New Economics Papers
on Collective Decision-Making
Issue of 2007‒03‒31
thirteen papers chosen by

  1. Framing Effects in Political Decision Making: Evidence From a Natural Voting Experiment By Bütler, Monika; Maréchal, Michel André
  2. Term Limits and Electoral Accountability By Michael Smart; Daniel M. Sturm
  3. Security-Voting Structure and Bidder Screening By At, Christian; Burkart, Mike; Lee, Samuel
  4. Ethnicity, Voter Alignment and Political Party Affiliation – an African Case: Zambia By Gero Erdmann
  5. Emergence and Persistence of Inefficient States By Daron Acemoglu; Davide Ticchi; Andrea Vindigni
  6. Social Expenditures as a Political Cue Ball? : OECD Countries under Examination By Niklas Potrafke
  7. On Rent-Seeking Cost Under Democracy And Under Dictatorship By R. Carson
  8. Crafting Political Institutions in Africa. Electoral Systems and Systems of Government in Rwanda and Zambia Compared By Alexander Stroh
  9. Configurations study for the Banzhaf and the Shapley-Shubik indices of power By Fabrice Barthélémy; Mathieu Martin
  10. Politics, political competition and the political budget cycle in Canada, 1870 - 2000: a search across alternative fiscal instruments By J. Stephen Ferris and Stanley L. Winer
  11. Political Competition and Convergence to Fundamentals: With Application to the Politcal Business Cycle and the Size of the Public Sector By J. Stephen Ferris, Soo-Bin Park, and Stanley L. Winer
  12. Dropping the Ax: Illegal Firings During Union Election Campaigns By John Schmitt; Ben Zipperer
  13. Just how much bigger is government in Canada? By J. Stephen Ferris and Stanley L. Winer

