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on Collective Decision-Making |
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Issue of 2005‒08‒13
nine papers chosen by |
| By: | Jean Hindriks; Benjamin Lockwood |
| Abstract: | This paper studies the relationship between fiscal decentralization and electoral accountability, by analyzing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The model abstracts from features such as public good spillovers or economies of scale, so that absent elections, voters are indifferent about the fiscal regime. The effect of fiscal centralization on voter welfare works through two channels: (i) via its effect on the probability of pooling by the bad incumbent; (ii) conditional on the probability of pooling, the extent to which, with centralization, the incumbent can divert rents in some regions without this being detected by voters in other regions (selective rent diversion). Both these effects depend on the information structure: whether voters only observe fiscal policy in their own region, in all regions, or an intermediate case with a uniform tax across all regions. More voter information does not necessarily raise voter welfare, and under some conditions, voters would choose uniform over differentiated taxes ex ante to constrain selective rent diversion. |
| JEL: | D72 D73 H41 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1509&r=cdm |
| By: | Egorov, Georgy; Sonin, Konstantin |
| Abstract: | The winner of a battle for a throne can either execute or spare the loser; if the loser is spared, he contends the throne in the next period. Executing the losing contender gives the winner an additional quiet period, but then his life is at risk if he loses to some future contender who might be, in equilibrium, too frightened to spare him. The trade-off is analysed within a dynamic complete information game, with, potentially, an infinite number of long-term players. In an equilibrium, decisions to execute predecessors are history-dependent. With a dynastic rule in place, incentives to kill the predecessor are much higher than in non-hereditary dictatorships. The historical part of our analytic narrative contains a detailed analysis of two types of non-democratic succession: hereditary rule of the Osmanli dynasty in the Ottoman Empire in 1281–1922, and non-hereditary military dictatorships in Venezuela in 1830–1964. |
| Keywords: | dictatorship; economic history; positive political theory; succession |
| JEL: | C73 D72 N40 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5092&r=cdm |
| By: | Hindricks, Jean; Lockwood, Ben |
| Abstract: | This paper studies the relationship between fiscal decentralization and electoral accountability, by analysing how decentralization impacts upon incentive and selection effects, and thus on voter welfare. The model abstracts from features such as public good spillovers or economies of scale, so that absent elections, voters are indifferent about the fiscal regime. The effect of fiscal centralization on voter welfare works through two channels: (i) via its effect on the probability of pooling by the bad incumbent; (ii) conditional on the probability of pooling, the extent to which, with centralization, the incumbent can divert rents in some regions without this being detected by voters in other regions (selective rent diversion). Both these effects depend on the information structure; whether voters only observe fiscal policy in their own region, in all regions, or an intermediate case with a uniform tax across all regions. More voter information does not necessarily raise voter welfare, and under some conditions, voter would choose uniform over differentiated taxes ex ante to constrain selective rent diversion. |
| Keywords: | accountability; Elections; fiscal decentralization |
| JEL: | D72 D73 H41 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5125&r=cdm |
| By: | Rotemberg, Julio |
| Abstract: | This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people’s well being rises when other people share their personal opinions. By conveying credible information on attitudes, votes give pleasure to individuals who agree with them and thereby confer vicarious utility on voters. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as higher turnout by more informed and more educated individuals. For certain parameters, the model predicts that third party candidates will lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts ‘vote-stealing’ where the addition of a third candidate robs a major candidate of electoral support. |
| Keywords: | altruism; elections; turnout; voting |
| JEL: | D64 D72 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5146&r=cdm |
| By: | Enriqueta Aragones (Institut d’Analisi Economica, C.S.I.C.); Itzhak Gilboa (Tel-Aviv University and Cowles Foundation, Yale University); Andrew Weiss (Department of Economics, Boston University) |
| Abstract: | We assume that people have a need to make statements, and construct a model in which this need is the sole determinant of voting behavior. In this model, an individual selects a ballot that makes as close a statement as possible to her ideal point, where abstaining from voting is a possible (null) statement. We show that in such a model, a political system that adopts approval voting may be expected to enjoy a significantly higher rate of participation in elections than a comparable system with plurality rule. |
| Keywords: | Approval voting, Abstention, Statements |
| JEL: | D72 |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1531&r=cdm |
| By: | Gil Kalai |
| Abstract: | In this paper we study the social preferences obtained from monotone neutral social welfare functions for random individual preferences. It turns out that there are two extreme types of behavior. On one side, there are social welfare functions, such as the majority rule, that lead to stochastic stability of the outcome in terms of perturbations of individual preferences. We identify and study a class of social welfare functions that demonstrate an extremely different type of behavior which is a completely chaotic: they lead to a uniform probability distribution on all possible social preference relations and, for every ε>0, if a small fraction ε of individuals change their preferences (randomly) the correlation between the resulting social preferences and the original ones tends to zero as the number of individuals in the society increases. This class includes natural multi-level majority rules. |
| Keywords: | social choice; social welfare functions; simple games; Banzhaf power index; noise sensitivity; chaos; indeterminacy; noise stability |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp399&r=cdm |
| By: | Hans Gersbach (University of Heidelberg, CEPR and IZA Bonn); Lars Siemers (University of Heidelberg) |
| Abstract: | We examine whether democratic societies can escape poverty traps. Unrestricted agenda setting with simple majority rules fail to educate a society, because education-enhancing redistribution will not occur. We show that a combination of suitable constitutional rules overcomes this impossibility result: rotating agenda setting and agenda repetition in combination with flexible majority rules or with a tax protection rule. |
| Keywords: | constitutional design, claims on deductions, flexible majority rules, agenda repetition, poverty traps, child labor |
| JEL: | D72 H20 H52 I20 O10 O40 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp1693&r=cdm |
| By: | Alberto Alesina; Guido Tabellini |
| Abstract: | Opportunistic politicians maximize the probability of reelection and rents from office holding. Can it be optimal from their point of view to delegate policy choices to independent bureaucracies? The answer is yes: politicians will delegate some policy tasks, though in general not those that would be socially optimal to delegate. In particular, politicians tend not to delegate coalition forming redistributive policies and policies that create large rents or effective campaign contributions. Instead they prefer to delegate risky policies to shift risk (and blame) on bureaucracies. |
| Date: | 2005–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11531&r=cdm |
| By: | Ariane Chapelle (Centre Emile Bernheim, Université libre de Bruxelles, Brussels); Ariane Szafarz (Centre Emile Bernheim and DULBEA, Université libre de Bruxelles, Brussels) |
| Abstract: | Pyramids, cross-ownership, rings, and other complex features inducing control tunnelling are frequent in the European and Asian industrial world. Based on the matrix methodology, this paper offers a model for measuring integrated ownership and threshold-based control, applicable to any group of interrelated firms. In line with the theory on pyramidal control, the model avoids the double counting problem and sets the full-control threshold at the conservative - but incontestable - majority level of 50% of the voting shares. Any lower threshold leads to potential inconsistencies and leaves unexplained the observed high level of ownership of many dominant shareholders. Furthermore, the models leads to ultimate shareholders' control ratios consistent with the majority voting rule. Finally, it is applied to the Frère Group, a large European pyramidal holding company known for mastering control leverages. |
| Keywords: | Majority Voting Rule, Pyramidal Ownership, Corporate Control, Corporate Governance |
| JEL: | G32 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:05-05rs&r=cdm |