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on Collective Decision-Making |
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Issue of 2006‒12‒22
eight papers chosen by |
| By: | Battaglini, Marco; Morton, Rebecca; Palfrey, Thomas R. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1262&r=cdm |
| By: | Daron Acemoglu; Georgy Egorov; Konstantin Sonin |
| 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 sub-coalitions 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 sub-coalition 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 sub-coalitions to be self-enforcing. This is most simply illustrated by the following simple finding: with a 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. |
| JEL: | C71 D71 D74 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12749&r=cdm |
| By: | Casella, Alessandra; Palfrey, Thomas R.; Riezman, Raymond |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1261&r=cdm |
| By: | Erik Snowberg; Justin Wolfers; Eric Zitzewitz |
| Abstract: | To understand the extent to which partisan majorities in Congress influence economic policy, we compare financial market responses in recent midterm elections to Presidential elections. We use prediction markets tracking election outcomes as a means of precisely timing and calibrating the arrival of news, allowing substantially more precise estimates than a traditional event study methodology. We find that equity values, oil prices, and Treasury yields are slightly higher with Republican majorities in Congress, and that a switch in the majority party in a chamber of Congress has an impact that is only 10-30 percent of that of the Presidency. We also find evidence inconsistent with the popular view that divided government is better for equities, finding instead that equity valuations increase monotonically, albeit slightly, with the degree of Republican control. |
| JEL: | D72 G13 G14 H0 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12751&r=cdm |
| By: | Daron Acemoglu; Davide Ticchi; Andrea Vindigni |
| Abstract: | Inefficiencies in the bureaucratic organization of the state are often viewed as important factors in retarding economic development. Why certain societies choose or end up with such inefficient organizations has received very little attention, however. In this paper, we present a simple theory of the emergence and persistence of inefficient states. The society consists of rich and poor individuals. The rich are initially in power, but expect to transition to democracy, which will choose redistributive policies. Taxation requires the employment of bureaucrats. We show that, under certain circumstances, by choosing an inefficient state structure, the rich may be able to use patronage and capture democratic politics. This enables them to reduce the amount of redistribution and public good provision in democracy. Moreover, the inefficient state creates its own constituency and tends to persist over time. Intuitively, an inefficient state structure creates more rents for bureaucrats than would an efficient state structure. When the poor come to power in democracy, they will reform the structure of the state to make it more efficient so that higher taxes can be collected at lower cost and with lower rents for bureaucrats. Anticipating this, when the society starts out with an inefficient organization of the state, bureaucrats support the rich, who set lower taxes but also provide rents to bureaucrats. We show that in order to generate enough political support, the coalition of the rich and bureaucrats may not only choose an inefficient organization of the state, but they may further expand the size of bureaucracy so as to gain additional votes. The model shows that an equilibrium with an inefficient state is more likely to arise when there is greater inequality between the rich and the poor, when bureaucratic rents take intermediate values and when individuals are sufficiently forward-looking. |
| JEL: | H11 H26 H41 P16 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12748&r=cdm |
| By: | Aragones, Enriqueta; Palfrey, Thomas R.; Postlewaite, Andrew |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1258&r=cdm |
| By: | Battaglini, Marco; Morton, Rebecca; Palfrey, Thomas R. |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1263&r=cdm |
| By: | David Marsden |
| Abstract: | Periodically, the 'zone of acceptance' within which management may use its authority to direct employees' work needs to be adapted to the changing needs of organisations. This article focuses especially on the non-codified elements of employees' work, such as those commonly the subject of 'psychological contracts', and considers the role of individual employee voice in the process of adaptation, and how it relates to more familiar forms of collective employee voice. It is argued that the process can be analysed as a form of integrative bargaining, and applies the framework from Walton and McKersie. Employee voice enters into this process by virtue of consideration of the respective goals and preferences of both parties. The element of employee voice may be very weak when new work goals and priorities are imposed unilaterally by management, and they may be strong when full consideration is given to the changing needs of both parties. Two examples from work on performance management in the public services are used to illustrate these processes. The article concludes with a discussion of the ways in which collective employee voice may help to reinforce individual level integrative negotiation. The article seeks to contribute to the recent work on why employers choose employee voice mechanisms by broadening the range of policies that should be taken into account, and in particular looking at the potential of performance management as one such form. |
| Keywords: | employee voice, performance management, renegotiation of employment contracts, psychological contracts |
| JEL: | M5 J5 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp0752&r=cdm |