  1. By: Bütler, Monika; Maréchal, Michel André
    Abstract: This paper analyzes a recent ballot in which two virtually identical popular initiatives, both demanding a decrease in the legal age of retirement in Switzerland, led to differences in approval rates of nearly seven percentage points. Based on this unique natural experiment, the existence of emphasis framing effects is tested for and their determinants are identified outside of the controlled settings of laboratories. Nonetheless, the analyzed setting allows for considerably more control than usually available in the field: All party, government and interest group recommendations were symmetric for both initiatives, and the simultaneous vote rules out potential variation of individual preferences and compositional changes of the electorate over time. Using community and individual level data it is shown that the difference in approval rates is largely due to the different emphases in the initiatives' titles.
    Keywords: bounded rationality; direct democracy; framing effect; natural experiment; pension reform; voting
    JEL: D1 D72 H55
    Date: 2007–03
  2. By: Michael Smart; Daniel M. Sturm
    Abstract: Periodic elections are the main instrument through which voters can hold politiciansaccountable. From this perspective term limits, which restrict voters' ability to rewardpoliticians with re-election, appear counterproductive. We show that despite the discipliningeffect of elections, term limits can be ex ante welfare improving from the perspective ofvoters. By reducing the value of holding office term limits can induce politicians toimplement policies that are closer to their private preferences. Such "truthful" behavior byincumbents in turn results in better screening of incumbents. We show that the combinationof these two effects can strictly increase the utility of voters.
    Keywords: Political Agency, Accountability, Term Limits
    JEL: D72 H11
    Date: 2006–12
  3. By: At, Christian; Burkart, Mike; Lee, Samuel
    Abstract: This paper analyzes how non-voting shares affect the takeover outcome in a single-bidder model with asymmetric information and private benefit extraction. In equilibrium, the target firm's security-voting structure influences the bidder's participation constraint and in response the shareholders' conditional expectations about the post-takeover share value. Therefore, the structure can be chosen to discriminate among bidder types. Typically, the socially optimal structure deviates from one share - one vote to promote all and only value-increasing bids. As target shareholders ignore takeover costs, they prefer more takeovers and hence choose a smaller fraction of voting shares than is socially optimal. In either case, the optimal fraction of voting shares decreases with the quality of shareholder protection and increases with the incumbent manager's ability. Finally, shareholder returns are higher when a given takeover probability is implemented by (more) non-voting shares rather than by (larger) private benefits.
    Keywords: dual-class share structure; free-rider behaviour; tender offer
    JEL: G34
    Date: 2007–03
  4. By: Gero Erdmann (GIGA Institute of African Affairs)
    Abstract: Conventional wisdom holds that ethnicity provides the social cleavage for voting behav-iour and party affiliation in Africa. Because this is usually inferred from aggregate data of national election results, it might prove to be an ecological fallacy. The evidence based on individual data from an opinion survey in Zambia suggests that ethnicity matters for voter alignment and even more so for party affiliation, but it is certainly not the only factor. The analysis also points to a number of qualifications which are partly methodology-related. One is that the degree of ethnic voting can differ from one ethno-political group to the other depending on various degrees of ethnic mobilisation. Another is that if smaller eth-nic groups or subgroups do not identify with one particular party, it is difficult to find a significant statistical correlation between party affiliation and ethnicity – but that does not prove that they do not affiliate along ethnic lines.
    Keywords: Social cleavages, ethnicity, voting behaviour, political party identification, political party affiliation, Zambia
  5. By: Daron Acemoglu (MIT); Davide Ticchi (Department of Economics, Università di Urbino "Carlo Bo"); Andrea Vindigni (Princeton University)
    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 based on patronage-politics. 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 the bureaucrats may not only choose an inefficient organization of the state, but they may expand the size of bureaucracy “excessively” 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.
    Keywords: bureucracy; corruption; democracy; patronage politics; political economy; public goods; redistributive politics.
    JEL: P16 H11 H26 H41
    Date: 2007–02
  6. By: Niklas Potrafke
    Abstract: This paper examines how policy affects social expenditures. Analyzing an OECD panel from 1980 to 2003, five political variables are tested: Election- and pre-election years, the ideological party composition of the governments, the number of coalition partners and the fact, if the ruling government has a majority in parliament or not (minority government). I find that neither of these variables have an impact on social expenditures using different model set-ups. The influence of national governments seems to be limited by the globalization, which indeed impairs social expenditures.
    Keywords: social expenditures, electoral cycles, partisan politics, globalisation
    JEL: D72 H50
    Date: 2007
  7. By: R. Carson (Department of Economics, Carleton University)
    Abstract: This note argues that, broadly speaking, democracies have a comparative advantage over dictatorships in keeping rent-seeking costs down by imposing penalties that reduce returns to scale in rent-seeking. Dictatorships have a comparative advantage in restricting the number of rent-seekers through higher entry barriers into rent-seeking, although not to the point of eliminating rent-seeking altogether. Of the two, the former is potentially a more effective way to control rent-seeking costs. For this reason, a democracy has the potential to achieve lower rent-seeking losses, as a share of total rent available, than does a dictatorship, although this may require the democracy to achieve a high degree of transparency of government, along with freedom of the press, the judiciary, and public and private watchdog agencies to criticize politicians and public officials.
    JEL: D72 H00 H19
    Date: 2007–03–15
  8. By: Alexander Stroh (GIGA Institute of African Affairs)
    Abstract: Scholars of institutional design attribute large importance to the choice of new institutions. The comparative analysis of how Rwanda and Zambia crafted their new electoral systems and the systems of government regards procedural, structural and rational choice variables which may influence the option for particular solutions. External influences and the type of transition are determinants that can decide which actors make their interests prevail. The degree of innovation or conservatism of new institutions is mainly a result of the speed of the process and the kind of actors involved. However, rational reflections on how to produce legitimacy and minimize personal risks which take into consideration the state of conflict in the country decide on the speed and on innovative outcomes. The structured analysis of only two cases uncovers already that it is rather difficult to realise the transfer of design recommendations into reality.
    Keywords: institutions, institutional design, transition, electoral system, Rwanda, Zambia
  9. By: Fabrice Barthélémy (THEMA, University of Cergy Pontoise); Mathieu Martin (THEMA, University of Cergy Pontoise)
    Abstract: How can we count and list all the Banzhaf or Shapley-Shubik index of power configurations for a given number of players? There is no formula in the literature that may give the cardinal of such a set, and moreover, even if this formula had existed, there is no formula which gives the configuration vectors. Even if we do not present such a formula, we present a methodology which enables to determine the set of configurations and its cardinality.
    JEL: C7 D7
    Date: 2007
  10. By: J. Stephen Ferris and Stanley L. Winer (Department of Economics, Carleton University)
    Abstract: In this paper Engel-Granger time series methodology is used to combine trending economic variables with stationary political factors to search for well-defined political influences on central government budgets in Canada over the entire post-Confederation time period from 1870 to 2000. To motivate such an inquiry we first investigate and find evidence of partisan political influence on Canada’s macro aggregates. However, because politics can influence economic outcomes only if there is a transmission mechanism through actual public policy choices, our finding of cycles in real output growth begs the question of whether such cycles arise through fiscal policy. Our analysis of three main fiscal policy instruments - public non-interest expenditure, taxation and the deficit net of interest - gives little support to any current political theory of public budgets, but does support the hypothesis that the degree of political competition matters for policy choices in both the long and short run. This new channel for the influence of politics on economic policy has not previously been isolated empirically in Canada and poses new questions in trying to reconcile the previous mixed results with respect to the influence of politics on economic aggregates.
    Keywords: expenditure size of government, tax-share, government deficits, political competition, political business cycles, political budget cycles, monetary policy, cointegration and error correction analysis.
    JEL: H1 H3 H5
    Date: 2006–08–08
  11. By: J. Stephen Ferris, Soo-Bin Park, and Stanley L. Winer (Department of Economics, Carleton University; Department of Economics, Carleton University; Department of Economics, Carleton University)
    Keywords: public expenditure, size of government, long run versus short run, opportunism, partisanship, political competition, cointegration.
    Date: 2005–10
  12. By: John Schmitt; Ben Zipperer
    Abstract: This report finds a steep rise in illegal firings of pro-union workers in the 2000s relative to the last half of the 1990s. It uses published data from the National Labor Relations Board (NLRB) to update an index of the probability that a pro-union worker will be fired in the course of a union election campaign. By 2005, pro-union workers involved in union election campaigns faced about a 1.8 percent chance of being illegally fired during the course of the campaign. If we assume that employers target union organizers and activists, and that union organizers and activists make up about 10 percent of pro-union workers, our estimates suggest that almost one-in-five union organizers or activists can expect to be fired as a result of their activities in a union election campaign.
    JEL: J41 J52 J53 J58 J83 K42
    Date: 2007–01
  13. By: J. Stephen Ferris and Stanley L. Winer (Department of Economics, Carleton University)
    Date: 2006–02–06

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