
Down
3, −5
Extensive Form Games
Generic Game II
Figure 3.11
1, –1
Up
Player 2
2, 0
Up
Left
Down
Player 1
Extensive form games can be represented
by a game tree.
Player 1
Down
Players make their choices sequentially.
Right
3, –5
4, 5
2. Senate Race Game revisited
Earlier we solved the Senate Race Game assuming that the incumbent, Staton, first decided
whether or not to advertise and that the potential challenger, Reenock, then decided whether
to enter or stay out. What happens, though, if we reverse the order in which the choices are
made? In other words, what happens if Reenock has to decide whether to enter or stay out
before Staton decides whether to advertise or not? The game tree for this scenario is shown in
80
Chapter 4:ofThe
Principles
Comparative
Origins of the
Politics
Modern State
Generic Game I
Figure 3.10
1, −1
Up
Game Forms
Player 2
Up
Down
Player 1
104
2, 0
Principles of Comparative Politics
Notes
Down
3, −5
best replies in a Nash equilibrium—each player is doing the best that he can given what the
other player is doing. If we think in terms of “best replies,” it is quite easy to find Nash equilibria in normal form games like the one in Figure 4.2. We show you how to do this step-bystep. Just before the problem section at the end of this chapter, we review the whole process
of constructing
solvingGeneric
normal form
games
Game
II again.
Figure and
3.11
Step 1 is to put yourself in the shoes of one of the players (say, player A). Ask yourself,
“What is my best reply (refrain or steal) if player B chooses to1, refrain?”
We are now just
–1
looking at the left-hand column where player B chooses
Up to refrain. If you choose to refrain,
you will get a payoff of 3, and if you choose to steal, you
will
get a payoff of 4. Thus, your best reply to player B’s
A best reply is the action that yields the highest
Player 2
payoff given what the other player is doing. Up
refraining is for you to steal. We indicate this by placing
a line under the number 4. This is shown inLeft
Figure 4.3.
Down B chooses to steal?” We are now just
Now ask yourself, “What is my best reply if player
Player 1
1 choose to refrain,
looking at the right-hand column where player B chooses to steal.Player
If you
you will get a payoff of 1, and if you choose to steal, you will get a payoff of 2. Thus, your
best reply to player Down
B’s stealing is for you to steal as well. We indicate this by placing a line
Right
under the number 2. This is shown in3,Figure
4.4. You have now identified the best replies for
–5
player A to any choice made by player B.
Step 2 is to put yourself in the shoes of the other player, in this case player B. Ask yourself, “What
is my best reply (refrain or steal) if player A chooses to refrain?” We are now just looking at the top
row where player
A chooses
to refrain.
If you choose to refrain, you will get a payoff of 3, and if you
2. Senate
Race Game
revisited
Extensive Form Games
2, 0
Extensive form games can be represented
by a game tree.
Players make their choices sequentially.
4, 5
Earlier we solved the Senate Race Game assuming that the incumbent, Staton, first decided
whether or not to advertise and that the potential challenger, Reenock, then decided whether
to enter or stay out. What happens, though, if we reverse the order in which the choices are
made? In other words, what happens if Reenock has to decide whether to enter or stay out
State of Nature Game with Payoffs
before Staton decides whether to advertise or not? The game tree for this scenario is shown in
Normal/Strategic Form Games
Figure 4.2
B
Refrain
Steal
Refrain
3, 3
1, 4
Steal
4, 1
2, 2
A
Normal or strategic form games can be
represented by a payoff matrix.
Players make their choices simultaneously.
Note: Player A’s (the row player’s) payoffs are shown first in each cell; player B’s (the column player’s) payoffs are
shown second. A comma separates the payoffs for the players in each cell.
Extensive Form Games
Notes
An extensive form game consists of choice nodes linked in a sequence.
A choice node is a point in the game at which a player must choose an action.
The initial node is the place where the game begins, and a terminal node is a
place where the game ends.
The branches represent the actions that can be taken at the choice nodes.
A game tree is the entire specification of choice nodes and branches.
Exit, Voice, and Loyalty (EVL) Game
Notes
Prehistory . . .
Deleterious shock resulting in a transfer of some benefit from the citizen
to the state.
The deleterious shock might be a tax increase.
Citizen must decide whether to exit, use voice, or remain loyal.
54
Principles of Comparative Politics
Notes
Exit, Voice, and Loyalty (EVL) Game without Payoffs
Figure 3.1
O3: State returns benefit
to citizen.
