New Economics Papers
on Collective Decision-Making
Issue of 2007‒06‒11
nine papers chosen by

  1. Strategies of the Political Opposition By Amihai Glazer
  2. Let Me Vote! An experimental study of vote rotation in committees By R. Bosman; P. Maier; V. Sadiraj; F. van Winden
  3. Overprotected Politicians By Bruno S. Frey
  4. Why Kill Politicians? A Rational Choice Analysis of Political Assassinations By Bruno S. Frey
  5. One share-One vote, le nouveau Saint Graal By de Beaufort, Viviane
  6. Democratic Jihad ? Military intervention and democracy By Hegre, Havard; Christiansen, Lene Siljeholm; Gleditsch, Nils Petter
  7. Measurement in Economics and Social Science By Hillinger, Claude
  8. Self-enforcing Norms and the Efficient Non-cooperative Organization of Clans By Konrad, Kai A; Leininger, Wolfgang
  9. Robust Implementation: The Case of Direct Mechanisms" By Dirk Bergemann; Stephen Morris

  1. By: Amihai Glazer (Department of Economics, University of California-Irvine)
    Abstract: I consider the strategies that an opposition party can use against an incumbent party which controls the government. The focus is on strategies when citizens vote retrospectively (so that the incumbent's chance of winning re-election increases with his performance), and when citizens compare the estimated abilities of the candidates. In both cases, the equilibrium may have the opposition vote against all policies the government proposes.
    Keywords: Political opposition; Reputation; Retrospective voting; Policy implementation
    JEL: D72 D78
    Date: 2007–05
  2. By: R. Bosman; P. Maier; V. Sadiraj; F. van Winden
    Abstract: We conduct an experiment to investigate (i) whether rotation in voting increases a committee’s efficiency, and (ii) the extent to which rotation is likely to critically influence collective and individual welfare. The experiment is based on the idea that voters have to trade-off individual versus common interests. Our findings indicate that the choice of a rotation scheme has important consequences: it ‘pays’ to be allowed to vote, as voting committee members earn significantly more than non-voting members. Hence, rotation is not neutral. We also find that smaller committees decide faster and block fewer decisions. This reduces frustration among committee members.
    JEL: D70 D78 E58
  3. By: Bruno S. Frey
    Abstract: This paper argues that politicians are overprotected. The costs of political assassination differ systematically depending on whether a private or a public point of view is taken. A politician attributes a very high (if not infinite) cost to his or her survival. The social cost of political assassination is much smaller as politicians are replaceable. Conversely, the private cost of the security measures is low for politicians, its bulk – including time loss and inconvenience – is imposed on taxpayers and the general public. The extent of overprotection is larger in dictatorial than in democratic countries.
    Keywords: Politicians; rational choice; assassination; security; democracy; dictatorship
    JEL: D01 D70 H50 J28 Z10
    Date: 2007–05
  4. By: Bruno S. Frey
    Abstract: In the course of history a large number of politicians has been assassinated. A rational choice analysis is used to distinguish the expected marginal benefits of killing, and the marginal cost of attacking a politician. The comparative analysis of various equilibria helps us to gain insights into specific historical events. The analysis suggests that – in addition to well-known security measures – an extension of democracy, a rule by a committee of several politicians, more decentralization via the division of power and federalism, and a strengthening of civil society significantly reduce politicians’ probability of being attacked and killed.
    Keywords: Rational choice; democracy; dictatorship; assassination; deterrence
    JEL: D01 D70 K14 K42 Z10
    Date: 2007–05
  5. By: de Beaufort, Viviane (ESSEC Business School)
    Abstract: More than one third of companies listed in the FTSE EUROFIRST 300 index are governed accordingly to principles differing from the One share – One vote standards. These exceptions could be illustrated by several practices such as Scandinavian multiple voting shares, non voting shares as seen in some State members as authorised by European Directives, French double voting shares, “golden shares” concerning recently privatized firms, or even preference shares as observed in Holland. Such variety can be explained by the fact that “control rights” and “cash-flow rights”, understood as essential to the company's activities, are distinctly considered in the shareholder practices. The question at stake is to know if the application of the One share – One vote as a European standard would be justified with regard to European Law, including its underlying principles, and to economic efficiency in general. Indeed, One share – One vote enthusiast affirm that this rule participates to corporate democracy and contributes to increases firms' performance. The aim of our study is to determine whether these principles are reached or not. As a preliminary remark, we can notice that the European Commission intervention is questionable. First, its competence, and therefore the legality of a potential action, is not obvious. Indeed, owing to the subsidiarity principle and the article 48.2: (“co-ordinating to the necessary extent the safeguards which, for the protection of the interests of members and others, are required by Member States of companies or firms, with a view to making such safeguards equivalent throughout the Community”.) and the European Parliament position concerning the Takeover Directive, the legitimacy of the European Commission in this case is undoubtedly compromised. Then, the application of One share - One vote, by the cancellation of certain rights attached to a share, would violate a democratic principle, founder of the European Union, and dedicated by Member States Constitutions, known as private property. It would have, as a result, an unjustified, not compensable and therefore, illegal expropriation. We also have to question ourselves concerning the concept of corporate democracy and its consequences on Europeans companies. Unquestionable at first glance, is the notion of democracy transposable it in corporate Law? Is it only referring to a strict equality between shareholders or rather intents to limit unequal situations and therefore, prevent dominant shareholders from unilaterally capturing the company's performance? The respect of principles such as equity, shareholders general interest and company's interest, combined with transparency rules and protection of minority shareholders leads us to favour the second supposition. Finally, we underline that the ultimate argument relating to efficiency as a result from the strict application of the One share – One vote rule, is tempered by economical studies and by the practice observed in several State members. The One share - One vote rule could definitely be necessary for market readability purposes. But, some exception to this rule might be justified with regard to the company's interest. Therefore, some flexibility principles should remain. A dogmatic approach focused on shareholders, or certain type of shareholders, would disadvantage the development of the internal market and could not be justifiable on a legal ground. We believe that promoting corporate democracy requests an enhancement of transparency with a better bordering of existing practices and a strengthening of minority shareholders (by improving an “upper standard” harmonization).
