Power, Philanthropy, and Prestige: Three Essays on the Economics of Non-priced Environments

Charity-Joy Acchiardo

Advisor: Christopher Coyne, PhD, Department of Economics

Committee Members: Richard E. Wagner, Peter J. Boettke

Enterprise Hall, #318
April 22, 2013, 12:30 PM to 09:00 AM


Monetary prices provide buyers and sellers with the information they need for economic calculation and direct their resource allocation decisions.  However, in some situations these decisions are made in the absence of prices and alternative guides must be used.  Decisions may be informed by an elite few or may incorporate knowledge disbursed among many individuals.  This dissertation looks at how the political environment influences how information is discovered and used and the subsequent effects on political and economic outcomes.

The first essay analyzes the “dictator’s knowledge problem” with particular emphasis on the process through which a dictator discovers the necessary information to maintain his position of power.  Three alternative information revelation mechanisms employed by dictators – legislatures, business and professional associations, and protests – are analyzed.  The analysis clarifies the informational role of these features in real-world dictatorships and shows why institutional arrangements that at first appear counterintuitive to the principles of dictatorship make sense when one realizes the primacy of the dictator’s knowledge problem.  The second essay examines the process nonprofit organizations engage it to discover how they create value for their stakeholders and how that process is affected when the state is included as a stakeholder. At each step in the process, nonprofits serve valuable economic and social functions that can be impeded when the state becomes a stakeholder.  The third essay looks at how social beliefs in Tunisia regarding the authority and knowledge of the ruling elite contribute to the persistence of institutions that determine the allocation of resources and political power. Though Tunisians appear to participate in the process of political and economic change described by current models, they continue to repeat the same cycle without lasting change due to the lack of constraints placed on the ruling elite.