New Economics Papers
on Collective Decision-Making
Issue of 2007‒01‒28
ten papers chosen by

  1. Vote buying and the education of a society By Felix Mühe
  2. Sincere Voting with Cardinal Preferences: Approval Voting By Miguel �gel Ballester; Pedro Rey-Biel
  3. Elections, Contracts and Markets By Hans Gersbach; Markus Müller
  4. Why Do European Governments Favor Religion? By Pablo Brañas-Garza; Angel Solano
  5. Local Economies and General Elections By Elinder, Mikael
  6. The Swing Voter’s Curse in the Laboratory By Marco Battaglini; Rebecca Morton; Thomas Palfrey
  7. Crowding-out in Productive and Redistributive Rent-Seeking. By Giuseppe Dari-Mattiacci; Eric Langlais; Bruno Lovat; Francesco Parisi
  8. Political Connections and Preferential Access to Finance: The Role of Campaign Contributions By Claessens, Stijn; Feijen, Erik; Laeven, Luc
  9. Prima le donne e i bambini. Il peso politico dei minorenni: come e perché è indispensabile farlo emergere. La prospettiva secondo Luigi Campiglio. By Reggiani, Tommaso
  10. Social Exchange and Common Agency in Organizations By Robert Dur; Hein Roelfsema

  1. By: Felix Mühe (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH))
    Abstract: Various studies provide evidence that buying of votes is a widespread instrument of parties in developing countries to influence the outcome of elections. In this paper we examine whether democratic societies which hold votes on educational enhancing redistribution proposals can escape poverty traps if vote buying is possible. We show that if agents can buy or sell votes, then the education of a society is impossible because educational enhancing redistribution will not occur. Hence, society will remain in the poverty trap. We then show that the negative effects of vote buying can be eliminated, for example, by means of a repeated voting constitution in combination with a threshold flexible majority voting rule.
    Keywords: vote buying, political economy, poverty traps, economic development, voting rules, repeated voting
    JEL: C72 D72 O10 P16
    Date: 2006–10
  2. By: Miguel �gel Ballester; Pedro Rey-Biel
    Abstract: We discuss sincere voting when voters have cardinal preferences over alter- natives. We interpret sincerity as opposed to strategic voting, and thus define sincerity as the optimal behaviour when conditions to vote strategically vanish. When voting mechanisms allow for only one message type we show that this op- timal behaviour coincides with an intuitive and common definition of sincerity. For voting mechanisms allowing for multiple message types, such as approval vot- ing (AV), there exists no conclusive definition of sincerity in the literature. We show that for AV, voters' optimal strategy tends to one of the existent definitions of sincerity, consisting in voting for those alternatives that yield more than the average of cardinal utilities.
    Keywords: sincere and strategic voting, approval voting
    JEL: D63 D71 D72 D80
    Date: 2007–01–15
  3. By: Hans Gersbach (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH)); Markus Müller (Center of Economic Research (CER-ETH), Swiss Federal Institute of Technology Zurich (ETH))
    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: elections, threshold contracts, democracy, information markets, triple mechanism
    JEL: D72 D82
    Date: 2006–05
  4. By: Pablo Brañas-Garza (Department of Economic Theory and Economic History, University of Granada); Angel Solano (Department of Economic Theory and Economic History, University of Granada)
    Abstract: This paper explores a highly controversial issue: while most European countries are undergoing a clear and well-documented process of secularization, the governments of these countries widely support religious institutions. The arguments put forward by the median voter seem insufficient to explain the data. We show that if political parties are allowed to take an ideological position with respect to religion, the observed deviations from the most preferred policy by the median voter could be explained. The assumptions of our model are tested using European data. We observe that citizens are concerned about secularization, but that there are differences between religious and non-religious citizens as we assume. In addition, and in consonance with our assumptions, the percentage of religious-averse inhabitants is very small.
    Keywords: religiosity, favoritism, voting, political economics.
    JEL: Z12 D72 H59
    Date: 2007–01–19
  5. By: Elinder, Mikael (Department of Economics)
