New Economics Papers
on Collective Decision-Making
Issue of 2008‒02‒09
fifteen papers chosen by

  1. Why Kill Politicians? A Rational Choice Analysis of Political Assassinations By Bruno S. Frey
  2. Inter-Group Conflict and Intra-Group Punishment in an Experimental Contest Game By Klaus Abbink; Jordi Brandts; Benedikt Herrmann; Henrik Orzen
  3. Incumbents' interests and gender quotas By Guillaume R. Fréchette; François Maniquet; Massimo Morelli
  4. A Positive Theory of Income Taxation Where Politicians Focus upon Swing and Core Voters By John E. Roemer
  5. Investment and Expropriation under Oligarchy and Democracy in a Heckscher-Ohlin World By Facundo Albornoz; Sebastian Galiani; Daniel Heymann
  6. The governance of the World Bank : analysis and implications of the decisional power of the G10 By Arthur Foch
  7. Inflating the Beast: Political Incentives Under Uncertainty By Ricardo J. Caballero; Pierre Yared
  8. Rotten parents and disciplined children: a politico-economic theory of public expenditure and debt By Zheng Song; Kjetil Storesletten; Fabrizio Zilibotti
  9. Public Spheres within Movements: Linking Transnational Social Movements Research and the (Re)search for a European Public Sphere By Christoph Haug
  10. Determining Constituency Marginality in the UK Using the Expense Claims of MPs By Tim Bale; Barry Reilly; Robert Witt
  11. The Informational Effects of Competition and Collusion in Legislative Politics By Martimort, David; Semenov, Aggey
  12. Rain and the Democratic Window of Opportunity By Antonio Ciccone; Markus Brückner
  13. On the politicization of the European consociation: A middle way between Hix and Bartolini By Magnette, Paul; Papadopoulos, Yannis
  14. Existence and uniqueness of Nash Equilibrium in electoral competition games: The hybrid case By Alejandro Saporiti
  15. Ideological Uncertainty and Lobbying Competition By Martimort, David; Semenov, Aggey

  1. 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
  2. By: Klaus Abbink (CREED, University of Amsterdam); Jordi Brandts (Institut d'Anàlisi Econòmica (CSIC), Barcelona); Benedikt Herrmann (University of Nottingham); Henrik Orzen (University of Nottingham)
    Abstract: We study how conflict in a contest game is influenced by rival parties being groups and by group members being able to punish each other. Our main motivation stems from the analysis of socio-political conflict. The relevant theoretical prediction in our setting is that conflict expenditures are independent of group size and independent of whether punishment is available or not. We find, first, that our results contradict the independence of groupsize prediction: conflict expenditures of groups are substantially larger than those of individuals, and both are substantially above equilibrium. Towards the end of the experiment material losses in groups are 257% of the predicted level. There is, however, substantial heterogeneity in the investment behaviour of individual group members. Second, allowing group members to punish each other after individual contributions to the contest effort are revealed leads to even larger conflict expenditures. Now material losses are 869% of the equilibrium level and there is much less heterogeneity in individual group members’ investments. These results contrast strongly with those from public goods experiments where punishment enhances efficiency and leads to higher material payoffs.
    Keywords: Laboratory experiments, Rent-seeking, Conflict, Group competitiveness
    JEL: C90 D72 D74 F51 H41
    Date: 2007–12
  3. By: Guillaume R. Fréchette (New York University - Department of Economics); François Maniquet; Massimo Morelli (Columbia University - Department of Economics)
    Abstract: The adoption of mandatory gender quotas in party lists has been a subject of discussion in many countries. Since any reform obviously requires the approval of a (sometimes qualified) majority of incumbent legislators' votes, keeping an eye on incumbents' interests and incentives in different systems seems a natural thing to do if we want to understand different prospects for reforms in different countries. Such differences in the cost-benefit analysis of incumbents may well depend on the electoral system. We argue that if male candidates have a higher probability of being elected when running against a female candidate than when running against a male of similar characteristics (male advantage), then single member district majority rule and closed list proportional representation are opposite extremes in terms of incentives for incumbents to pass parity laws. We validate the above argument using a formal model of constitutional design as well as an empirical analysis of the legislative elections in France, since France offers a natural experiment for both electoral systems. Given the male advantage, increasing the number of female new candidates made the incumbents' probability of reelection higher and thus male incumbent members of the Assembly have actually benefited from the parity law. We also show that parity may have Assembly composition effects and policy effects that vary with the electoral system.
