|
on Collective Decision-Making |
|
Issue of 2007‒10‒06
ten papers chosen by |
| By: | Gersbach, Hans |
| Abstract: | In this paper we introduce vote-share contracts. Such contracts contain a vote-share threshold that incumbents must reach in order to be reelected. In a simple model, we illustrate the working of vote-share contracts. Such vote-share contracts curb socially detrimental incumbency advantages by improving the average ability level of re-elected politicians and also increase effort. We show that the socially optimal vote-share threshold for incumbents is larger than one half. Competing candidates offer vote-share contracts with socially optimal thresholds. |
| Keywords: | elections; political contracts; vote-share thresholds |
| JEL: | D7 D82 H4 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6497&r=cdm |
| By: | Lauren N. Merrill (Department of Economics, College of William and Mary) |
| Abstract: | For an odd number of individuals Campbell and Kelly [2] show that over the set of profiles that admit a strong Condorcet winner, majority rule is the only non-dictatorial strategy-proof social choice function. This paper shows that the situation is quite different in the case of an even number of individuals, and provides a characterization of strategy-proof social choice rules in this case. |
| Keywords: | majority rule, Condorcet domain, dicatorial rule, stratefy-proof |
| JEL: | D70 D71 |
| Date: | 2007–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:cwm:wpaper:60&r=cdm |
| By: | Rajashri Chakrabarti; Joydeep Roy |
| Abstract: | This paper analyzes the effect of a redrawing of political boundaries on voting patterns and investigates whether it leads to closer conformity of an electorate's voting patterns with its political preferences. We study these issues in the context of a reorganization of states in India. In 2000, Madhya Pradesh, the biggest state in India before the reorganization, was subdivided into Madhya Pradesh and Chhattisgarh, the latter accounting for less than one-fourth of the electorate of undivided Madhya Pradesh. Using socioeconomic composition and traditional voting patterns, we argue that there are differences in political preferences between Madhya Pradesh and Chhattisgarh. Next, in the context of a theoretical model that captures some of the basic features of the electoral scenario of the two regions, we predict that before reorganization, the smaller region would vote strategically to elect representatives with preferences more closely aligned to those of the bigger region. Once Chhattisgarh became a separate state, however, this motive would no longer operate, and the voting distributions of the two regions would differ. Using detailed data on state elections in Madhya Pradesh and Chhattisgarh in 1993, 1998, and 2003 as well as a difference-in-differences estimation strategy, we find that voting patterns in the two regions were indeed very similar before reorganization but strikingly different afterwards, with a relative shift in Chhattisgarh toward its inherent political preferences. These findings are reasonably robust in that they continue to hold after controlling for other confounding factors and survive several sensitivity tests. |
| Keywords: | Political science ; Developing countries |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:301&r=cdm |
| By: | Eleni Mylona |
| Abstract: | This paper looks into the impact the accession of the Western Balkan countries of Albania, Serbia, Montenegro, Croatia, Bosnia and Herzegovina, and FYROM would have on voting power in the EU Council. Particular attention is paid to the implications of a priori coalitions between member states. The Shapley-Shubik power index is used to estimate voting power and two scenarios are considered: accession under the Nice Treaty and the Reform Treaty rules. If the Western Balkans accede under the Nice Treaty rules then the efficiency and workability of the EU would deteriorate, although the “paradox of new members” might occur where the power of some existing members is increased. Conversely if the accession took place under the Reform Treaty rules then there would be little impact on the ability of the EU to act. The inefficiency of a priori coalition formation between countries of dissimilar size is revealed, as well as the likely occurrence of the “paradox of size” where some countries are made worse off through cooperation. The enlargement will not affect this. |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:07/28&r=cdm |
| By: | Sourav Bhattacharya |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:pit:wpaper:325&r=cdm |
| By: | Burkart, Mike (Stockholm School of Economics); Lee, Samuel (Stockholm School of Economics) |
| Abstract: | The impact of separating cash flow and votes depends on the ownership structure. In widely held firms, one share - one vote is in general not optimal. While it ensures an efficient outcome in bidding contests, dual-class shares mitigate the free-rider problem, thereby promoting takeovers. In the presence of a controlling shareholder, one share - one vote promotes value-increasing control transfers and deters value-decreasing control transfers more effectively than any other vote allocation. Moreover, leveraging the insider's voting power aggravates agency conflicts because it protects her from the takeover threat and provides less alignment with other shareholders. Even so, minority shareholder protection is not a compelling argument for regulatory intervention, as rational investors anticipate the insider's opportunism. Rather, the rationale for mandating one share – one vote must be to disempower controlling minority shareholders in order to promote value-increasing takeovers. As this policy tends to empower managers vis-a-vis shareholders, it is an open question whether it would improve the quality of corporate governance, notably in systems built around large active owners. The verdict in the case of depositary certificates, priority shares, voting and ownership ceilings is less I ambiguous, since they insulate managers from both takeovers and effective shareholder monitoring. |
| Keywords: | Security-voting structure; market for corporate control; controlling minority shareholders |
| JEL: | G32 |
| Date: | 2007–07–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:sifrwp:0057&r=cdm |
| By: | Laurens Cherchye (University of Leuven and FWO-Vlaanderen); Bram De Rock (University of Leuven); Frederic Vermeulen (CentER, Tilburg University, Netspar and IZA) |
