New Economics Papers
on Collective Decision-Making
Issue of 2006‒03‒11
three papers chosen by

  1. Partisan Impacts on the Economy: Evidence from Prediction Markets and Close Elections By Erik Snowberg; Justin Wolfers; Eric Zitzewitz
  2. Overcoming Incentive Constraints? The (In-)effectiveness of Social Interaction By Dirk Engelmann; Veronika Grimm
  3. How do spouses share their full income ? Identification of the sharing rule using self-reported income. By Ekaterina Kalugina; Natalia Radtchenko; Catherine Sofer

  1. By: Erik Snowberg (Stanford GSB); Justin Wolfers (Wharton, University of Pennsylvania, CEPR, NBER and IZA Bonn); Eric Zitzewitz (Stanford GSB)
    Abstract: Political economists interested in discerning the effects of election outcomes on the economy have been hampered by the problem that economic outcomes also influence elections. We sidestep these problems by analyzing movements in economic indicators caused by clearly exogenous changes in expectations about the likely winner during election day. Analyzing high frequency financial fluctuations on November 2 and 3 in 2004, we find that markets anticipated higher equity prices, interest rates and oil prices and a stronger dollar under a Bush presidency than under Kerry. A similar Republican-Democrat differential was also observed for the 2000 Bush-Gore contest. Prediction market based analyses of all Presidential elections since 1880 also reveal a similar pattern of partisan impacts, suggesting that electing a Republican President raises equity valuations by 2-3 percent, and that since Reagan, Republican Presidents have tended to raise bond yields.
    Keywords: elections, prediction markets, political economy, event study, partisan effects
    JEL: D72 E3 E6 G13 G14 H6
    Date: 2006–03
  2. By: Dirk Engelmann; Veronika Grimm
    Abstract: We experimentally study behavior in a simple voting game where players have private information about their preferences. With random matching, subjects overwhelmingly follow the dominant strategy to exaggerate their preferences. Applying the linking mechanism suggested by Jackson and Sonnenschein (2005) captures nearly all achievable efficiency gains. Repeated interaction leads to significant gains in truthful representation and efficiency only if players can choose their partners.
    Keywords: Experimental Economics, Mechanism Design, Implementation, Linking, Bayesian Equilibrium, Efficiency
    JEL: A13 C72 C91 C92 D64 D72 D80
    Date: 2006–02–28
  3. By: Ekaterina Kalugina (CES-TEAM et HCE Moscow); Natalia Radtchenko (CES-TEAM); Catherine Sofer (CES-TEAM)
    Abstract: The paper applies the collective model to the analysis of intra-household inequality using self-reported income scales. Starting from a collective model including household production, our key assumption is that the income level that household members report corresponds to their true income sharing. Using Russian data (Rounds V to VIII of the Russian Longitudinal Monitoring Survey), we apply the results for couples who report the same level of income to identify the sharing rule for the whole sample. This method allows us to obtain not only the derivatives, but also the sharing rule itself. From simulations for an average couple with one child living in the Urals, we find that a full income share of 45% is allocated to the wife.
    Keywords: Collective model, within-household income comparisons, subjective data, Russia, sharing rule.
    JEL: D1 J22 C3
    Date: 2006–02

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.