    Date: 2007
  4. By: John E. Roemer (Dept. of Political Science, Yale University)
    Abstract: We construct an equilibrium model of party competition, in which parties are especially concerned with their core and swing voters, concerns which American political scientists have focused upon in their attempts to understand party behavior in general elections. Parties compete on a large policy space of possible income-tax policies. An element in this infinite-dimensional space is a function which maps pre-fisc income into post-fisc income. The only restrictions are that the function be continuous, and satisfy exogenously specified upper and lower bounds on its derivative, where it is differentiable. Only a fraction of each voter type will vote for each party, perhaps because of issues not modeled here or voter misperceptions of policies. Each party's policy makers comprise two factions, one concerned with maximizing the welfare of its constituency, or its core, the other with winning over swing voters. An equilibrium is a pair of parties (endogenously determined), and a pair of policies, one for each party, in which neither party can deviate to another policy which will be assented to by both its core and swing factions. Formally, this is a Nash equilibrium where each party possesses only a quasi-order over the policy space. We fully characterize the equilibria. There are many. In a specially important case, each party proposes a piece-wise linear tax schedule, and these schedules coincide for a possibly large interval of middle-income voters, while the left' party gives more to the poor and the ‘right’ party more to the rich. An empirical section uses the data of Piketty and Saez on taxation in the US during the twentieth century to assess the model's predictions. We argue that the model is roughly confirmed.
    Keywords: Political economy, Income taxation, Political equilibrium
    JEL: D72 D31
    Date: 2008–02
  5. By: Facundo Albornoz; Sebastian Galiani; Daniel Heymann
    Abstract: We study the incentives to expropriate foreign capital under democracy and obligarchy. We model a two-sector small open economy where foreign investment triggers Stolper-Samuelson effects through reducing exporting costs. We show how incentives to expropriate depend on the distributional effects of the investment and how these affect the interests of the group in power. How investment affects the incomes of the different groups in society depends on the sectors where these investments are undertaken and the structural features of the economy such as factor intensity. We characterize expropriation equilibria and show that if investment is undertaken in the sector that uses labor less intensively, democracies are generally more prone to expropriate. This result provides one possible rationalization for the wave of expropriation equilibria and show that if investment is undertaken in the sector that uses labor less intensively, democracies are generally more prone to expropriate. This result provides one possible rationalization for the wave of expropriations in Latin America under governments with a broad popular base during the 20th Century.
    Keywords: Expropriation, political regimes, democracy, oligarchy, foreign investments, Stolper-Samuelson
    JEL: D72 D74 H71 O15 P16
    Date: 2008–01
  6. By: Arthur Foch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This article discusses the World Bank's formal rules of governance. It states that theoretically, each of the World Bank's member states is represented within the decision making process but in practice it is otherwise. Indeed, we demonstrate that in reality the democratic imbalance in favor of the Most Developed Countries (MDCs), caused by the voting system of the WB, is much stronger than it appears. In the first place, our analysis of the formal decision making process demonstrates that the voting system is such that a coalition of particularly coordinated countries - the eleven countries of the G10 - can, on its own, constitute a majority permitting them to vote decisively on all issues. This implies that the remaining 174 members have no influence on voting results. Thus, this minority coalition alone is in position to approve loans and their attached conditions. In the second place, four features of the World Bank's governance which protect and re-enforce the power of this coalition are found. On the one hand, this analysis provides some explanations to the failure of various initiatives made to increase the voice of the Less Developed Countries (LDCs). On the other hand, it identifies several means susceptible of increasing the power of these countries in the institution. The main interest of this study shows that the democratic imbalance caused by the voting system is more important than it seems. Indeed, not only do the World Bank's formal rules of governance give the G10 the voting weight at all three levels of decision making but several governing features also permit the G10 to protect and re-enforce the power that they already have. Due to their right of veto, the MDCs can notably block any reform proposals.
    Keywords: World Bank, governance, decision-making power, decision-making authorities, conditionality.
