Political economy with affect: On the role of emotions and relationships in political economics

•Affect and endogenous relationships important in key areas of political economy.•Social ties model helps explain appropriation, conflict, and collective action.•Emotions and affective relationships are missing link in theory of governance.

This paper discusses and provides experimental evidence on the role of emotions and, in particular, the neglected role of endogenous affective relationships (bonding) in three key areas of political economy: (i) appropriation, with compliance or resistance as response; (ii) competition for access to appropriation and its potential for escalation and de-escalation of the inherent conflict; and (iii) determinants of (large scale) collective action. To that purpose, a series of experiments on power-to-take games and public good games are presented and put into perspective. Furthermore, the relevance of an affective social ties model for explaining these experimental findings is investigated. Finally, some important political economic implications are addressed.