Sylabus to a course Public Choice (Veřejná volba)
Annotation
Public choice theory is often considered to be an analysis of collective decision-making. The
theory analyses processes leading to collective decisions, as a sum of the individual
preferences. Therefore, public choice is interested not only in functioning of decision-making
mechanisms itself (e.g. the effectiveness of alternative voting mechanisms), but is also
interested in behavior of persons and groups involved. Traditional topics of public choice
cover the analysis of voters and politicians behavior, as well as behavior of other subjects
with a potential to influence result of decision-making processes: bureaucracy, interest groups
and lobbying.
The course Public Choice covers most of these topics using the classics in the field: works of
Buchanan, Tullock, Downs, Olson, and Mueller. Integral part of the course is devoted to one
of the most progressive economic research methods - economic experiments.
Course objective
The main objective of the course is to enhance student´s basic knowledge of student studying
public sector, of an aspect of political process influence on accepted decisions. To a certain
extent, the course brings a new insight into effectiveness of public sector, introducing the
presumption of methodological individualism into the analysis. Decisions of public sector are
not only seen as a result of objective economic analysis, but also as an outcome of conflicts of
individual participants’ interests via public choice process. In the course student will therefore
find out, what is the role of individual subjects (players) in a process of collective decision
making.
Another partial objective is to motivate at least some of the students to deeper studies of
theoretical problems connected with working of public sector
Thematic course schedule
1. Introductory lesson. Introduction to the theory of Public Choice: what is new that
Public Choice brought?
Democratic individualism model versus “public interest”, collectivism etc. Freedom,
individualism and public sector- introduction to the theory of public choice, Homo
politicus is the same as homo economicus…
Literature: Buchanan (1998, pp.3-21), Tullock (2002)
2. Allocative inefficiency and market failure
Public goods, externalities, information asymmetry – summary of findings, developing of
concepts, reasons for state interventions as remedies of allocative inefficiency. Theory of
clubs.
Literature: Akerlof (1970), Buchanan (1966), Špalek (2011), Hillman (2003).
3. State as a tool of coordination and regulation of individual activities
A necessity of individual activities coordination, inefficiency of anarchy, game theory
models. Constitution as a natural consequence of necessity to coordinate activities.
Literature: Mueler (2003, chapter 2), Hilmann (2003)
4. Influence of institutions on the results of fiscal choice
Methods of assessing and individual fiscal choice
Literatutre: Buchanan (1998, pp.23-148)
5. Influence of institutions on the results of fiscal choice II
Influence of time on fiscal decision, fiscal illusions.
Literature: Buchanan (1998, pp.149-218)
6. Public choice in direct democracy
Unanimity rule, majority rule, median voter theorem, cycling, Arrow's impossibility
theorem
Literature: MUELLER(2003, chapter 5-7), GUNNING (2003, chapter 10)
7. Voting rules and alternative mechanisms of decision-making
Borda count, approval voting, Smith’s auction mechanisms, point and range voting.
Literature: MUELLER(2003, charter 5-7), GUNNING (2003, chapter 10)
8. Representative democracy and federalism
Selection of representatives, structure of representative democracy, authorities, median
voter and competition of political parties. Electoral systems in practice (term of electoral
system, majority and proportional systems, methods of calculations of votes to a
mandates). The Tiebout hypothesis of voting with one's feet.
Literature: Mueller (2003), Jackson, Brown (2003), Špalek (2011)
9. Characteristic voters behavior
An Economic theory of democracy (Anthony Downs). Rational ignorance.
Literature: Downs (1957), Mueller (2003)
10. Government as a problem of a principal and agent
Negotiating, formation of coalitions, logrolling, rent-seeking.
Jackson, Brown (2003), Mueller (2003)
11. Economics of bureaucracy
Theory of bureaucracy according to Weber Niskanen, Liebenstein, X-inefficiency.
Literature: Niskanen (1994)
12. Interest groups and lobbying
Theory of interest groups, influence of interest groups on decisions. Interest group as a
source of information for decision-making. Lobbying- situation in the CR and foreign
countries.
Literature: Olson (1970),
13. Public choice in a field of experimental and behavioral economics
Results of experiments verifying some of the theories, effectiveness of the proposed
alternatives, the group experiment in a lesson.
Literature: Davis, Holt (1993), Ledyard (1995), Špalek (2011).
References
[1] AKERLOF, George A., "The Market for 'Lemons': Quality Uncertainty and the Market
Mechanism." Quarterly Journal of Economics, 84(3), pp. 488-500, 1970.
[2] BUCHANAN, J. M - TULLOCK, G. The calculus of consent : logical foundations of
constitutional democracy. Michigan : University of Michigan, 2006. s. ISBN
0472061003.
[3] BUCHANAN, J. Veřejné finance v demokratickém systému. Vyd. 1. Brno : Computer
Press, 1998. 324 s. ISBN 8072261169.
[4] BUCHANAN, J.M. An economic theory of clubs. Economica, New Series, Vol. 32, No.
125 (Feb., 1965), pp. 1-14
[5] DAVIS, D., HOLT Ch. (1993). Experimental Economics. New Jersey: Princeton
University Press, 1993. 572 s. ISBN 0-691-04317-5
[6] DOWNS, A. An economic theory of democracy.. Renewed 1985. Boston : AddisonWesley,
1957. 310 s. ISBN 0060417501.
[7] GUNNING, J. Understanding democracy : an introduction to public choice. Taiwan :
Nomad Press, 2003. 451 s. ISBN 9864120832.
[8] HILLMAN, A. L. Public finance and public policy : responsibilities and limitations of
government. 1st. ed. Cambridge : Cambridge University Press, 2003. .ISBN
0521001145
[9] JACKSON, P. M - BROWN, C. Ekonomie veřejného sektoru. Vyd. 1. Praha : Eurolex
Bohemia, 2003. 733 s. ISBN 8086432092.MALÝ, I. ed.. Problémy definování a
prosazování veřejného zájmu.Sborník referátů z teoretického semináře. Brno,
Masarykova Univerzita. 1999. 214 s. ISBN 8021022361
[10] MUELLER, D. C. Public Choice III. 1st ed. Cambridge : Cambridge University
Press, 2003. 768 s. ISBN 0521894751
[11] MUNGER, M. C. Analyzing Policy: Choices, Conflicts, and Practises. 1st ed. New
York : W.W. Norton, c2000. xvii, 430 s.ISBN 0393973999
[12] LEDYARD, J. (1995). Public Goods: A Survey of Experimental Research. In J.H.
Kagel and A.E. Roth eds, Handbook of Experimental Economics. Princeton, Princeton
University Press, pp. 111-194.
[13] OLSON, M. The logic of collective action : public goods and the theory of groups. 18th
ed. Cambridge, Mass. : Harvard University Press, 2000. 186 s. ISBN 0674537513.
[14] ŠPALEK, Jiří. Veřejné statky : teorie a experiment. Vyd. 1. V Praze : C.H.Beck, 2011.
204 s. ISBN 9788074003530
[15] TULLOCK, G. SELDON, A, BRADY, G.L. Government Failure: A Primer in Public
Choice. Cato Institute, 2002. ISBN 1-930865-20-1.
[16] NISKANEN, William A. Bureaucracy and public economics. Cheltenham, UK :
Edward Elgar, 1994. 298 s. ISBN 1858980194.