from Bates, de Figueirdo, and Weingast (1998):

“Although ethnic groups may be taken as given in the short run, their political significance cannot…. Ethnic identity thus emerges in part as a result of interaction among competing political elites.”

Gerard Pardo i Miquel. 2006. “The control of politicians in divided societies.”

How do wasteful and abusive leaders maintain the support of their impoverished populations?

- Citizens belong to one of two ethnic groups, A and B

The set-up

- Members of each ethnic group have a comparative advantage in one of two economic activities, a and b, and they can switch between them if they choose

- A ruler needs the support of his ethnic group to stay in power

- Attempting to replace a ruler risks losing power to the other ethnic group

- A ruler can tax each economic activity and can make direct transfers to targeted groups

Gerard Pardo i Miquel. 2006. “The control of politicians in divided societies.”

How do wasteful and abusive leaders maintain the support of their impoverished populations?

- The ruler announces his policy of taxes and transfers

The game

- Each group chooses whether to switch economic activity

- The ruler’s co-ethnics choose whether to support him

- If they do not, the leader is ousted, and the group loses power with some probability

- If they do, the policy is implemented, payoffs are realized, and the next round begins

or

taxesI pay

benefits I receive

my group’s dependence on this leader

gains from my group being in power

exploitation payoff

The Politics of Fear

“the influence of ideas does not depend on relative plausibility but rather on the balance between plausibility and the stakes, that is, between probabilities and payoffs.”

from Bates, de Figueirdo, and Weingast (1998)