Respond
State
O4: State keeps benefit;
citizen suffers loss.
Voice
ignore
O2: State keeps benefit;
citizen suffers loss.
Loyalty
Citizen
Loyalty
Citizen
3: What Is Politics?
55
Exit
Exit
O1:or
State
keeps her.
benefit;
O5: State
to the citizen
ignore
If the state responds positively, then
the keeps
state benefit;
returnscitizen
the benefit
citizen opts for some substitute.
opts for some substitute.
to the citizen. This is outcome 3 (O3). If the state ignores the citizen’s use of voice, then the
citizen must decide whether to remain loyal or exit.4 If the citizen remains loyal, the state gets
to keep the benefit that it took and the citizen suffers the loss. This is outcome 4 (O4). If the
citizen chooses to exit, then the state gets to keep the benefit but the citizen opts for some
player This
in that
entire specification of choice nodes and branches is called a
substitute.
is outcome.
outcomeThe
5 (O5).
gamedo
treeyou
because
it resembles
a tree.
What
expect
the players
to do in this game? This is actually an unfair question
Figure 3.1 illustrates a game in extensive form between two players—a citizen and the
because you cannot really answer it without knowing how much each of the players values
state—going from left to right. The choice nodes are identified by the name of the player
the different
we indicate
theaspayoffs
for the
players
that are
making apossible
choice at outcomes.
that point ofIn
theTable
game.3.2,
Branches
are shown
lines linking
choice
nodes
associated
with
each
of the
five possible
If theorcitizen
chooses
to game
exit at
any point
to other
choice
nodes
or terminal
nodes. outcomes.
The “prehistory,”
background,
to the
is that
in thethegame,
thencaused
she gets
what we
call in
her
payoff.” We
arbitrarily
setresulted
the value
state has
a negative
change
the“exit
environment
of the
citizen that
in a of the
transfer
someatbenefit
from
the citizen
example,
the state
haveon the
citizen’s
exit of
payoff
E. The
precise
value to
of the
E instate.
any For
specific
situation
willmight
depend
introducedofa tax
leadingexit
to an
increase
in revenue
for will
the state
less income
the
attractiveness
thehike
citizen’s
option.
Some
citizens
haveand
attractive
exitforoptions
(E
citizen.
Now
the game
displayed
Figure
3.1 begins.
will be
high),
whereas
others
will in
not
(E will
be low). If the citizen chooses to remain loyal
The game starts at the leftmost choice node (the initial node) with the citizen deciding
at any point in the game, then she accepts the loss of her benefit and she gets nothing, 0. We
whether to exit, use voice, or remain loyal. If the citizen decides to exit, then the state gets to
assume
that
use that
of voice
is costly
theprehistory
citizen, because
complaining,
keep
thethe
benefit
it seized
in the for
game’s
and the protesting,
citizen opts for
some substi-lobbying, and
action
allIfrequire
effort
thatto
could
beloyal,
put to
alternative
use.toDepending
tute.taking
This is direct
outcome
1 (O1).
the citizen
chooses
remain
then
the state gets
keep
on the
state
in
which
she
lives,
voice
might
be
costly
in
other
respects
as
well.
example,
the benefit that it seized and the citizen just suffers the loss in silence. This is outcomeFor
2 (O2).
the citizen chooses
to use voice,
must decide whether
positivelyor even
one’s Ifinvolvement
in a protest
mightthen
be the
metstate
by imprisonment,
losstoofrespond
employment,
Notes
Table 3.2
Turning Outcomes into Payoffs
Outcome
Description
O1
State keeps benefit of new situation; citizen opts
for some substitute
Citizen
E
State
1
O2
State keeps benefit of new situation; citizen
suffers loss
0
1+L
O3
State returns benefit to citizen
1–c
L
O4
State keeps benefit; citizen suffers loss
0–c
1+L
O5
State keeps benefit but loses support of the
citizen; citizen opts for some substitute
E–c
1
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice.
4. You might be wondering why the citizen cannot choose to use her voice again at this point. Well, obviously, she could.
But ask yourself whether the state would behave any differently this time around if nothing else has changed. If the state
ignored the citizen’s voice before, it will do so again. Thus, allowing the citizen to use her voice at this point in the game
does not add anything substantively new. This is why we allow the citizen to choose only between exiting and remaining
loyal if the state decides to ignore her use of voice.
