Series: Working Papers. 1741.
Author: Thomas Fujiwara and Carlos Sanz.
Topics: Quantitative methods | International Economy | Regional analysis | Legislation | Economic situation.
Published in: Review of economic studies. Volume 87, Issue 3, May 2020, Pages 1261-1295
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Abstract
Theories of multilateral bargaining and coalition formation applied to legislatures predict that
parties’ seat shares determine their bargaining power. We present findings that are difficult to
reconcile with this prediction. We use data from 2,898 municipal Spanish elections in which
two parties tie in the number of seats. The party with slightly more general election votes
is substantially more likely to appoint the mayor (form the government). Since tied parties
should, on average, have equal bargaining power, this identifies the effect of being the most
voted due to a norm prescribing that “the most voted should form government.” The effect
of being most voted is comparable in size to the effect of obtaining an additional seat. This
norm binds behavior even when the second and third most voted parties can form a winning
coalition that prefers the most voted not to appoint the mayor. Voters punish, in future
elections, second most voted parties that appoint mayors, suggesting that they enforce the
norm. We document a similar second-versus-third most voted effect and provide suggestive
evidence of similar norms from 28 national European parliaments. A model where elections
play a dual role (aggregating information and disciplining incumbents) and different equilibria
(norms) can occur is consistent with our results and yields additional predictions.