New Economics Papers
on Collective Decision-Making
Issue of 2006‒10‒28
nine papers chosen by

  1. Are all crowds equally wise? A comparison of political election forecasts by experts and the public By Sjöberg, Lennart
  2. Ex Interim Voting in Public Good Provision By Sven Fischer; Andreas Nicklisch
  3. Elections, Contracts and Markets By Gersbach, Hans; Muller, Markus
  4. On Public Opinion Polls and Voters' Turnout By Klor, Esteban F; Winter, Eyal
  5. To Segregate or to Integrate: Education Politics and Democracy By de la Croix, David; Doepke, Matthias
  6. Separation of Powers and the Budget Process By Grossman, Gene; Helpman, Elhanan
  7. Media Freedom, Bureaucratic Incentives and the Resource Curse By Egorov, Georgy; Guriev, Sergei; Sonin, Konstantin
  8. When is Democracy an Equilibrium? Theory and Evidence from Colombia's La Violencia By Chacón, Mario; Robinson, James A; Torvik, Ragnar
  9. Love thy Neighbour, Love thy Kin: Strategy and Bias in the Eurovision Song Contest By Clerides, Sofronis; Stengos, Thanasis

  1. By: Sjöberg, Lennart (Center for Risk Research)
    Abstract: In this study, 4 groups of people made prognostic judgments of the outcome of the Swedish Parliamentary election in the fall of 2006, about one week before the election. The groups consisted of members of the public (N=123), political scientists (N=53), journalists writing about domestic politics in Swedish daily newspapers (N=32), and journalists who were editing sections of readers’ letters in daily newspapers (N=10). They rated, for each of seven political parties, which percentage of the votes that they believed they would get in the election. They also marked which party they themselves preferred, and answered to a few questions about interest and competence. Data were then obtained on the outcome of the election, and on the two opinions polls closest in time to it. It was found that all four groups did reasonably well, when average prognostic judgments were compared to the outcome of the election, and better than the opinion polls. The two last polls overestimated the span between the incumbent government and the victorious opposition by a factor of 2. Wishful thinking was assessed by comparing prognostic judgments for each respondent’s preferred party with his or her judgments of other parties. All groups showed some wishful thinking; the political scientists least and the public most. There were large and consistent individual differences in prognostic ability. Men performed better than women, as did those who expressed more interest and knowledge in politics, but neither level of education nor confidence in making the judgments correlated significantly with performance.
    Keywords: prognostic judgments; experts; poltical elections
    Date: 2006–10–03
  2. By: Sven Fischer; Andreas Nicklisch
    Abstract: We report the results of an experimental study that compares voting mechanisms in the provision of public goods. Subjects can freely decide how much they want to contribute. Whether the public good is finally provided is decided by a referendum under full information about all contributions. If provision is rejected, contributions are reduced by a fee and reimbursed. We compare unanimity with majority voting and both to the baseline of cheap talk. Contributions are highest under unanimity. Yet, results concerning overall efficiency are mixed. When provision occurs, only unanimity enhances efficiency. Overall, however, unanimity leads to too many rejections.
    Keywords: competition, collusion, auction, bidding, public procurement
    JEL: C72 C91 H41
    Date: 2006–10
  3. By: Gersbach, Hans; Muller, Markus
    Abstract: As the performance of long-term projects is not observable in the short run politicians may pander to public opinion. To solve this problem, we propose a triple mechanism involving political information markets, reelection threshold contracts, and democratic elections. An information market is used to predict the long-term performance of a policy, while threshold contracts stipulate a price level on the political information market that a politician must reach to have the right to stand for reelection. Reelection thresholds are offered by politicians during campaigns. We show that, on balance, the triple mechanism increases social welfare.
    Keywords: democracy; elections; information markets; threshold contracts; triple mechanism
    JEL: D72 D82
    Date: 2006–06
  4. By: Klor, Esteban F; Winter, Eyal
    Abstract: This paper studies the effects that the revelation of information on the electorate's preferences has on voters' turnout decisions. The experimental data show that closeness in the division of preferences induces a significant increase in turnout. Moreover, for closely divided electorates (and only for these electorates) the provision of information significantly raises the participation of subjects supporting the slightly larger team relative to the smaller team. This behaviour contradicts the qualitative predictions of the unique quasi-symmetric Nash equilibrium of the theoretical model. We show that the heterogeneous effect of information on the participation of subjects in different teams is driven by the subjects' (incorrect) beliefs of casting a pivotal vote. Simply put, subjects overestimate the probability of casting a pivotal vote when they belong to the team with a slight majority, and choose the strategy that maximizes their utility based on their inflated probability assessment. Empirical evidence on gubernatorial elections in the U.S. between 1990 and 2005 is consistent with our main experimental result. Namely, we observe that the difference in the actual vote tally between the party leading according to the polls and the other party is larger than the one predicted by the polls only in closely divided electorates. We provide a behavioural model that explains the main findings of our experimental and empirical analyses.