| Abstract: | We extend the nonparametric ‘revealed preference’ methodology for analyzing collective consumption behavior (with consumption externalities and public consumption), to render it useful for empirical applications that deal with welfare-related questions. First, we provide a nonparametric necessary and sufficient condition for collectively rational group behavior that incorporates the possibility of assignable quantity information. This characterizes collective rationality in terms of feasible personalized prices, personalized quantities and income shares (representing the underlying sharing rule). Subsequently, we present nonparametric testing tools for data consistency with special cases of the collective model, which impose specific structure on the preferences of the group members (in terms of consumption externalities and public consumption); and we show that these testing tools in turn allow for nonparametrically recovering (bounds on) feasible personalized prices, personalized quantities and income shares that underlie observed (collectively rational) group behavior. In addition, we present formally similar testing and recovery tools for the general collective consumption model, which imposes minimal a priori structure. Interestingly, the proposed testing and recovery methodology can be implemented through integer programming (IP and MILP), which is attractive for practical applications. Finally, while we argue that assignable quantity information generally entails more powerful recovery results, we also demonstrate that precise nonparametric recovery (i.e. tight bounds) can be obtained even if no assignable quantity information is available. |
| Keywords: | collective model, revealed preferences, consumption, testing, recovery, welfare analysis, integer programming |
| JEL: | D11 D12 D13 C14 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3062&r=cdm |
| By: | Roland G. Fryer, Jr; Richard T. Holden |
| Abstract: | The United States Supreme Court has long recognized compactness as an important principle in assessing the constitutionality of political districting plans. We propose a measure of compactness based on the distance between voters within the same district relative to the minimum distance achievable -- which we coin the relative proximity index. We prove that any compactness measure which satisfies three desirable properties (anonymity of voters, efficient clustering, and invariance to scale, population density, and number of districts) ranks districting plans identically to our index. We then calculate the relative proximity index for the 106th Congress, requiring us to solve for each state's maximal compactness; an NP-hard problem. Using two properties of maximally compact districts, we prove they are power diagrams and develop an algorithm based on these insights. The correlation between our index and the commonly-used measures of dispersion and perimeter is -.22 and -.06, respectively. We conclude by estimating seat-vote curves under maximally compact districts for several large states. The fraction of additional seats a party obtains when their average vote increases is significantly greater under maximally compact districting plans, relative to the existing plans. |
| JEL: | H70 K19 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13456&r=cdm |
| By: | Cherchye, L.; Rock, B. de; Vermeulen, F.M.P. (Tilburg University, Center for Economic Research) |
| Abstract: | We extend the nonparametric 'revealed preference' methodology for analyzing collective consumption behavior (with consumption externalities and public consumption), to ren- der it useful for empirical applications that deal with welfare-related questions. First, we provide a nonparametric necessary and su? cient condition for collectively rational group behavior that incorporates the possibility of assignable quantity information. This charac- terizes collective rationality in terms of feasible personalized prices, personalized quantities and income shares (representing the underlying sharing rule). Subsequently, we present nonparametric testing tools for data consistency with special cases of the collective model, which impose specific structure on the preferences of the group members (in terms of con- sumption externalities and public consumption); and we show that these testing tools in turn allow for nonparametrically recovering (bounds on) feasible personalized prices, per- sonalized quantities and income shares that underlie observed (collectively rational) group behavior. In addition, we present formally similar testing and recovery tools for the general collective consumption model, which imposes minimal a priori structure. Interestingly, the proposed testing and recovery methodology can be implemented through integer program- ming (IP and MILP), which is attractive for practical applications. Finally, while we argue that assignable quantity information generally entails more powerful recovery results, we also demonstrate that precise nonparametric recovery (i.e. tight bounds) can be obtained even if no assignable quantity information is available. |
| Keywords: | collective model;revealed preferences;consumption;testing;recovery;welfare analysis;integer programming. |
| JEL: | D11 D12 D13 C14 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200773&r=cdm |
| By: | Manuel Couret Branco (Department of Economics, University of Évora) |
| Abstract: | I believe that freedom of choice constitutes a pillar of rational choice in economic theory, regardless of the definition of rational choice one adopts. On the other hand, economics being socially embedded, free choice in economics seems senseless without political freedom of choice. Democracy, therefore, plays an important role in economic efficiency as much as in social fairness. Following this line of thought one should expect that economics, both in theory and in practice, should permanently strengthen the role of democracy in its institutional construction. Unfortunately it does not seem to be the case. Although historically many of the democratic achievements in the past two centuries have been intimately connected to the development of liberal economics, one can assert that mainstream liberal economics is intrinsically contradictory with the democratic ideal. The first stage of the demonstration of this thesis concerns the dismounting of the naturalization process that economics has undergone with the purpose of transforming economic decisions into plain technical issues supposedly free from democratic debate.The second stage concerns the ways in which the market has managed to legitimise its hegemony in society and the reasons why this contributes to the erosion of democracy. Within this hegemony five aspects will be dealt with; the imposition of a market jurisdiction; the deregulation of the economy; the process of political and economic unaccountability; the de-politicization of free choice and the conflict between the territorialization of democracy and the de-territorialization of economics. |
| Keywords: | Democracy, Market, Politics, Liberal Economics, Participation |
| JEL: | A1 B4 H4 H5 I3 J8 K0 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:evo:wpecon:03_2007&r=cdm |