3: What Is Politics?
57
Notes
Figure 3.2
Exit, Voice, and Loyalty (EVL) Game with Payoffs
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
0, 1 + L
Loyalty
Citizen
Exit
Exit
E, 1
E – c, 1
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0, and that E < 1 – c. The citizen’s
payoffs are shown first because she is the first player to make a choice; the state’s payoffs are shown second. A
comma separates the payoffs for the players associated with each outcome.
assumption makes the situation we are examining between the citizen and the state more
interesting from a political point of view because there is now at least the possibility that the
citizen might choose to use voice.
SOLVING THE EXIT, VOICE, AND LOYALTY GAME
Now that we know the players, the choices available to them, and how they value each possible outcome, we are ready to “solve” the game. To solve the game we have to identify the
choices that a rational decision maker, who is trying to do as well as possible, would make.
By rational, all we mean is that the player does what she believes is in her best interest given
Solving the EVL Game
Notes
What would a rational decision maker do?
A rational player does what she believes is in her best interest given what she
knows at the time.
We typically solve extensive form games for subgame perfect equilibria (SPE).
Solving the EVL Game
Notes
A subgame perfect equilibrium can be found using a method known as
backward induction.
Backward induction is the process of reasoning backward, from the end of the
game or situation to the beginning, in order to determine an optimal course of
action.
3: What Is Politics?
57
Notes
Figure 3.2
Exit, Voice, and Loyalty (EVL) Game with Payoffs
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
0, 1 + L
Loyalty
Citizen
Exit
Exit
E, 1
E – c, 1
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0, and that E < 1 – c. The citizen’s
payoffs are shown first because she is the first player to make a choice; the state’s payoffs are shown second. A
comma separates the payoffs for the players associated with each outcome.
assumption makes the situation we are examining between the citizen and the state more
interesting from a political point of view because there is now at least the possibility that the
citizen might choose to use voice.
SOLVING THE EXIT, VOICE, AND LOYALTY GAME
Now that we know the players, the choices available to them, and how they value each possible outcome, we are ready to “solve” the game. To solve the game we have to identify the
choices that a rational decision maker, who is trying to do as well as possible, would make.
By rational, all we mean is that the player does what she believes is in her best interest given
3: What Is Politics?
Figure 3.3
59
Notes
Solving the Exit, Voice, and Loyalty Game When the
Citizen Has a Credible Exit Threat (E > 0): Step 1
Scenario 1
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Ignore
Loyalty
Citizen
Loyalty
Citizen
0, 1 + L
Exit
Exit
E – c, 1
E, 1
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E > 0.
60
citizen would never choose to exit. Once we make the assumption that E > 0, it becomes
clear that E – c > 0 – c. As a result, the citizen will choose to exit rather than remain loyal.
We indicate this choice by making the exit branch at this terminal node bold. This is
shown in Figure 3.3.
Now we move backward to the choice node prior to the final choice node. At this choice
node, the state has to decide whether to respond positively to the citizen or ignore her. If the
state responds positively, then it receives a payoff of L. If the state ignores the citizen, then it
can look down the game tree (follow the bold line) and see that the citizen will choose to exit
at the final choice node and that its payoff will be 1. The decision whether to respond positively to the citizen or ignore her will obviously depend on whether L is larger or smaller than
1. For now, let us assume that L > 1. One way to interpret this is to say that the state is dependent on the citizen—the state values having the loyalty of the citizen more than the benefit
that it took from her. Once we make this assumption, it becomes clear that the state will
choose
to respond positively.
Principles
of Comparative
Politics We indicate this choice by making the respond branch at this
choice node bold. This is shown in Figure 3.4.
Figure 3.4
Notes
Solving the Exit, Voice, and Loyalty Game When the
Citizen Has a Credible Exit Threat (E > 0) and the State
Is Dependent (L > 1): Step 2
Scenario 1
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
Loyalty
Citizen
0, 1 + L
Exit
Exit
E – c, 1
E, 1
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E > 0; L > 1.
Now we move backward to the choice node prior to this one. In this particular game, this
is the initial choice node. At this node, the citizen has to choose whether to exit, remain loyal,
or use her voice. If the citizen chooses to exit, then she receives a payoff of E. If the citizen
chooses to remain loyal, then she receives a payoff of 0. And if the citizen chooses to use her
voice, then she can look down the game tree (follow the bold lines) and see that the state will
respond positively and that her payoff will be 1 – c. As always, the citizen will choose the
action that provides her with the highest payoff. Remember that we have assumed in this
particular example that the citizen has a credible exit threat (E > 0) and that E < 1 – c. Given
these assumptions, it is easy to see that the citizen will choose to use voice to get a payoff of
1 – c instead of E or 0. Again, we indicate this choice by making the voice branch at this
choice node bold. This is shown in Figure 3.5.
