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on Collective Decision-Making |
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Issue of 2006‒04‒08
nine papers chosen by |
| By: | Ian Ayres, Colin Rowat and Nasser Zakariya |
| Abstract: | We study option management by committee. Analysis is illustrated by tenure decisions. Our innovations are two-fold: we treat the committee's problem as one of social choice, not of information aggregation; and we endogenise the outside option: rejecting a candidate at either the probationary or tenure stage returns the committee to a candidate pool. For committees with N members, we find three key results: (1) a candidate's fate depends only on the behaviour of two `weather-vane' committee members - generalised median voters; (2) enthusiastic assessments by one of these weather-vanes may harm a candidate's chances by increasing others' thresholds for hiring him; and (3) sunk time costs may lead voters who opposed hiring a candidate to favour tenuring him, even after a poor probationary performance. We also characterise the optimal voting rule when N = 2. A patient or perceptive committee does best with a (weak) majority at the hiring stage and unanimity at the tenure stage. An impatient or imperceptive committee does best under a double (weak) majority rule. If particularly impatient or imperceptive, this rule implies that any hire is automatically tenured. Perversely, the performance of a patient, imperceptive committee improves as its perceptiveness further declines. |
| Keywords: | intertemporal strategic voting, real options, social choice, heterogenous priors, tenure |
| JEL: | C73 D71 D72 D80 G12 |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:04-23r&r=cdm |
| By: | Alexander F. Wagner; Friedrich Schneider |
| Abstract: | We construct a panel of satisfaction with democracy (SWD) and economic, institutional, and environmental variables for 1990-2001 for fifteen European countries. In this sample, controlling for a number of factors, we find that average SWD is higher where (1) there exists an energy / CO2 tax, where (2) government expenditures on the environment are higher, where (3) certain environmental regulations like packaging rules are in place, and (4) where the government puts in place environmental offices or other official bodies charged with addressing environmental concerns. We also find that, on the environmental quality side, (5) more cars on the roads, (6) less unleaded fuel, and (7) higher pesticide use intensity all decrease SWD. |
| Keywords: | satisfaction with democracy, environment |
| JEL: | K32 P16 Q21 Q28 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1660&r=cdm |
| By: | Topi Miettinen; Panu Poutvaara |
| Abstract: | We argue that anticorruption laws may provide an efficiency rationale for why political parties should meddle in the distribution of political nominations and government contracts. Anticorruption laws forbid trade in spoils that politicians distribute. However, citizens may pay for gaining access to politicians and, thereby, to become potential candidates for nominations. Such rent-seeking results in excessive network formation. Political parties may reduce wasteful network formation, thanks to their ability to enter into exclusive membership contracts. This holds even though anticorruption laws also bind political parties. |
| Keywords: | political parties, two-sided platforms, rent-seeking, network formation |
| JEL: | D72 D85 L14 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_1663&r=cdm |
| By: | Cremer, Helmuth; Lozachmeur, Jean-Marie; Pestieau, Pierre |
| Abstract: | Social insurance for the elderly is judged responsible for the widely observed trend towards early retirement. In a world of laissez-faire or in a first-best setting, there would be no such trend. However, when first-best instruments are not available, because health and productivity are not observable, the optimal social insurance policy may imply a distortion on the retirement decision. The main point we make is that while there is no doubt that retirement systems induce an excessive bias towards early in many countries, a complete elimination of this bias (i.e., a switch to an actuarially fair system) is not the right answer. This is so and for two reasons. First, some distortions are second-best optimal. This is the normative argument. Second, and on the positive side, the elimination of the bias might be problematic from a political perspective. Depending on the political process, it may either not be feasible or alternatively it may tend to undermine the political support for the pension system itself. |
| Keywords: | early retirement; majority voting; optimal income taxation; social security |
| JEL: | H21 H55 J26 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5542&r=cdm |
| By: | Leigh, Andrew; Wolfers, Justin |
