Research Focus

Muhammad Arslan Iqbal, Nisvan Erkal, Aaron Kamm

Abstract: In this paper, we investigate whether campaign promises constrain rent-seeking by elected leaders when embezzlement opportunities exist. While experimental evidence shows that psychological costs like guilt aversion effectively prevent promise-breaking in allocation games, empirically elected officials routinely break promises and engage in rent-seeking. We reconcile this puzzle through laboratory experiments using a modified public goods game where randomly selected candidates campaign on binding tax rates (mandatory voter contributions) and compete for office. Using a between-subjects design, we vary whether candidates can also make non-binding promises about their contributions to a common fund. Elected leaders then decide whether to contribute to or extract (embezzle) from this fund. Although nearly all candidates promise to contribute at least as much as their campaigned tax rate, approximately 80 percent renege on their campaign promise and mostly embezzle. We also find that explicit campaign promises about leader's contribution neither affect leader behavior nor voter welfare. To isolate the mechanism, we conduct two additional treatments with exogenous tax rates, varying only whether embezzlement is possible.

Muhammad Arslan Iqbal, Nisvan Erkal, Aaron Kamm

Abstract: Leaders often face a conflict of interest between self-interest and promoting social welfare. Different leadership selection mechanisms can affect leader behavior by (1) influencing the type of individuals who become leaders and (2) exerting direct behavioral effects through feelings of entitlement, legitimacy, and reciprocity. This study compares the overall effects of three leader selection mechanisms (random appointment, meritocracy, and election) on leaders' behavior, while also isolating the behavioral effects of each mechanism by controlling for the types of individuals selected. Using a laboratory experiment, we implement a novel game in which leaders impose taxes on members and decide whether to contribute to or take from the common fund which allows us to analyze a range of leader behaviors, including embezzlement, tax evasion, and socially responsible behavior. We find that, across all treatments, an overwhelming majority of leaders engage in opportunistic rather than responsible behaviors. The leader selection mechanism does not significantly affect leaders' embezzlement, or socially responsible contribution. However, both meritocracy and election significantly increase tax evasion compared to random appointment, with no observed difference between meritocracy and election. Finally, we find suggestive evidence of both entitlement and legitimacy effects under meritocracy and election, but no support for selection or reciprocity effects.