    Keywords: experimental economics; public opinion polls; voter turnout
    JEL: C72 C92 D72 H41
    Date: 2006–05
  5. By: de la Croix, David; Doepke, Matthias
    Abstract: The governments of nearly all countries are major providers of primary and secondary education to its citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study, we ask why different societies make different choices regarding the mix of private and public schooling. We develop a theory which integrates private education and fertility decisions with voting on public schooling expenditures. In a given political environment, high income inequality leads to more private education, as rich people opt out of the public system. Comparing across political systems, we find that concentration of political power can lead to multiple equilibria in the determination of public education spending.
    Keywords: democracy; private education; probabilistic voting; public education
    JEL: D72 H42 I21 O10
    Date: 2006–08
  6. By: Grossman, Gene; Helpman, Elhanan
    Abstract: We study budget formation in a model featuring separation of powers. In our model, the legislature designs a budget bill that can include a cap on total spending and earmarked allocations to designated public projects. Each project provides random benefits to one of many interest groups. The legislature can delegate spending decisions to the executive, who can observe the productivity of all projects before choosing which to fund. However, the ruling coalition in the legislature and the executive serve different constituencies, so their interests are not perfectly aligned. We consider settings that differ in terms of the breadth and overlap in the constituencies of the two branches, and associate these with the political systems and circumstances under which they most naturally arise. Earmarks are more likely to occur when the executive serves broad interests, while a binding budget cap arises when the executive's constituency is more narrow than that of the powerful legislators.
    Keywords: comparative political economics; fiscal policy; government spending; pork-barrel politics
    JEL: D78 H41 H61
    Date: 2006–07
  7. By: Egorov, Georgy; Guriev, Sergei; Sonin, Konstantin
    Abstract: How can a non-democratic ruler provide proper incentives for state bureaucracy? In the absence of competitive elections and separation of powers, the ruler has to be well-informed himself, and to gather information he may use either a secret service or the media. The danger of using a secret service is that it can collude with bureaucrats; overcoming collusion is costly. Free media aggregate information and thus constrain bureaucrats, but also help citizens to coordinate on actions against the incumbent. We endogenize the ruler's choice in a dynamic model to argue that free media are less likely to emerge in resource-rich economies where the ruler is less interested in providing incentives to his subordinates. We show that this prediction is consistent with both cross-section and panel data.
    Keywords: bureaucracy; media freedom; non-democratic politics; resource curse
    JEL: D72 D80 P16 Q4
    Date: 2006–07
  8. By: Chacón, Mario; Robinson, James A; Torvik, Ragnar
    Abstract: The conventional wisdom in political science is that for a democracy to be consoliated, all groups must have a chance to attain power. If they do not then they will subvert democracy and choose to fight for power. In this paper we show that this wisdom is, if not totally incorrect, seriously incomplete. This is so because although the probability of winning an election increases with the size of a group, so does the probability of winning a fight. Thus in a situation where all groups have a high chance of winning an election, they may also have a high chance of winning a fight. Indeed, in a natural model, we show that democracy may never be consolidated in such a situation. Rather, democracy may only be stable when one group is dominant. We provide a test of a key aspect of our model using data from La Violencia, a political conflict in Colombia during the years 1946-1950 between the Liberal and Conservative parties. Consistent with our results, and contrary to the conventional wisdom, we show that fighting between the parties was more intense in municipalities where the support of the parties was more evenly balanced.
    Keywords: conflict; democracy
    JEL: D72 D74
    Date: 2006–05
  9. By: Clerides, Sofronis; Stengos, Thanasis
    Abstract: The annual Eurovision Song Contest provides a setting where Europeans can express their sentiments about other countries without regard to political sensitivities. Analyzing voting data from the 25 contests between 1981-2005, we find strong evidence for the existence of clusters of countries that systematically exchange votes regardless of the quality of their entries. Cultural, geographic, economic and political factors are important determinants of point exchanges. Factors such as order of appearance, language and gender are also important. There is also a substantial host country effect. We find some evidence of reciprocity but no evidence of strategic voting.
    Keywords: Eurovision; reciprocity; social networks
    JEL: Z13
    Date: 2006–06

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