| Abstract: | We review the efficacy of three approaches to forecasting elections: econometric models that project outcomes on the basis of the state of the economy; public opinion polls; and election betting (prediction markets). We assess the efficacy of each in light of the 2004 Australian election. This election is particularly interesting both because of innovations in each forecasting technology, and also because the increased majority achieved by the Coalition surprised most pundits. While the evidence for economic voting has historically been weak for Australia, the 2004 election suggests an increasingly important role for these models. The performance of polls was quite uneven, and predictions both across pollsters, and through time, vary too much to be particularly useful. Betting markets provide an interesting contrast, and a slew of data from various betting agencies suggests a more reasonable degree of volatility, and useful forecasting performance both throughout the election cycle and across individual electorates. |
| Keywords: | elections; macroeconomic voting; opinion polling; prediction markets; voting |
| JEL: | D72 D84 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5555&r=cdm |
| By: | Snowberg, Erik; Wolfers, Justin; Zitzewitz, Eric |
| 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; event study; partisan effects; political economy |
| JEL: | D72 E3 E6 G13 G14 H6 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5591&r=cdm |
| By: | Mazzuca, Sebastián L; Robinson, James A |
| Abstract: | In this paper we present historical evidence and a theoretical analysis of the origins of political stability and instability in Colombia for the period 1850-1950, and their relationship to political, particularly electoral, institutions. We show that the driving force behind institutional change over this period, specifically the move to proportional representation (PR), was the desire of the Conservative and Liberal parties to come up with a way of credibly dividing power to avoid civil war and conflict, a force intensified by the brutal conflict of the War of a Thousand days between 1899 and 1902. The problem with majoritarian electoral institutions was that they did not allocate power in a way which matched the support of the parties in the population, thus encouraging conflict. The strategic advantage of PR was that it avoided such under-representation. The parties however could not initially move to PR because it was not `fraud proof' so instead, in 1905, adopted the `incomplete vote' which simply allocated 2/3 of the legislative seats to the winning party and 1/3 to the loser. This formula brought peace. The switch to PR arose when the Liberals became confident that they could solve problems of fraud. But it only happened because they were able to exploit a division within the Conservatives. The switch also possibly reflected a concern with the rising support for socialism and the desire to divide power more broadly. Our findings shed new light on the origins of electoral systems and the nature of political conflict and its resolution. |
| Keywords: | conflict; electoral institutions; political institutions; power |
| JEL: | D7 |
| Date: | 2006–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:5606&r=cdm |
| By: | Arianna Degan (Department of Economics, University of Quebec at Montreal); Antonio Merlo (Department of Economics, University of Pennsylvania) |
| Abstract: | In this paper we address the following questions: (i) To what extent is the hypothesis that voters vote sincerely testable or falsifiable? And (ii) in environments where the hypothesis is falsifiable, to what extent is the observed behavior of voters consistent with sincere voting? We show that using data only on how individuals vote in a single election, the hypothesis that voters vote sincerely is irrefutable, regardless of the number of candidates competing in the election. On the other hand, using data on how the same individuals vote in multiple elections, the hypothesis that voters vote sincerely is potentially falsifiable, and we provide general conditions under which the hypothesis can be tested. We then assess whether the behavior of voters is consistent with sincere voting in U.S. national elections in the post-war period. We find that by and large sincere voting can explain virtually all of the individual-level observations on voting behavior in presidential and congressional U.S. elections in the data. |
| Keywords: | voting, spatial models, falsifiability, testing |
| JEL: | D72 C12 C63 |
| Date: | 2006–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:06-008&r=cdm |
| By: | Klaas Staal (Zentrum für Europäische Integrationsforschung ZEI(b), Walter-Flex-Straße 3, 53113 Bonn, Germany and Econometric Institute, Erasmus University Rotterdam, the Netherlands. kstaal@uni-bonn.de) |
| Abstract: | In this paper I examine the incentives of regions to unite, to separate and to provide public goods. Separation allows for greater influence over the nature of political decision making while unification allows regions to exploit economies of scale in the provision of public goods. When public good provision is relatively inexpensive, separation occurs since individuals want to assert greater influence, while for intermediate costs of public good provision, separation can be explained by the desires for greater influence as well as for more public goods. Compared with the social optimum, there are excessive incentives for public good provision as well as excessive incentives for separation. |
| Keywords: | unification, separation, public good provision, voting |
| JEL: | D7 H2 H7 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:104&r=cdm |