New Economics Papers
on Collective Decision-Making
Issue of 2005‒06‒05
six papers chosen by

  1. Politicians' Motivation, Role of Elections, and Policy Choices By Phongthorn Wrasai
  2. Determining the Level of Transportation Costs in the Core-Periphery Model: a Majority Voting Approach By Gallo, Fredrik
  3. The Case for Utilitarian Voting By Hillinger, Claude
  4. Political Election on Legal Retirement Age By Juan Antonio Lacomba; Francisco Miguel Lagos
  5. Direct Democracy: Designing a Living Constitution By Bruno S. Frey; Alois Stutzer
  6. The Role of Direct Democracy and Federalism in Local Power By Bruno S. Frey; Alois Stutzer

  1. By: Phongthorn Wrasai (Faculty of Economics, Erasmus Universiteit Rotterdam)
    Abstract: We develop a simple two period model to study the importance of motivational differences among politicians in describing the role of elections and explaining policy choices. In our model, politicians differ in their motives of running public office. Good politicians care about policies while bad politicians care about rent extraction. Voters want to control politician misbehavior and to select good politicians. We show that reelection concerns may compel a good politician not to implement a socially desirable policy if he sufficiently cares about the future. Second, reelection concerns may induce a bad politician not to undertake a socially undesirable policy. The reason for this is fear of being ruled by another bad politician if unseated. This finding exhibits the disciplining function of elections. A striking result in our paper is that bad politicians may act more in tune with the public interest relative to the good politicians.
    Keywords: Politicians' Motivation; Role of Elections; Policy Choices
    JEL: D72 D78 D82
    Date: 2005–05–26
  2. By: Gallo, Fredrik (Department of Economics, Lund University)
    Abstract: We analyse the political determination of transportation costs in an analytically solvable core-periphery model. In a benchmark case with certainty about where agglomeration takes place, we find that a majority of voters prefers low trade costs and the resulting equilibrium is an industrialised core and a de-industrialised periphery. Allowing for uncertainty we show that a high trade cost candidate, that guarantees the initial symmetric equilibrium, may defeat the core-periphery equilibrium candidate. The reason is that a coalition of risk-averse immobile factors of production votes for status quo due to uncertainty about which region that will attract industrial activity.
    Keywords: core-periphery model; majority voting; new economic geography; regional policy
    JEL: F12 F15 R12
    Date: 2005–05–31
  3. By: Hillinger, Claude
    Abstract: Utilitarian voting (UV) is defined in this paper as any voting rule that allows the voter to rank all of the alternatives by means of the scores permitted under a given voting scale. Specific UV rules that have been proposed are approval voting, allowing the scores 0, 1; range voting, allowing all numbers in an interval as scores; evaluative voting, allowing the scores -1, 0, 1. The paper deals extensively with Arrow's impossibility theorem that has been interpreted as precluding a satisfactory voting mechanism. I challenge the relevance of the ordinal framework in which that theorem is expressed and argue that instead utilitarian, i.e. cardinal social choice theory is relevant for voting. I show that justifications of both utilitarian social choice and of majority rule can be modified to derive UV. The most elementary derivation of UV is based on the view that no justification exists for restricting voters? freedom to rank the alternatives on a given scale.
    JEL: D72 D71
    Date: 2005–05
  4. By: Juan Antonio Lacomba (Department of Economic Theory and Economic History, University of Granada); Francisco Miguel Lagos (Department of Economic Theory and Economic History, University of Granada)
    Abstract: We use a lifecycle model in which individuals di ffer by age and by wage in order to analyze a pairwise majority voting process on the legal retirement age. We consider two di fferent retirement regimes. In the first one the retirees do not return to the labor market, regardless the new retirement age. In the second one, they have to return if this age is higher than her own age. We show that the final outcome of the voting process will crucially depend on the retirement regime as well as on the parameters of the Social Security, that is, the redistributive character of the system and the present legal retirement age.
    Date: 2005–06–01
  5. By: Bruno S. Frey; Alois Stutzer
    Abstract: A crucial aspect of constitutional design is the provision of rules on how a constitution is to be amended. If procedures for constitutional amendment are very restrictive, changes will take place outside the constitution. These changes are likely to be against the citizens’ interests and their ability to influence the political process. We argue that the development of the constitution must be based on the rule of law. We propose direct democratic rights that allow citizens to participate in the amendment process. The direct democratic process of institutional change is theoretically and empirically analyzed. A number of counter arguments and issues for a gradual introduction are discussed.
    Keywords: collective decision-making; constitutional design; constitutional economics; direct democracy
    JEL: D72 H1 H7
    Date: 2003–09
  6. By: Bruno S. Frey; Alois Stutzer
    Abstract: Alienation to politics weakens political competition and can undermine the acceptance and legitimacy of democracy as a political system. Governance and representation problems at the local level cause part of citizens’ lack of power and political alienation. Citizens have local power if they can influence the political process so that its outcomes are closer to their preferences and if they feel to be effective in the political sphere. In order to increase citizens’ local power, we emphasize the role of institutions of local governance. Local democratic governance is concerned about the relationship between citizens and local government institutions, political representatives and officials. This relationship is fundamentally shaped by the federal structure of a nation’s government and by the scope and depth of citizens’ participation possibilities in the political process.
    Keywords: collective decision-making; constitutional design; constitutional economics; direct democracy; fiscal federalism; local governance; local power; participation
    JEL: D70 D71 D72 H10 H77
    Date: 2004–10

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