New Economics Papers
on Collective Decision-Making
Issue of 2005‒07‒03
four papers chosen by

  1. Jurisdiction and Choice of Law in Economic Perspective By Katrin Lantermann; Hans-Bernd Schäfer
  2. Collective economic decisions and the discursive dilemma By Carl Andreas Claussen; Øistein Røisland
  3. Extreme Voting under Proportional Representation: The Multidimensional Case By Francesco De Sinopoli; Giovanna Iannantuoni
  4. Membership has its Privileges - On the Effects of Delegating Powers Internationally By Stefan Voigt

  1. By: Katrin Lantermann (Universität Hamburg, Fachbereich Rechtswissenschaften, Institut für Recht und Ökonomik); Hans-Bernd Schäfer (University of Hamburg, Germany)
    Abstract: This article looks at choice of law rules from an economic perspective . The aim is to understand whether particular choice of law norms are wealth creating or wealth destroying and which of different norms should be preferred from this point of view. In this article we do not try to understand the forces that generate and sustain particular choice of law rules. We restrict ourselves to an efficiency analysis of existing or proposed choice of law rules. In the first part of the paper we argue that a free choice of law should be granted, whenever the choice causes no third party effects. We show that this criterion would extend free choice beyond the present scope. Free menu choice of law increases the wealth of the parties and creates institutional competition. It should be extended to fields of the law other than contract and tort law. In the second part we proceed with choice of law rules if the choice leads to positive or negative third party effects. To take care of these effects mandatory choice rules are sometimes but not always necessary. Methodologically choice of law rules should be market-mimicking rules, which reflect the interests of a grand coalition of the parties and all third parties affected by the choice rule. In the third part of the paper we discuss existing rules for the choice of tort law and refer to the discussion on a draft proposal for a European Council regulation of the law applicable to non-contractual obligations . In the fourth part we discuss whether the German or the US approach of international comparative law is preferable from an economic perspective. The US approach gives more judicial discretion for the choice of law than the German approach. We argue that the choice of law rules should lead to precise and clear legal commands with escape clauses for the judiciary only in exceptional and obvious cases. As Guzman pointed out it is striking that choice of law scholars have paid virtually no attention on how choice of law rules affect individual behaviour. But any economic analysis has to focus on this aspect as otherwise the social consequences of legal norms remain unknown and consequently little can be said about whether the consequences of one rule are socially better than those of another rule.
  2. By: Carl Andreas Claussen (Norges Bank); Øistein Røisland (Norges Bank)
    Abstract: Most economic decisions involve judgments. When decisions are taken collectively, various judgment aggregation problems may occur. Here we consider an aggregation problem called the "discursive dilemma", which is characterized by an inconsistency between the aggregate judgment on the premises for a conclusion and the aggregate judgment on the conclusion itself. It thus matter for the decision whether the group uses a premise- or a conclusion-based decisionmaking procedure. The current literature, primarily within jurisprudence, philosophy, and social choice, consider aggregation of qualitative judgments on propositions. Most economic decisions, however, involve quantitative judgments on economic variables. We develop a framework that is suitable for analyzing the relevance of the discursive dilemma for economic decisions. Assuming that decisions are reached either through majority voting or by averaging, we find that the dilemma cannot be ruled out, except under some restrictive assumptions about the relationship between the premise-variables and the conclusion.
    Keywords: Collective economic decisions, Judgement aggregation, Inconsistency
    JEL: D71 E60
    Date: 2005–06–29
  3. By: Francesco De Sinopoli; Giovanna Iannantuoni
    Abstract: We study the strategic behavior of voters in a model of proportional representation, in which the policy space is multidimensional. Our main finding is that in large electorate, under some assumptions on voters'preferences, voters essentially vote, in any equilibrium, only for the extreme parties.
    Keywords: Strategic Voting, Proportional Rule, Nash Equilibrium
    JEL: C72 D72
    Date: 2005–06
  4. By: Stefan Voigt (Department of Economics, University of Kassel)
    Abstract: This paper analyzes whether nation-state governments can increase their credibility by becoming members of international organizations. Credibility is an important asset because it determines the real interest rate and is expected to have an important impact on investment and growth. It is hypothesized that the degree of delegation to international organizations can improve the credibility of nation-state governments. This hypothesis is tested by introducing a new indicator. On the basis of 136 countries, various versions of an indicator of international delegation are highly significant for explaining variation in countries’ credibility. The effect of international delegation on credibility is particularly strong among the group of lower income countries (N=60).
    Keywords: Delegation of Competence, Credibility, Dilemma of the Strong State, International Organizations
    JEL: F02 F21 H11 K33 P26
    Date: 2005–06

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