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We study how partisan alignment across levels of government affects coalition formation and government stability using a regression discontinuity design and a large dataset of Spanish municipal elections. We document a positive effect of alignment on both government formation and stability. Alignment increases the probability that the most-voted party appoints the mayor and decreases the probability that the government is unseated during the term. Aligned parties also obtain sizeable electoral gains in the next elections. We show that these findings are not the consequence of favoritism in the allocation of transfers towards aligned governments.

In this paper we use data on US states and a regression-discontinuity design to study how divided government affects the polarization of the legislature, inter-branch conflict, and policy implementation. We document that Republican legislators serving under a divided government have more conservative ideologies than those serving under a fully unified government. Correspondingly, Democrats have more liberal ideologies. In terms of policy implementation, however, we find evidence of moderation: compared to unified Republican governments, divided ones with a democratic governorship or senate implement more liberal policies. When Democrats lose unified control, instead, policies become more conservative.

What drives soldiers to risk their life in combat? Using individual-level data from over 4 million British war records, we show that the legacy of WWI deeply affected local communities and the behaviour of the next generation of soldiers. Servicemen from localities that suffered heavier losses in WWI were considerably more likely to die or to win gallantry awards for valour in WW2. To rationalise these findings, we show that the mortality shock increased communities' civic capital in the inter-war period: Great War deaths spur the creation of new charities, veterans' associations, and historically significant memorials as well as promoting charitable donations and voter participation. Our results highlight the importance of the memory of past conflicts in fostering the creation of socially-oriented activities that, in turn, can shape the behaviour of soldiers in future wars.

This paper studies how divided government – arising when control of the government branches is split between parties – affects the polarization of the legislature and policy implementation. Using data on electoral and legislative outcomes for US states and a regression-discontinuity design, we show that Republican state senators are substantially more polarized when they serve in a divided government than they are in a fully unified government. We find similar but smaller effects for Democrats. In addition, governors facing an opposing, united legislature veto more bills, and have more of these overridden. However, in terms of policy implementation, we find evidence of moderation: when a unified Republican government loses a chamber or the governor to the Democratic party, the implemented legislation becomes much more liberal. Correspondingly, when Democrats lose unified control, policies become more conservative. These results suggest that divided government creates incentives for legislators to polarize knowing they will need to compromise in order to obtain their preferred policy.

This paper studies how political fragmentation affects government stability Using a regression discontinuity design, we show that each additional party with representation in the local parliament increases the probability that the incumbent government is unseated by 5 percentage points. The entry of an additional party affects stability by reducing the probability of a single-party majority and increasing the instability of governments when such a majority is not available. We interpret our results in light of a bargaining model of coalition formation featuring government instability.

This paper studies how political fragmentation affects government stability. We show that each additional party with representation in Parliament increases the probability that the incumbent government is unseated by 4 percentage points. Governments with more resources at their disposal for bargaining are less likely to be replaced. When they are, new government leaders are younger and better educated, suggesting instability may induce positive selection. We interpret our results in light of a bargaining model of coalition formation featuring government instability. Our findings indicate that the rising fragmentation in parliaments worldwide may have a substantial impact on stability and political selection.

Do behavioral biases affect prices in a high-stakes market? We study the role of left-digit bias in the purchase of an apartment. Left-digit bias is the failure to fully process digits after the first, perceiving prices just below a round number (such as $3.99) as cheaper than their round counterpart ($4). Apartments with asking prices just below round millions are sold at a 3%–5% higher final price after an auction. This effect appears not to be driven by differences in observables or in real estate agents’ behavior. Auctions for apartments listed just below round numbers are more competitive and attract more bidders and bids.

We study distributive politics inside cities by analysing how local governments allocate investment projects to voters across neighbourhoods. In particular, we ask whether politicians use investment to target their own supporters. To this aim, we use detailed geo-located investment data from Plan E, a large fiscal stimulus program carried out in Spain in 2009-2011. Our main empirical strategy is based on a close-elections regression discontinuity design. In contrast to previous studies which use aggregate data at the district or municipal level we exploit spatial variation in both investment and voter support within municipalities and find no evidence of supporter targeting. Complementary results indicate that voters may be responding to investment by increasing turnout.

I exploit a reform that required Italian municipalities to disclose their balance sheets before elections to study whether having more informed voters affects the political budget cycle. Municipal investment in the year before elections is 28.5% higher than in electoral years, and the reform reduced this pre-electoral spending increase by one third. I then study the role of local newspapers in disseminating municipal financial information to voters and find that the effect of the reform is twice as large in areas with relatively many newspaper readers, suggesting that mayors react to more informed voters by reducing spending manipulation.

Do behavioral biases affect prices in a high-stake market? We study the role of left-digitbias in the purchase of an apartment, one of the most important assets in a household’sportfolio. Left-digit bias is the inability to fully process digits after the first, perceivingprices just below a round number (such as $3.99) as cheaper than their roundcounterpart ($4). We start by documenting that apartments listed at just-below asking prices are sold at a 3-5% higher final price after an auction. This effect appears not to bedriven by i) differences in observable characteristics; ii) differences in real estate agents’behavior; or iii) institutional characteristics of the market. We show that apartments using just-below prices attract more bidders and bids, leading to higher competition and to a higher final price. Our results suggest that inattentive buyers might be losing roughlyhalf a year of disposable income.