    Keywords: Corporate Governance; One share-One vote; Shareholder Democracy
    JEL: H00 K00
    Date: 2006–12
  6. By: Hegre, Havard; Christiansen, Lene Siljeholm; Gleditsch, Nils Petter
    Abstract: Democracies rarely if ever fight one another, but they participate in wars as frequently as autocracies. They tend to win the wars in which they participate. Democracies frequently build large alliances in wartime, but not only with other democracies. From time to time democracies intervene militarily in ongoing conflicts. The democratic peace may contribute to a normative justification for such interventions, for the purpose of promoting democracy and eventually for the promotion of peace. This is reinforced by an emerging norm of humanitarian intervention. Democracies may have a motivation to intervene in non-democracies, even in the absence of ongoing conflict, for the purpose of regime change. The recent Iraq War may be interpreted in this perspective. A strong version of this type of foreign policy may be interpreted as a democratic crusade. The paper examines the normative and theoretical foundations of democratic interventionism. An empirical investigation of interventions in the period 1960-96 indicates that democracies intervene quite frequently, but rarely against other democracies. In the short term, democratic intervention appears to be successfully promoting democratization, but the target states tend to end up among the unstable semi-democracies. The most widely publicized recent interventions are targeted on poor or resource-dependent countries in non-democratic neighborhoods. Previous research has found these characteristics to reduce the prospects for stable democracy. Thus, forced democratization is unpredictable with regard to achieving long-term democracy and potentially harmful with regard to securing peace. But short-term military successes may stimulate more interventions until the negative consequences become more visible.
    Keywords: Population Policies,Peace & Peacekeeping,Parliamentary Government,Politics and Government,Political Systems and Analysis
    Date: 2007–06–01
  7. By: Hillinger, Claude
    Abstract: ABSTRACT The paper discusses measurement, primarily in economics, from both analytical and historical perspectives. The historical section traces the commitment to ordinalism on the part of economic theorists from the doctrinal disputes between classical economics and marginalism, through the struggle of orthodox economics against socialism down to the cold-war alliance between mathematical social science and anti-communist ideology. In economics the commitment to ordinalism led to the separation of theory from the quantitative measures that are computed in practice: price and quantity indexes, consumer surplus and real national product. The commitment to ordinality entered political science, via Arrow’s ‘impossibility theorem’, effectively merging it with economics, and ensuring its sterility. How can a field that has as its central result the impossibility of democracy contribute to the design of democratic institutions? The analytical part of the paper deals with the quantitative measures mentioned above. I begin with the conceptual clarification that what these measures try to achieve is a restoration of the money metric that is lost when prices are variable. I conclude that there is only one measure that can be embedded in a satisfactory economic theory, free from unreasonable restrictions. It is the Törnqvist index as an approximation to its theoretical counterpart the Divisia index. The statistical agencies have at various times produced different measures for real national product and its components, as well as related concepts. I argue that all of these are flawed and that a single deflator should be used for the aggregate and the components. Ideally this should be a chained Törnqvist price index defined on aggregate consumption. The social sciences are split. The economic approach is abstract, focused on the assumption of rational and informed behavior, and tends to the political right. The sociological approach is empirical, stresses the non-rational aspects of human behavior and tends to the political left. I argue that the split is due to the fact that the empirical and theoretical traditions were never joined in the social sciences as they were in the natural sciences. I also argue that measurement can potentially help in healing this split.
    Keywords: Key words: collective choice; consumer surplus; money metric; price and quantity indexes; welfare measurement
    JEL: B16 C43 C82 D61 D71
    Date: 2007–05
  8. By: Konrad, Kai A; Leininger, Wolfgang
    Abstract: We study how norms can solve distributional conflict inside a clan and the efficient coordination of collective action in a conflict with an external enemy. We characterize a fully non-cooperative equilibrium in a finite game in which a self-enforcing norm coordinates the members on efficient collective action and on a peaceful distribution of the returns of collective action.
    Keywords: collective action; defence; distributional conflict; free-riding; norms; war
    JEL: D72 D74 H11 H41
    Date: 2007–06
  9. By: Dirk Bergemann (; Stephen Morris (Dept. of Economics, Princeton University)
    Abstract: A social choice function is robustly implementable if there is a mechanism under which the process of iteratively eliminating strictly dominated messages leads to outcomes that agree with the social choice at every type profile. In an interdependent value environment with single crossing preferences, we identify a strict contraction property on the preferences which together with strict ex post incentive compatibility is sufficient to guarantee robust implementation in the direct mechanism. Strict EPIC and the contraction property are also necessary for robust implementation in any mechanism. The contraction property essentially requires that the interdependence is not too large. In a linear signal model, the contraction property is equivalent to an interdependence matrix having an eigenvalue less than one.
    Keywords: Mechanism design, Implementation, Robustness, Common knowledge, Interim equilibrium, Iterative deletion, Direct mechanism
    JEL: C79 D82
    Date: 2006–05

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