New Economics Papers
on Collective Decision-Making
Issue of 2006‒12‒16
nine papers chosen by

  1. Information Transmission in Coalitional Voting Games By Roberto Serrano; Rajiv Vohra
  2. Coalition Formation in Political Games By Daron Acemoglu; Georgy Egorov; Konstantin Sonin
  3. Group and individual risk preferences : a lottery-choice experiment By David Masclet; Youenn Loheac; Laurent Denant-Boemont; Nathalie Colombier
  4. Condorcet domains and distributive lattices By Bernard Monjardet
  5. Democracy, Rationality and Morality By Dennis C. Mueller
  6. Collective penalties and inducement of self-reporting By Katrin Millock; David Zilberman
  7. The Problem of Legitimacy in the European Polity. Is Democratization the Answer? By Claus Offe; Ulrich K. Preuss
  8. Dictators, Repression and the Median Citizen: An “Eliminations Model” of Stalin’s Terror (Data from the NKVD Archives) By Paul R. Gregory; Philipp J.H. Schr oder; Konstantin Sonin
  9. The Emergence of Institutions By Santiago Sanchez-Pages; Stephane Straub

  1. By: Roberto Serrano; Rajiv Vohra
    Date: 2005
  2. By: Daron Acemoglu (MIT); Georgy Egorov (Harvard); Konstantin Sonin (CEFIR)
    Abstract: We study the formation of a ruling coalition in political environments. Each individual is endowed with a level of political power. The ruling coalition consists of a subset of the individuals in the society and decides the distribution of resources. A ruling coalition needs to contain enough powerful members to win against any alternative coalition that may challenge it, and it needs to be self-enforcing, in the sense that none of its subcoalitions should be able to secede and become the new ruling coalition. We first present an axiomatic approach that captures these notions and determines a (generically) unique ruling coalition. We then construct a simple dynamic game that encompasses these ideas and prove that the sequentially weakly dominant equilibria (and the Markovian trembling hand perfect equilibria) of this game coincide with the set of ruling coalitions of the axiomatic approach. We also show the equivalence of these notions to the core of a related non-transferable utility cooperative game. In all cases, the nature of the ruling coalition is determined by the power constraint, which requires that the ruling coalition be powerful enough, and by the enforcement constraint, which imposes that no subcoalition of the ruling coalition that commands a majority is self-enforcing. The key insight that emerges from this characterization is that the coalition is made self-enforcing precisely by the failure of its winning subcoalitions to be self-enforcing. This is most simply illustrated by the following simple finding: with simple majority rule, while three-person (or larger) coalitions can be self-enforcing, two-person coalitions are generically not self-enforcing. Therefore, the reasoning in this paper suggests that three-person juntas or councils should be more common than two-person ones. In addition, we provide conditions under which the grand coalition will be the ruling coalition and conditions under which the most powerful individuals will not be included in the ruling coalition. We also use this framework to discuss endogenous party formation.
    Keywords: Coalition Formation, Collective Choice, Cooperative Game Theory, Political Economy,Self-Enforcing Coalitions, Stability
    JEL: D71 D74 C71
    Date: 2006–11
  3. By: David Masclet (CREM - Centre de Recherche en Economie et Management - [CNRS : UMR6211] - [Université Rennes I][Université de Caen], CIRANO - [Centre Interuniversitaire de Recherche en ANalyse des Organisations]); Youenn Loheac (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); Laurent Denant-Boemont (CREM - Centre de Recherche en Economie et Management - [CNRS : UMR6211] - [Université Rennes I][Université de Caen]); Nathalie Colombier (CREM - Centre de Recherche en Economie et Management - [CNRS : UMR6211] - [Université Rennes I][Université de Caen])
    Abstract: This paper focuses on decision making under risk, comparing group and individual risk preferences in a lottery-choice experiment inspired by Holt and Laury (2002). The experiment presents subjects with a menu of unordered lottery choices which allows us to measure risk aversion. In the individual treatment, subjects make lottery choices individually ; in the group treatment, each subject was placed in an anonymous group of three, where unanimous lottery choice decisions were made via voting. Finally, in a third treatment, called the choice treatment, subjects could choose whether to be on their own or in a group. Our main findings are that groups are more likely than individuals to choose safe lotteries for decisions with low winning percentages. Moreover, groups converge toward less risky decisions because subjects who were relatively less risk averse were more likely to change their vote in order to conform to the group average decision ; more risk-averse individuals were less likely to change their preferences. Finally our results reveal a positive relationship between preference for risk and willingness to decide alone.
    Keywords: Experiment, decision rule, individual decision, group decision.
    Date: 2006–12–07
  4. By: Bernard Monjardet (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: Condorcet domains are sets of linear orders where Condorcet's effect can never occur. Works of Abello, Chameni-Nembua, Fishburn and Galambos and Reiner have allowed a strong understanding of a significant class of Condorcet domains which are distributive lattices -in fact covering distributive sublattices of the permutoèdre lattice- and which can be obtained from a maximal chain of this lattice. We describe this class and we study three particular types of such Condorcet domains.
