Endogenously Determined Versus Exogenously Imposed Institutions: the Case of Tyranny in Ancient Greece

Abstract: For empirical research on the effects of institutions, an important question is whether a given institutional type will generate different outcomes depending on the circumstances in which it arises. In this paper, we examine a unique historical episode in which a specific type of institution – rule by a tyrant – arose in a similar set of states, yet in differing circumstances, with the impetus for establishment coming from local support in some cases and through external influence in others. Over the course of the sixth century BCE, a substantial subset of Greek poleis (city-states) experienced a period of tyranny. In some cases, the tyrant came to power with the support of local elites, yet in other cases, the tyrant was imposed by a conquering power, Persia. Although it is likely that the tyrants’ proponents – whether local elites or Persian rulers – sought to increase stability and maintain policies necessary for wealth creation, the long run effects of tyranny differed: In poleis where the rise of a tyrant would have depended on local support, a record of tyranny predicts a greater propensity for subsequent development of democracy. By contrast, in poleis where the rise of a tyrant would have depended on Persian support, a record of tyranny has a weak (and perhaps negative) association with subsequent development of democracy. These findings illustrate both the importance of the institutional path and the difficulty in transplanting institutions.