Budget Processes: Theory and Experimental Evidence

Ehrhart, Karl-Martin (), Roy Gardner, Juergen von Hagen () and Claudia Keser ()
Additional contact information
Ehrhart, Karl-Martin: University of Karlsruhe
Claudia Keser: IBM T.J. Watson Research Center

No 2006-009, Caepr Working Papers from Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington

Abstract: This paper studies budget processes, both theoretically and experimentally. We compare the outcomes of bottom-up and top-down budget processes. It is often presumed that a top-down budget process leads to a smaller overall budget than a bottom-up budget process. Ferejohn and Krehbiel (1987) showed theoretically that this need not be the case. We test experimentally the theoretical predictions of their work. The evidence from these experiments lends strong support to their theory, both at the aggregate and the individual subject level.

Keywords: budget processes; voting equilibrium; experimental economics (search for similar items in EconPapers)
JEL-codes: H61 C92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-exp and nep-pbe
Date: Written
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http://www.iub.edu/~caepr/RePEc/PDF/2006/CAEPR2006-009.pdf (application/pdf)

Related works:
Working Paper: Budget Processes: Theory and Experimental Evidence (2004)
Working Paper: Budget Processes: Theory and Experimental Evidence (2006)
Working Paper: Budget Processes: Theory and Experimental Evidence (2001)
Working Paper: Budget Processes: Theory and Experimental Evidence (1999)
Journal Article: Budget processes: Theory and experimental evidence (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:inu:caeprp:2006009

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