    Keywords: Acyclic set, alternating scheme, Condorcet effect, distributive lattice, maximal chain of permutations, permutoèdre lattice.
    Date: 2006–12–07
  5. By: Dennis C. Mueller
    Abstract: The fundamental, underlying assumption in economics, public choice, and increasingly in political science and other branches of the social sciences is that individuals are rational actors. Many people have questioned the realism of this assumption, however, and considerable experimental evidence seems to refute it. This paper builds on recent findings from the field of evolutionary psychology to discuss the evolution of rational behavior in humans. It then goes on to relate this evolutionary process to the evolution of political institutions and in particular of democratic institutions. Length 58 pages
    Date: 2006–11
  6. By: Katrin Millock (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I]); David Zilberman (Department of Agricultural and Ressource Economics - [University of California, Berkeley])
    Abstract: Random accidents can be contained by collective penalties. These penalties are not likely to be enforced but rather induce self-reporting that enhances welfare due to early containment. Self-reporting under collective penalties increases overall welfare, but may increase expected environmental cost. Even when regulation is constrained by an upper limit on the acceptable collective penalty, the threat of collective penalties can induce an incentive-compatible mutual insurance scheme under which a side-payment is made to the agent that self-reports an accident. This self-reporting mechanism is welfare-improving, but first-best outcomes can only be obtained when the collective penalty is unconstrained, or when an honor system applies. In cases when there is a new externality that requires fast response (avian flu), collective penalties can compliment or substitute for monitoring.
    Keywords: Ambient tax, collective penalties, enforcement, self-reporting.
    Date: 2006–12–06
  7. By: Claus Offe; Ulrich K. Preuss
    Abstract: The authors discuss potential sources of legitimacy of the EU, i. e. of the normative bindingness of its decisions. After rejecting the views that such legitimacy is either not needed, not feasible, or provided for already, they focus upon the corrosive impact of the EU upon democratic legitimacy within member states. Brussels-based 'governance' is essentially uncontested and can hardly provide for the legitimacy that results from the interplay between government and opposition within nation states. The problem boils down to achieving legitimacy in the absence of the political community of a 'demos'. The paper outlines a solution to this problem that relies on the apparently oxymoronic model of a 'republican empire' - a political community, that is, which is held together not by the bonds of some presumed sameness, but, to the contrary, by the shared contractual recognition of the dissimilarity of its constituent parts from which legitimacy can flow.
    Keywords: democracy; legitimacy; diversity/homogeneity; governance; democratization
    Date: 2006–12–05
  8. By: Paul R. Gregory (University of Houston and Hoover Institution, Stanford University); Philipp J.H. Schr oder (Aarhus School of Business, Denmark); Konstantin Sonin (CEFIR/NES)
    Abstract: This paper sheds light on dictatorial behavior as exemplified by the mass terror campaigns of Stalin. Dictatorships – unlike democracies where politicians choose platforms in view of voter preferences – may attempt to trim their constituency and thus ensure regime survival via the large scale elimination of citizens. We formalize this idea in a simple model and use it to examine Stalin’s three large scale terror campaigns with data from the NKVD state archives that are accessible after more than 60 years of secrecy. Our model traces the stylized facts of Stalin’s terror and identifies parameters such as the ability to correctly identify regime enemies, the actual or perceived number of enemies in the population, and how secure the dictators power base is, as crucial for the patterns and scale of repression.
    Keywords: Dictatorial systems, Stalinism, Soviet State and Party archives, NKVD, OPGU,Repression
    JEL: P00 N44 P26
    Date: 2006–11
  9. By: Santiago Sanchez-Pages; Stephane Straub
    Abstract: This paper analyzes how institutions aimed at coordinating economic interactions may appear. We build a model in which agents play a prisoners’ dilemma game in a hypothetical state of nature. Agents can delegate the task of enforcing cooperation in interactions to one of them in exchange for a proper compensation. Two basic commitment problems stand in the way of institution formation. The first one is the individual commitment problem that arises because an agent chosen to run the institution may prefer to renege ex post. The second one is a “collective commitment” problem linked to the lack of binding agreements on the fee that will be charged by the centre once it is designated. This implies first that a potentially socially efficient institution may fail to arise because of the lack of individual incentives, and second that even if it arises, excessive rent extraction by the institution may imply a sub-optimal efficiency level, explaining the heterogeneity of observed institutional arrangements. An institution is less likely to arise in small groups with limited endowments, but also when the underlying commitment problem is not too severe. Finally, we show that the threat of secession by a subset of agents may endogenously solve part of the second commitment problem.
    Keywords: Institution, Coordination, State of nature, Secession.
    JEL: C72 D02 O17 Z13

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