New Economics Papers
on Collective Decision-Making
Issue of 2005‒02‒20
four papers chosen by

  1. Why are More Redistributive Social Security Systems Smaller? A Median Voter Approach By Marko Köthenbürger; Panu Poutvaara; Paola Profeta
  2. Media Capture in a Democracy: The Role of Wealth Concentration By Giacomo Corneo
  3. Shareholders’ Voting at General Meetings: Evidence from the Netherlands By Jong, A. de; Mertens, G.; Roosenboom, P.
  4. Protecting minorities through the average voting rules By Régis Renault; Alain Trannoy

  1. By: Marko Köthenbürger; Panu Poutvaara; Paola Profeta
    Abstract: We suggest a political economy explanation for the stylized fact that intragenerationally more redistributive social security systems are smaller. Our key insight is that linking benefits to past earnings (less redistributiveness) reduces the efficiency cost of social security (due to endogenous labor supply). This encourages voters who benefit from social security to support higher contribution rates in political equilibrium. We test our theory with a numerical analysis of eight European countries. Our simple, but suggestive median voter model performs relatively well in explaining the stylized fact and cross-country differences in social security contribution rates.
    Keywords: earnings-related and flat-rate benefits, social security, public pensions, median voter model
    JEL: D72 H55
    Date: 2005
  2. By: Giacomo Corneo
    Abstract: Since objective news coverage is vital to democracy, captured media can seriously distort collective decisions. The current paper develops a voting model where citizens are uncertain about the welfare effects induced by alternative policy options and derive information about those effects from the mass media. The media might however secretly collude with interest groups in order to influence the public opinion. In the case of voting over the level of a productivity-enhancing public bad, it is shown that an increase in the concentration of firm ownership makes the occurrence of media bias more likely. Although media bias is not always welfare worsening, conditions for it to raise welfare are restrictive.
    Keywords: mass media, public bads, voting, wealth inequality
    JEL: D72 H41
    Date: 2005
  3. By: Jong, A. de; Mertens, G.; Roosenboom, P. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: We study annual general meetings of shareholders in the Netherlands. The Dutch corporate governance system is characterized by relatively concentrated shareholdings and large stakes owned by pension funds, banks and insurance companies. The legal protection of shareholders is poor due to takeover defenses, such as certificates, which deprive shareholders from their voting rights. An analysis of the minutes of 245 general meetings in the period 1998-2002 reveals that about 30% of the shareholders is present at the meeting. This is low in comparison with shareholder turn-out in Anglo-Saxon countries. Management sponsors all proposals at the meeting and only 9 out of 1,583 proposals are rejected or withdrawn. Multivariate analyses of the incidence and extent of voting against a proposal show that firm size and the type of proposal are important determinants. Overall, our findings suggest that shareholders in the Netherlands have hardly any influence on management.
    Keywords: meetings;corporate governance;
    Date: 2004–06–23
  4. By: Régis Renault; Alain Trannoy (Ehess, Greqam-Idep)
    Abstract: Properties of an average voting rule - the outcome being some weighted average of votes - are investigated, with particular attention to its ability to protect minorities. The unique average voting outcome is characterized with a median formula which depends on the voters’ preferred allocations and some parameters constructed from the voters’ weights. We provide necessary and sufficient conditions for the average outcome to be above the majority outcome. A minority is said to be protected by a switch in voting rule if the voting outcome becomes closer to the median bliss point of the minority. A sufficient condition for minority protection is that, either the minority’s weight is sufficiently large or the majority outcome is too unfavorable to the minority. Applications to the composition of public goods and to public expenditures level are considered. We end by exploring the combined use of average and majority voting in a two-stage procedure for determining both the level and the composition of public expenditures.
    Keywords: minority, majority voting, public goods, Nash equilibrium.
    JEL: D74 H41 I22
    Date: 2003–04

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