    Date: 2007–11
  7. By: Ricardo J. Caballero; Pierre Yared
    Abstract: High commodity prices and a sustained global expansion have brought about a new policy dilemma for many economies: Why are governments accumulating so much wealth and what should be the fiscal response to this abundance? In this paper we characterize how politicians' rent-seeking incentives and their interaction with political and economic uncertainty affect the management of abundance. In the standard political economy model of debt, the presence of political risk leads current governments to over-borrow in order to starve the beast. However, when economic risk is significant, we show that the presence of rent-seeking politicians gives rise to an option value of rent-seeking. In this case, if economic risk is large relative to political risk, the standard result is overturned and politicians have an incentive to over-save or inflate the beast. In the latter scenario, the government also hedges less than is socially optimal. Finally, we show that incentive compatible rules that weaken political risk and the option value of rent-seeking can improve social welfare.
    JEL: E6 H2 H6
    Date: 2008–02
  8. By: Zheng Song; Kjetil Storesletten; Fabrizio Zilibotti
    Abstract: This paper proposes a dynamic politico-economic theory of debt, government finance and expenditure. Agents have preferences over a private and a government-provided public good, financed through labor taxation. Subsequent generations of voters choose taxation, government expenditure and debt accumulation through repeated elections. Debt introduces a conflict of interest between young and old voters: the young want more fiscal discipline. We characterize the Markov Perfect Equilibrium of the dynamic voting game. If taxes do not distort labor supply, the economy progressively depletes its resources through debt accumulation, leaving future generations “enslaved”. However, if tax distortions are sufficiently large, the economy converges to a stationary debt level which is bounded away from the endogenous debt limit. The current fiscal policy is disciplined by the concern of young voters for the ability of future government to provide public goods. The steady-state and dynamics of debt depend on the voters’ taste for public consumption. The stronger the preference for public consumption, the less debt is accumulates. We extend the analysis to redistributive policies and political shocks. The theory predicts government debt to be mean reverting and debt growth to be larger under right-wing than under left-wing governments. Data from the US and from a panel of 21 OECD countries confirm these theoretical predictions.
    Keywords: Fiscal discipline, Fiscal policy, Government debt, Intergenerational conflict, Left- and right-wing governments, Markov equilibrium, Political economy, Public finance, Repeated voting.
    JEL: D72 E62 H41 H62 H63
    Date: 2007–06
  9. By: Christoph Haug
    Keywords: civil society; deliberative democracy; discourse; European public space; Europeanization; media; networks; participation; protest
    Date: 2008–01–15
  10. By: Tim Bale (University of Sussex); Barry Reilly (University of Sussex); Robert Witt (University of Surrey)
    Abstract: A United Kingdom (UK) parliamentary seat is commonly referred to as ‘marginal’ if the majority is less than 10% of votes cast thus rendering the seat vulnerable on a swing of 5%. This paper investigates whether the spending behaviour of MPs on selected constituency service expenditure categories can offer insights on what constitutes a ‘marginal’ seat within the UK ‘first-past-the-post’ electoral system. The possible existence of a non-linear relationship between the expense claims of MPs and the size of the constituency majority provides the basis for such an insight. This paper thus investigates the empirical nature of this non-linear relationship using separate specifications based on quadratic and piece-wise linear splines in constituency majority size. The empirical analysis reported for the behavior of MPs appears broadly consistent with the conventional definition used to classify a ‘marginal’ constituency in the UK.
    Keywords: marginality, expense claims, postage, stationery, Members of Parliament
    JEL: D72 P16
    Date: 2008–01
  11. By: Martimort, David; Semenov, Aggey
    Abstract: We use a mechanism design approach to study the organization of interest groups in an informational model of lobbying. Interest groups influence the legislature only by communicating private information on their preferences and not by means of monetary transfers. Interest groups have private information on their ideal points in a one-dimensional policy space and may either compete or adopt more collusive behaviors. Optimal policies result from a trade-off between imposing rules which are non-responsive to the groups' preferences and flexibility that pleases groups better. Within a strong coalition, interest groups credibly share information which facilitates communication of their joint interests, helps screening by the legislature and induces flexible policies responsive to the groups' joint interests (an informativeness effect). Competing interest groups better transmit information on their individual preferences (a screening effect). The socially and privately optimal organization of lobbying favors competition between groups only when their preferences are not too congruent with those of the legislature. With more congruence, a strong coalition is preferred. Finally, within a weak coalition, interest groups must design incentive compatible collusive mechanisms to share information. Such weak coalitions are always inefficient.
