New Economics Papers
on Collective Decision-Making
Issue of 2006‒09‒23
five papers chosen by

  1. Voting over Taxes: The Case of Tax Evasion By Traxler, Christian
  2. Democratic Defenses and Destabilisations By Werner Güth; Hartmut Kliemt; Stefan Napel
  3. Institution Formation in Public Goods Games By Michael Kosfeld; Akira Okada; Arno Riedl
  4. Generalized Utilitarianism and Harsanyi’s Partial Observer Theorem By Simon Grant; Atsushi Kajii; Ben Polak; Zvi Safra
  5. Liberté ou égalité? By Jean-Yves Duclos

  1. By: Traxler, Christian
    Abstract: This paper studies majority voting on taxes when tax evasion is possible. We characterize the voting equilibrium where the agent with median taxed income is pivotal. Since the ranking of true incomes does not necessarily correspond to the ranking of taxed incomes, the decisive voter can differ from the median income receiver. In this case, we find unconventional patterns of redistribution, e.g. from the middle class to the poor and the rich. Furthermore, we show that majority voting can lead to an inefficiently low level of taxation despite a right-skewed income distribution. Hence, the classical over-provision result might turn around, once tax evasion is taken into account.
    Keywords: Majority Voting; Tax Evasion; Welfare Analysis; Redistribution
    JEL: H26 H72 D6
    Date: 2006–09
  2. By: Werner Güth; Hartmut Kliemt; Stefan Napel
    Abstract: The so-called paradox of democracy is approached as a variant of a more general class of so-called paradoxes of self-amendment. It is studied from a legal philosophy and a game theoretic point of view. Special attention is devoted to the risks and chances of inducing the foes of democracy to accept democratic rules by granting them a share in power. The upshot is that admitting democratic competition there are no foolproof defenses against democratic self-destabilisation.
    Date: 2006–09
  3. By: Michael Kosfeld (University of Zurich and IZA Bonn); Akira Okada (Hitotsubashi University); Arno Riedl (Maastricht University, CESifo and IZA Bonn)
    Abstract: Centralized sanctioning institutions are of utmost importance for overcoming free-riding tendencies and enforcing outcomes that maximize group welfare in social dilemma situations. However, little is known about how such institutions come into existence. In this paper we investigate, both theoretically and experimentally, the endogenous formation of institutions in a public goods game. Our theoretical analysis shows that players may form sanctioning institutions in equilibrium, including those where institutions govern only a subset of players. The experiment confirms that institutions are formed frequently as well as that institution formation has a positive impact on cooperation rates and group welfare. However, the data clearly reveal that players are unwilling to implement institutions in which some players have the opportunity to free ride. In sum, our results show that individuals are willing and able to create sanctioning institutions, but that the institution formation process is guided by behavioral principles not taken into account by standard theory.
    Keywords: public goods, institutions, sanctions, cooperation
    JEL: C72 C92 D72
    Date: 2006–09
  4. By: Simon Grant (Dept. of Economics, Rice University); Atsushi Kajii (Institute of Economic Research, Kyoto University); Ben Polak (Dept. of Economics and School of Management, Yale University); Zvi Safra (Tel Aviv University and College of Management)
    Abstract: We provide an axiomatization of generalized utilitarian social welfare functions in the context of Harsanyi's impartial observer theorem. To do this, we reformulate Harsanyi's problem such that lotteries over identity (accidents of birth) and lotteries over outcomes (life chances) are independent. We show how to accommodate (first) Diamond's critique concerning fairness and (second) Pattanaik's critique concerning differing attitudes toward risk. In each case, we show what separates them from Harsanyi by showing what extra axioms return us to Harsanyi. Thus we provide two new axiomatizations of Harsanyi's utilitarianism.
    Keywords: Generalized utilitarianism, Impartial observer, Social welfare function, Fairness, Ex ante egalitarianism
    JEL: D63 D71
    Date: 2006–09
  5. By: Jean-Yves Duclos
    Abstract: Qu'es-ce que la liberté? Qu'es-ce que l'égalité? En quoi une plus grande égalité peut-elle accroître la liberté? Telles sont les questions principales auxquelles tente de répondre cet article. Le problème du choix entre liberté et égalité soulève en effet le problème de la définition de ces deux objets. Une fois cette définiton clarifiée, il ressort que, sous certaines conceptions de la liberté et de l'égalité, il n'est pas nécessaire ou utile de choisir entre ces deux objets: ils deviennent alors complémentaires plutôt que substituts. L'égalité peut en effet renforcer à la fois la liberté réelle et la liberté morale des individus, et ainsi contribuer au bien-être de tous. L'article traite aussi des difficultés de mesure de l'égalité, et en quoi ces difficultés peuvent affecter la comparaison de l'égalité à travers le temps et l'espace.
    Keywords: Liberté, égalité, efficacité, bien-être, justice sociale
    JEL: D31 D63 D64 I30 I31
    Date: 2006

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