We have now solved the game using backward induction. Once we have solved a game,
3: What Is Politics?
we are often interested in identifying three things: the expected outcome of the game, the
payoffs that each player receives, and the equilibrium of the game. Let’s start by identifying
Figure 3.5
Solving the Exit, Voice, and Loyalty Game When the
Citizen Has a Credible Exit Threat (E > 0) and the State
Is Dependent (L > 1): Third and Final Step
Scenario 1
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
0, 1 + L
Loyalty
Citizen
Exit
Exit
E, 1
E – c, 1
The subgame perfect equilibrium is (Voice, Exit; Respond)
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E > 0; L > 1.
the expected outcome of the game. We do this by starting at the beginning of the game and
following the bold lines until we reach a terminal node. The expected outcome of the game
in Figure 3.5 is that the citizen uses her voice and the state responds positively (Voice,
Respond). The payoffs next to the terminal node that is identified as the expected outcome
indicate the payoffs that each player will receive. In this case, the citizen obtains 1 – c and the
state obtains L, that is, (1 – c, L).
To find the subgame perfect equilibrium for the EVL Game in Figure 3.5, we must list the
actions chosen by both the citizen and the state at all of the choice nodes in the game. By
61
Notes
3: What Is Politics?
Figure 3.5
61
Solving the Exit, Voice, and Loyalty Game When the
Citizen Has a Credible Exit Threat (E > 0) and the State
Is Dependent (L > 1): Third and Final Step
Notes
Scenario 1
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Ignore
Loyalty
Citizen
Loyalty
Citizen
0, 1 + L
Exit
Exit
E – c, 1
E, 1
The subgame perfect equilibrium is (Voice, Exit; Respond)
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E > 0; L > 1.
the expected outcome of the game. We do this by starting at the beginning of the game and
following the bold lines until we reach a terminal node. The expected outcome of the game
1
in Figure 3.5 equilibrium:
is that the citizen uses (Voice,
her voice andExit;
the state Respond)
responds positively (Voice,
Subgame perfect
2
indicate the payoffs that each player will receive. In this case, the citizen obtains 1 – c and the
Observed outcome:
Citizen uses voice and state responds.
state obtains L, that is, (1 – c, L).
3
Payoffs: Citizen
obtains
− candand
state
obtains
L.in the game. By
actions chosen
by both the1citizen
the state
at all of the
choice nodes
Respond). The payoffs next to the terminal node that is identified as the expected outcome
To find the subgame perfect equilibrium for the EVL Game in Figure 3.5, we must list the
convention, the SPE first lists all the choices that the first player (citizen) makes at each of
the choice nodes where she gets to make a choice, and then lists all of the choices that the
second player (state) makes at each of the choice nodes where it gets to make a choice. We
distinguish between the choices of the first player and the choices of the second player by
3: What Is Politics?
Figure 3.6
Solving the Exit, Voice, and Loyalty Game When the
Citizen Does Not Have a Credible Exit Threat (E < 0) and
the State Is Dependent (L > 1)
63
Notes
Scenario 2
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Ignore
Loyalty
Citizen
Loyalty
Citizen
0, 1 + L
Exit
Exit
E – c, 1
E, 1
The subgame perfect equilibrium is (Loyalty, Loyalty; Ignore)
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E < 0; L > 1.
node prior to the final one, the state must choose whether to respond positively to the citizen’s
use of voice or ignore it. If the state responds positively, then it receives a payoff of L. If the
1
state ignores the citizen, then it can look down the game tree (follow the bold line) and see
Subgame perfect
(Loyalty,
Loyalty;
Ignore)
that the citizenequilibrium:
will choose to remain loyal
at the final choice
node and that
its payoff will be
2
Observed outcome:
Citizen
remains
1 + L > L. As a result,
the ignore branch
from thisloyal.
choice node is bold. At the initial choice
3
off will be E.obtains
If she remains loyal,
her payoff
will be 0.
