ALUMNI PRESENT PANEL AT CONFERENCE OF
SOCIETY FOR INSTITUTIONAL AND ORGANIZATIONAL ECONOMICS
August 26, 2025
University of New South Wales, Sydney, Australia

Workshop alumni Wentian Diao, Xinyu Fan, Alberto Simpser, and Michael Rochlitz presented papers at a session on effects of shocks, polarization, and language affinity on political behavior: studies from China, Mexico, and Kazakhstan at the 2025 SIOE conference. Mary Shirley was the chair, and Scott Gehlbach and Lixin Colin Xu were the discussants.

ABSTRACTS BY THE PANEL

Reform or Revolution: Elites’ Choices under Negative Shocks and the Economic Outcomes
Wentian Diao
Shanghai University of Finance and Economics

Political elites can establish institutions that secure their political and economic resources. When external shocks threaten their interests, they can respond in one of two ways: reform or revolution. This study focuses on the jinshi class of the Qing dynasty, a group of young political elites who had passed the highest level of the imperial civil examination and were about to embark on official careers. By constructing a database of jinshi from 1878 to 1905, I analyze how those influenced by the intense debate over China’s political future—triggered by the defeat in the First Sino-Japanese War (1894–1895) and the signing of the Treaty of Shimonoseki—chose between reform and revolution and the economic consequences of their choices.
Using prefecture-year-level data and a difference-in-differences methodology, I find that after 1894, for every 1% increase in the number of affected jinshi from a prefecture, 1.5%–2.9% more modern firms were established in that prefecture compared to others. Furthermore, during the 1911 Xinhai Revolution, which led to the collapse of the Qing dynasty, these affected jinshi’s home prefectures experienced fewer rebellions than others and did not produce significantly more revolutionaries. These findings suggest that, while the affected jinshi recognized the nation’s decline, they pursued reformist strategies, such as fostering economic development, to protect their interests.

Godfather Politicians and Organized Violence
Xinyu Fan
Cheung Kong Graduate School of Business
Shuo Chen, Fudan University
Yuzheng Wang, Central University of Fiance and Economics

We analyze the ironic breakdown of social order when good politicians replace flawed ones. A corrupt politician (“Godfather”) may arbitrate otherwise violent conflicts peacefully for extralegal personal benefits, while eradicating such politicians leads to social unrest. Utilizing a unique natural experiment that systematically removed corrupt officials, a difference-in-differences test shows that organized violence surged by an additional 15% in cases where local officials were found colluding with organized criminals. The violence surge was not due to their successors’ increased monitoring intensity, government failure, or gangster infightings, thus highlighting the institution design – not moral characters – that shapes politicians’ behavior.

Language Affinity, Russian Media, and Sanctions Evasion
Michael Rochlitz
Oxford University
Andrey Tkachenko, Nazarbayev University
Darvid F. Karpa, TU Munich
Meruyert Tatkeyeva, Nazarbayev University
Galiya Sagyndykova, Nazarbayev University

Does language affinity with a former colonizing power make countries vulnerable to outside influence? By combining multiple survey waves, online search statistics, a survey experiment, and international trade data, we study this question for Kazakhstan. We show a shift towards pro-Russian opinions among the Russian-speaking population after Russia’s full-scale invasion of Ukraine, even among ethnically Kazakh citizens. We relate this shift in opinion to a substantial increase in Russian online news and social media consumption after February 2022. We demonstrate that the consumption of Russian propaganda increases the justification for circumventing sanctions against Russia. Finally, using detailed trade data, we document that re-exports of sanctioned products to Russia increased disproportionately after February 2022 from regions where the population is more exposed to Russian propaganda. Our results shed light on the mechanisms by which former colonial powers can influence beliefs and economic behavior in their former colonies in wartime.

Accountability under Polarization
Jose Ramon Enriquez, Stanford
Horacio Larreguy, ITAM
John Marshall, Columbia
Alberto Simpser, ITAM

In democracies, political polarization can weaken electoral accountability by shaping how citizens process information. We examine the impact of disseminating incumbent performance information on voting behavior in a polarized setting and assess the mitigating role of a debiasing nudge. We experimentally evaluate a local civil-society organization's Facebook ad campaign that delivered COVID-19 case and death statistics to over 2 million unique users across 500 Mexican municipalities ahead of the 2021 elections. Polling-station-level results reveal that the information alone backfired: it increased (decreased) incumbent support in areas with high (low) COVID-19 impact. These effects are driven by areas with strong prior incumbent support, prevalent communal values, and higher stress indicators among citizens. However, a debiasing nudge provided before the information reversed this effect, resulting in voters rewarding (punishing) incumbents with low (high) COVID-19 impact. Our findings underscore how biases in information processing undermine electoral accountability in polarized contexts and demonstrate the potential for nudges to restore it.