    Abstract: This paper estimates voters’ response to municipality and regional level unemployment and economic growth, in Swedish general elections from 1985 to 2002, using data on 284 municipalities and 9 regions. An increase in regional growth or a reduction in regional unemployment by one percentage point is associated with an increase in the support for the national government by about 0.8 and 1.1 percentage points. Changes in unemployment and growth at the municipality level seem to have much smaller effects on government support.
    Keywords: elections; voting; local economic conditions
    JEL: H11 R11 R12 R58
    Date: 2006–11–23
  6. By: Marco Battaglini; Rebecca Morton; Thomas Palfrey
    Date: 2007–01–12
  7. By: Giuseppe Dari-Mattiacci; Eric Langlais; Bruno Lovat; Francesco Parisi
    Abstract: TThis paper presents a general rent-seeking model in which participants decide on entry before choosing their levels of efforts. The conventional wisdom in the rent-seeking literature suggests that the rent dissipation increases with the number of potential participants and with their pro- ductivity of effort. In this paper, we show that this result of the rent- seeking literature is far from general and applies only when participants are relatively weak and enter the game with certainty. In the presence of strong competitors, the expected total dissipation actually decreases, since participation in the game is less frequent. We further consider the impact of competitors' exit option, distinguishing between "redistributive rent-seeking"and "productive rent-seeking" situations. In redistributive rent-seeking, no social loss results from the fact that all competitors exit the race. In productive rent-seeking, instead, lack of participation creates a social loss (the "lost treasure" effect), since valuable rents are left unex- ploited. We show that the lost-treasure effect perfectly counterbalances the reduction in rent dissipation due to competitors' exit. Hence, unlike redistributive rent-seeking, in productive rent-seeking the total social loss remains equal to the entire rent even when parties grow stronger or the number of players increases.
    Keywords: Rent-seeking, rent dissipation, Tullock' s paradox.
    JEL: C72 D72 K00
    Date: 2007
  8. By: Claessens, Stijn; Feijen, Erik; Laeven, Luc
    Abstract: Using novel indicators of political connections constructed from campaign contribution data, we show that Brazilian firms that provided contributions to (elected) federal deputies experienced higher stock returns than firms that don’t around the 1998 and 2002 elections. This suggests contributions help shape policy on a firm-specific basis. Using a firm fixed effects framework to mitigate the risk that unobserved firm characteristics distort the results, we find that contributing firms substantially increased their bank financing relative to a control group after each election, indicating that access to bank finance is an important channel through which political connections operate. We estimate the economic costs of this rent seeking over the two election cycles to be at least 0.2% of GDP per annum.
    Keywords: Campaign Contributions; Elections; Preferential Lending; Rent-seeking
    JEL: D7 G1 G2 G3 P48
    Date: 2007–01
  9. By: Reggiani, Tommaso
    Abstract: Prof. Luigi Campiglio has endorsed a test, entitled Prima le donne e i bambini (First the women and children), which reflects the importance of women and children for the entire society. Meeting this test requires that under-age children be able to exercise political weight, which can only be accomplished by allowing them to vote. They should be able to do so by giving their mothers the power to vote on their behalves, through exercise of a power of attorney.
    Keywords: Luigi Campiglio
    JEL: I38 I0 K40
    Date: 2006–04–01
  10. By: Robert Dur (Erasmus Universiteit Rotterdam); Hein Roelfsema (Utrecht University)
    Abstract: We study the relation between formal incentives and social exchange in organizations where employees work for several managers and reciprocate to a manager's attention with higher effort. To this end we develop a common agency model with two-sided moral hazard. We show that when effort is contractible and attention is not, the first-best can be achieved through bonus pay for both managers and employees. When neither effort nor attention are contractible, an 'attention race' arises, as each manager tries to sway the employee's effort his way. While this may result in too much social exchange, the attention race may also be a blessing because it alleviates managers' moral-hazard problem in attention provision. Lastly, we derive the implications of these contract imperfections for optimal organizational design.
    Keywords: social exchange; reciprocity; incentive contracts; common agency; organizational design
    JEL: D86 J41 M50 M54 M55
    Date: 2006–12–19

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