    Keywords: Communication Mechanisms; Lobbying; Competition; Coalition; Legislative Politics.
    JEL: D72 D8
    Date: 2008–02–01
  12. By: Antonio Ciccone; Markus Brückner
    Abstract: According to the economic approach to political transitions, negative transitory economic shocks can give rise to a window of opportunity for democratic change. We examine this hypothesis using yearly rainfall variation over the 1980-2004 period in 41 Sub-Saharan African countries. We find that a 25% drop in rainfall increases the probability of a transition to democracy during the following two years by around 3 percentage points. A 5% fall in income due to low rainfall raises the probability of democratization by 7 percentage points. We also find that rainfall does not affect transitions from democracy to autocracy.
    Keywords: Democratization, transitory economic shocks
    JEL: O0 P0
    Date: 2008–01
  13. By: Magnette, Paul; Papadopoulos, Yannis
    Abstract: A debate has emerged between S. Hix and S. Bartolini on the plausibility and desirability of the politicization of the EU. By this it is usually meant a more important role for mass, competitive, and partisan politics both on the input- (expression of preferences) and on the output- (collectively binding measures and resource allocation) side of the European decision-making system. In this article, we argue that this debate does not sufficiently take into consideration the consociational nature of the EU. Comparing the EU to other consociational polities such as Belgium and Switzerland, we show that the politicization of the EU is not plausible along a bipolar logic, but that other forms of politicization are both plausible and desirable. We argue that S. Hix’s recipe for politicization is based on some incorrect assumptions and predictions. It is not obvious that the EU is evolving towards more Left-Right polarization. Even if this were the case, the nature of the EU implies that cooperation and compromises are indispensable, therefore Hix’s suggestions will not suffice to clarify political choice and enhance accountability. Hix is not correct in believing that politicization along the Left-Right cleavage will alleviate euroskepticism. He tends to associate the latter with this dimension, which is partly wrong. Moreover, euroskepticism also has a social base (“losers of modernization”) and does not only derive from the deficit of accountability in the EU. At the same time, we think that the consociational nature of the EU also reduces the risks feared by S. Bartolini with regard to the consequences of politicization on governability. The politicization of constitutive issues can even be regarded as necessary, in order to integrate anti-system political entrepreneurs and euroskeptic segments of public opinion. Also Bartolini is only partially right in stressing the destabilizing potential of the politicization of opposition on these issues: it is true that consociational mechanisms are less effective – at least in the short term – in dealing with this kind of conflict, but it seems to us less risky to rely on them than on non-politicization. As a remedy to the accountability deficit of the EU, consociational-type politicization is nevertheless not a panacea. Therefore we suggest the coupling of a system of politicized “negotiation democracy” with mechanisms of direct participation. With a number of institutional safeguards, such a coupling would help to cope with the limits of consociational systems, would remain compatible with the compound nature of the EU, and would provide value-added in terms of public legitimization of the European integration.
    Keywords: accountability; democratization; legitimacy; participation; political parties; political representation; political science; polity building; public opinion; referendum
    Date: 2008–01–31
  14. By: Alejandro Saporiti
    Date: 2007
  15. By: Martimort, David; Semenov, Aggey
    Abstract: Polarized interest groups (principals) compete to influence a decision-maker (agent) through monetary contributions. This decision-maker chooses a one-dimensional policy and has private information about his ideal point. Competition between interest groups under asymmetric information yields a rich pattern of equilibrium strategies and payoffs. Policies are systematically biased towards the decision-maker's ideal point and it may sometimes lead to a "laissez-faire" equilibrium. Either the most extreme decision-makers or the most moderate ones may get information rent depending on the importance of their ideological bias. The market for influence may exhibit segmentation with interest groups keeping an unchallenged influence on ideologically close-by decision-makers. Indeed, interest groups stop contributing when there is too much uncertainty on the decision-maker's ideology and when the latter is ideologically too far away.
    Keywords: Lobbying Competition; Common Agency; Asymmetric Information; Contributions.
    JEL: D7 D8
    Date: 2008–02–02

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