William T Bernhard
Reputation and Politics
Reputation matters for social interaction. People who could benefit from cooperation might not do so because they do not trust each other’s reputations. If someone has a reputation for being trustworthy, however, others may be more willing to enter into an agreement. During his Center appointment Professor Bernhard and his collaborators will explore the evolution and impact of reputation in governance and policy-making.
First, through a series of laboratory experiments, Professor Bernhard will develop a better formulation of how institutional context affects the development of reputation. The experiments will involve a strategic-interaction situation, such as the “trust” game. Between each round of play, he will record the players’ beliefs about their opponents’ predicted behavior. He expects that the updating of reputation will proceed in a Bayesian fashion, where the impact of new information depends on prior beliefs.
In the second part of the project, he will connect these results with political situations by examining the role of reputation in two areas: Congressional deal-making and the European sovereign debt crisis. Members of Congress must work together to pass bills, exchanging support on proposals or making policy compromises. Reputation factors heavily in their ability to build winning legislative coalitions. Reputation may also shape career trajectories: Those who become known for their expertise, for instance, may win influential committee assignments. Using data on U.S. legislators’ activities (1989-2011), Professor Bernhard will construct measures of legislators’ reputations and assess their impacts on legislative outcomes and career patterns.
Reputation also plays a critical role in the European sovereign debt crisis. As the financial crisis began unfolding in 2008, the interest rate spreads on government bonds in the Eurozone increased, as investors revised their beliefs about whether debt levels were sustainable and whether the rich states would rescue the indebted governments. How did the policy statements and actions of member states and European leaders affect the course of the crisis? Professor Bernhard suggests that the reputations of policymakers conditioned how investors changed, or didn’t change, their behaviors in response to policy actions.