New Economics Papers
on Collective Decision-Making
Issue of 2007‒06‒23
eight papers chosen by

  1. Fixing the Quorum: Representation versus Abstention By Sanne Zwart
  2. Voting, Lobbying and the Decentralization Theorem By Ben Lockwood
  3. Making Autocracy Work By Timothy Besley; Masayuki Kudamatsu
  4. Group formation and governance By Ludovic Renou
  5. The Cost of Social Pacts By Acocella, Nicola; Di Bartolomeo, Giovanni
  6. The Political Economy of Housing Supply:Homeowners, Workers, and Voters By Francois Ortalo-Magne; Andrea Prat
  7. Addressing the Food Aid Curse By Max Blouin; Stéphane Pallage
  8. The Signalling Power of Sanctions in Collective Action Problems By Joel van der Weele

  1. By: Sanne Zwart
    Abstract: The majority of the participating voters in referenda does not necessarily reflect the majority of the whole population since voters can abstain. This paper shows that a quorum exists for which the outcome of the referendum coincides with the population preference. However, a second equilibrium can exist in which the proposal is always rejected. When insu±cient information makes the optimal quorum unknown, it is in general more harmful to set the quorum too high than too low. Robustness of the results is analyzed by allowing pressure groups to encourage or discourage participation after the quorum is set.
    Keywords: Electoral engineering, quorum, referendum, voting/not-voting decision, voting rules
    JEL: D72
    Date: 2007
  2. By: Ben Lockwood
    Abstract: This paper revisits the fiscal "decentralization theorem", by relaxing the role of the assumption that governments are benevolent, while retaining the assumption of policy uniformity. If instead, decisions are made by direct majority voting, (i) centralization can welfare-dominate decentralization even if there are no externalities and regions are heterogenous; (ii) decentralization can welfare-dominate centralization even if there are positive externalities and regions are homogenous. The intuition is that the insensitivity of majority voting to preference intensity interacts with the different inefficiencies in the two fiscal regimes to give second-best results. Similar results obtain when governments are benevolent, but subject to lobbying, because now decisions are too sensitive to the preferences of the organised group.
    Keywords: Decentralization, majority voting, lobbying, local public goods
    JEL: H41 H70 H72
    Date: 2007
  3. By: Timothy Besley; Masayuki Kudamatsu
    Abstract: One of the key goals of political economy is to understand how institutional arrangementsshape policy outcomes. This paper studies a comparatively neglected aspect of this - theforces that shape heterogeneous performance of autocracies. The paper develops a simpletheoretical model of accountability in the absence of regularized elections. Leadershipturnover is managed by a selectorate - a group of individuals on whom the leader depends tohold onto power. Good policy is institutionalized when the selectorate removes poorlyperforming leaders from office. This requires that the selectorate's hold on power is not toodependent on a specific leader being in office. The paper looks empirically at spells ofautocracy to establish cases where it has been successful according to various objectivecriteria. We use these case studies to identify the selectorate in specific instances of successfulautocracy. We also show that, consistent with the theory, leadership turnover in successfulautocracies is higher than in unsuccessful autocracies. Finally, we show by exploitingleadership deaths from natural causes that successful autocracies appear to have found waysfor selectorates to nominate successors without losing power - a feature which is alsoconsistent with the theoretical approach.
    Keywords: Keywords: dictatorship, democracy
    JEL: P16 P26
    Date: 2007–05
  4. By: Ludovic Renou
    Abstract: This paper studies the impact of the governance of a group, whether be it unanimity, simple majority or qualified majority, on its size, composition, and inclination to change the status quo. Somewhat surprisingly, we show that not only unanimity might favor the formation of larger groups than majority, but also a change of status quo. This paper therefore suggests that unanimity, often blamed for the European inertia of the last two decades, was only a scapegoat.
    Keywords: groups; coalitions; alliances; endogenous formation; cost reduction; loss of control; governance; unanimity; majority
    JEL: D7
    Date: 2007–06
  5. By: Acocella, Nicola; Di Bartolomeo, Giovanni
    Abstract: Social pacts, while improving macroeconomic performance, usually impose costs on unions. To facilitate the formation of such pacts, various substitutes can operate, such as the payment of transfers or, to some extent, the conservativeness of the government, union’s inflation aversion or political partisanship.
    Keywords: Social pacts; side payments; conservativeness; partisanship; unions.
    JEL: E58 E61 J51
    Date: 2007–06
  6. By: Francois Ortalo-Magne; Andrea Prat
    Abstract: Equilibrium of the housing market depends on a complex set of interactions between: (1)individual location decisions; (2) individual housing investment; (3) collective decisions onurban growth. We embed these three elements in a model of a dynamic economy with twosources of friction: ill-de…ned property rights on future land development and uninsurableshocks a¤ecting labor productivity. We characterize the feedback between the households’desire to invest in housing as a hedge against the risk of rent ‡uctuations and their supportfor supply restrictions once they own housing. The model generates an ine¢ ciently lowsupply of housing in equilibrium. The model also rationalizes the persistence of housingundersupply: the more restricted the initial housing supply, the smaller the city size selectedby the voting process. We use the model to study the e¤ects of a number of policies andinstitutional changes.
    Keywords: Housing Supply, Housing Demand, Regulatory Policies, Political Economy.
    JEL: R31 R21 R38 D72
    Date: 2007–01
  7. By: Max Blouin; Stéphane Pallage
    Abstract: In this paper, we build a model of agrarian economies in which a kleptocratic government taxes farmers to maximize its life-time utility. The model is a dynamic general equilibrium model in which the subsistence of farmers requires a minimum level of consumption. We analyze the effect that a benevolent food aid agency can have in such an environment. If it expects the food aid agency to intervene, the kleptocratic government will starve its farmers, in a clear case of the Samaritan's dilemma. We show that the likelihood of man-made famines, however, can be greatly reduced if the food aid agency intervenes with probability slightly lower than one. No aid agency devoted to saving lives, however, can commit to such policy. We propose a solution to this food aid curse.
    Keywords: Food aid, famines, commitment
    JEL: F35 D72 C72
    Date: 2007
  8. By: Joel van der Weele
    Abstract: We present a model of collective action in a heterogenous population of egoists and conditional cooperators. Each player is uncertain about the cooperative inclinations of the other player. A government or principal who has information about the distribution of types may introduce sanctions for defection. We study the impact of such sanctions through the e¤ect on the beliefs of the players about the distribution of types they are facing. It is shown that in equilibrium sanctions can crowd out trust between agents by sending a signal that there are many egoists around. This can lead the government to set low sanctions to induce trust and 'crowd in' cooperation. In cases where conditional cooperation is an important factor in collective action, as is the case in tax compliance, the model provides a rationale for the low observed sanctions in the real world.
    Keywords: Collective action, trust, incentives, crowding out, conditional cooperation
    JEL: D83 J30 K42 M52
    Date: 2007

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