And if she uses1voice,
Payoffs: Citizen
0 and
state
obtains
+ she
L.can look down
1 + L. No matter what the value of L, the state will always choose to ignore the citizen because
node, the citizen must choose whether to exit, remain loyal, or use voice. If she exits, her paythe game tree (follow the bold lines) and see that her payoff will be 0 – c. Because the citizen
does not have a credible exit threat (E < 0) in this scenario, she will get her highest payoff (0)
by remaining loyal. As a result, the loyalty branch from the initial choice node is bold. We have
now solved this new scenario of the EVL game using backward induction. The SPE is (Loyalty,
Loyalty; Ignore). This indicates that the citizen will choose to be loyal from the beginning of
64
Principles of Comparative Politics
the game. If the citizen had used her voice, the state would have ignored her, at which point
the citizen would have remained loyal. The expected outcome of this game is that the citizen
remains loyal and the state gets to keep the benefit it took from her. The payoffs associated
with this outcome are 0 for the citizen and 1 + L for the state, that is, (0, 1 + L).
What happens if we change the assumptions again? What happens, for example, if we
assume that the citizen has a credible exit threat (E > 0) but that the state is autonomous and
does not depend on the citizen (L < 1)? The solution to this game is shown in Figure 3.7. At
the final choice node, the citizen has to choose whether to remain loyal with a payoff of 0 – c
or exit with a payoff of E – c. Since the citizen has a credible exit threat once again (E > 0), she
will receive a higher payoff if she exits because E – c > 0 – c. As a result, the exit branch from
the final choice node is bold. At the choice node prior to this, the state must choose whether
to respond positively to the citizen’s use of voice or ignore it. If the state responds positively,
its payoff will be L. If the state ignores the citizen, it can look down the game tree (follow the
Figure 3.7
Solving the Exit, Voice, and Loyalty Game When the
Citizen Has a Credible Exit Threat (E > 0) and the State
Is Autonomous (L < 1)
Scenario 3
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
0, 1 + L
Loyalty
Citizen
Exit
Exit
E, 1
E – c, 1
The subgame perfect equilibrium is (Exit, Exit; Ignore)
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E > 0; L < 1.
1
Subgame perfect equilibrium: (Exit, Exit; Ignore)
2
Observed outcome: Citizen exits.
3
Payoffs: Citizen obtains E and state obtains 1.
Notes
bold line) and see that the citizen will exit and that its payoff will be 1. Because the state is now
autonomous (L < 1), it will choose to ignore the citizen. As a result, the ignore branch from
this choice node is bold. At the initial choice node, the citizen must choose whether to exit,
remain loyal, or use voice. If she exits, her payoff will be E. If she remains loyal, her payoff will
be 0. And if she uses voice, she can look down the game tree (follow the bold lines) and see
that her payoff will be E – c. Because the citizen has a credible exit threat (E > 0), she will
receive her highest payoff by choosing to exit. As a result, the exit branch from the initial choice
node is bold. The SPE is, therefore, (Exit, Exit; Ignore). This indicates that the citizen will
choose to exit at the beginning of the game. If the citizen had used her voice, the state would
have ignored her, at which point the citizen would have exited. The observed outcome of this
version of the game is that the citizen simply exits and the state gets to keep the benefit. The
payoffs associated with this outcome are E for the citizen and 1 for the state, that is, (E, 1).
Figure 3.8
Solving the Exit, Voice, and Loyalty Game When the
Citizen Does Not Have a Credible Exit Threat (E < 0) and
the State Is Autonomous (L < 1)
Notes
Scenario 4
1 – c, L
Respond
State
0 – c, 1 + L
Voice
Citizen
Ignore
Loyalty
0, 1 + L
Loyalty
Citizen
Exit
Exit
E – c, 1
E, 1
The subgame perfect equilibrium is (Loyalty, Loyalty; Ignore)
Note: E = citizen’s exit payoff; 1 = value of benefit taken from the citizen by the state; L = state’s value from having
a loyal citizen who does not exit; c = cost of using voice. It is assumed that c, L > 0; E < 1 – c; E < 0; L < 1.
1
Subgame perfect equilibrium: (Loyalty, Loyalty; Ignore)
2
Observed outcome: Citizen remains loyal.
3
Payoffs: Citizen obtains 0 and state obtains 1 + L.
3: What Is Politics?
