L.M. (Lotte) Swank, MSc

Don't think twice, it's alright
I present a theoretical model in which citizens rationally decide whether or not to process information rationally in a social context. Specifically, I consider citizens who choose between incorporating a truthful message or maintaining an established communal belief, a status quo. I derive three different equilibria. First, in the Responsive equilibrium, all citizens rationally process information and a new communal belief that reflects the truth follows. Second, in the Inertia equilibrium, all citizens ignore the message and maintain the status quo. Hence, the communal belief remains unaltered. Third, in the Polarized equilibrium, a share of citizens processes the message while another share ignores it. In this inferior equilibrium, no consensus on a new communal belief is found. I illustrate the model with data on the responsiveness of voting intentions to information by the media from the 2020 United States presidential election.

Vague news and fake news (in Journal of Economic Behavior & Organization)
I consider a situation in which citizens consult a report by the media to learn the state of the world. Besides the true state of the world, the report can contain two types of inaccuracies: persistent bias following from the media's ideology and random noise. Employing a theoretical model, I show that citizens perform additional investigations if there is much variance in noise. In contrast, citizens are not affected by persistent bias as they can anticipate it. These predictions are confirmed through an empirical analysis of the start of the COVID-19 outbreak, in which I utilize sentiment data to differentiate persistent bias from noise in media reports. The results suggest that media quality is more of a concern than media neutrality.

Full paper: https://doi.org/10.1016/j.jebo.2023.09.001

The Political Economy of Legal Regimes (with Daniël Vullings and Lambert Schoonbeek, submitted)
We examine legal regimes in a theoretical model. We consider an elected, potentially biased, legislator who enacts the law by either selecting a strict liability or negligence regime. With strict liability, culpability is simply based on the damage caused. With negligence, besides damage, intentions are also taken into account. A neutral, appointed judiciary rules the courts and sets fines that apply when the law is not obeyed. We show that negligence regimes outperform strict liability regimes as more information is used under the former. Yet, we derive that a biased legislator may cater to the wishes of the economically powerful and select strict liability because court cases are less common under this regime. We predict that transitions from strict liability to negligence regimes occur when court efficiency improves and political equality increases. We present historical sources and data with trends that are in line with our theoretical predictions.

The separation of powers and the trade-off between corruption and favoritism (with Daniël Vullings)
This paper investigates the role of the separation of powers in addressing favoritism and corruption within governments. We develop a theoretical model to mirror constitutions with different shapes of power separations between a biased legislator and a neutral judiciary. The traditional role of power separations is twofold. First, the separation of decision powers involves multiple actors in decision-making, creating plurality in preferences. As such, individual preferences of the governmental branches are supposed to be eliminated from final governing choices. Second, a power separation should create checks and balances - a monitoring system in which the branches control each other for the abuse of power and the usage of public resources for personal gain. In this paper, we show that the two roles for a power separation are substitutes: limiting the impact of the branches’ individual preferences (i.e. less favoritism) comes at the cost of reduced monitoring (i.e. more corruption).