Table 3.3
67
Notes
Summary of Subgame Perfect Equilibria and Outcomes
The state
The citizen
Has a Credible Exit Threat
(E > 0)
Has no Credible Exit Threat
(E < 0)
Is Autonomous
(L < 1)
Is Dependent
(L > 1)
(Exit, Exit; Ignore)
Outcome 1
(Voice, Exit; Respond)
Outcome 3
(Loyalty, Loyalty; Ignore)
Outcome 2
(Loyalty, Loyalty; Ignore)
Outcome 2
Think about what this means for your life more generally. If you want to be able to influence others (say, for example, you want your employer to give you a pay raise), then you
should try to make sure that you have a credible exit threat (there are other jobs you could
do or other firms that would hire you) and that the person you are interacting with depends
on you in some way (perhaps you are the only one who knows how the firm’s accounts
work). If other firms are willing to hire you but your employer does not depend on you, then
your employer will feel free to ignore you. Similarly, if your employer depends on you but
other firms are not willing to hire you, then your employer will again feel free to ignore you.
The only way to have power and be able to influence others is if you have a credible exit
threat and the person or group that you want to influence depends on you. Think about how
this applies to other relationships in your life. What about the relationship between you and
your parents, your professors, or your friends?
The second important conclusion is that, in the absence of a credible exit option (E < 0),
the citizen is, in some sense, a sitting duck. Under these conditions, the state can take away
the citizen’s benefits, and there is nothing that the citizen can do about it but accept the new
state of affairs. How can we see this conclusion at work in the real world? Well, some have
argued that the Democratic Party in the United States has not done enough to take account
of the concerns of African American voters. If this is true—and we do not wish to enter that
particular debate—then our EVL Game throws some light on why this might be the case.
Clearly, Democrats depend on African American voters. Without their vote, Democrats have
little chance of winning national office as things stand. But ask yourself whether African
American voters have a credible exit option. In other words, is there another party that African Americans could credibly threaten to vote for instead of the Democrats? Some might
argue that the fact that African Americans rarely vote for the Republican Party sends a signal
to the Democratic Party that African Americans do not have a credible exit threat. Think
about
it this
way. If the
Republican
Party were
The
state
responds
positively
to voice
only aifcredible option for African Americans,
wouldn’t more of them vote for it? Observing this signal, the Democratic Party can, to some
extent, ignore (and exploit) African Americans even though it depends heavily on this
Evaluating the EVL Game
1
the citizen has a credible exit threat
and
2
the state is dependent on the citizen.
Think about what this means for your life!
Notes
Evaluating the EVL Game
Notes
The state responds positively to voice only if
1
the citizen has a credible exit threat
and
2
the state is dependent on the citizen.
Think about what this means for your life!
If the citizen does not have a credible exit threat, then she is a sitting duck!
Evaluating the EVL Game
Notes
It is sometimes difficult to draw inferences from real-world observations.
While it is always possible to infer the citizen’s type by observing her actions,
this is not the case with the state.
Evaluating the EVL Game
Notes
It is sometimes difficult to draw inferences from real-world observations.
While it is always possible to infer the citizen’s type by observing her actions,
this is not the case with the state.
Voice, or the lack thereof, cannot be taken as a straightforward revelation of
citizen preferences.
Evaluating the EVL Game
Notes
Why would a dependent state ever take a benefit away from citizens with
credible exit threats?
Evaluating the EVL Game
Notes
Why would a dependent state ever take a benefit away from citizens with
credible exit threats?
It wouldn’t!
British PM Margaret Thatcher: “Being powerful is like being a lady. If you
have to tell people you are, you aren’t.”
Evaluating the EVL Game
Notes
The insight that powerful people never need to use their voice poses a big
problem for empirical political science.
When power is most potent, it is least likely to be used.
Voice 6= Power.
Presidential vetos.
Evaluating the EVL Game
Notes
Structural dependence of the state on
capital.
Evaluating the EVL Game
Notes
Structural dependence of the state on
capital.
Variation in treatment of economic
sectors.
Bailout, click
here
Evaluating the EVL Game
Notes
The model suggests that citizens use voice only when it is effective.
But we often see states ignoring citizens who are protest. Why?
Evaluating the EVL Game
Notes
The model suggests that citizens use voice only when it is effective.
But we often see states ignoring citizens who are protest. Why?
1
Voice may be a benefit rather than a cost.
Evaluating the EVL Game
Notes
The model suggests that citizens use voice only when it is effective.
But we often see states ignoring citizens who are protest. Why?
1
Voice may be a benefit rather than a cost.
2
Incomplete information.
Notes