New Economics Papers
on Collective Decision-Making
Issue of 2008‒03‒15
twelve papers chosen by

  1. A Dynamic Model of Democratic Elections in Multidimensional Policy Spaces By John Duggan; Jeffrey S. Banks
  2. Endogenous information in committees and aggregation of information in large elections By Oliveros, Santiago
  3. Electoral Rules and Politicians’ Behavior: A Micro Test By Gagliarducci, Stefano; Nannicini, Tommaso; Naticchioni, Paolo
  4. Politicians' Outside Earnings and Electoral Competition By Becker, Johannes; Peichl, Andreas; Rincke, Johannes
  5. Electoral Goals and Center-State Transfers: A Theoretical Model and Empirical Evidence from India By Arulampalam, Wiji; Dasgupta, Sugato; Dhillon, Amrita; Dutta, Bhaskar
  6. Who abstains in equilibrium? By Oliveros, Santiago
  7. Political Entry, Public Policies, and the Economy By Casey B. Mulligan; Kevin K. Tsui
  8. Is there an election cycle in public employment? Separating time effects from election year effects By Dahlberg, Matz; Mörk, Eva
  9. Public Accountability and the Public Sphere of International Governance By Jens Steffek
  10. Political Accountability, Fiscal Conditions, and Local Government Performance – Cross-Sectional Evidence from Indonesia By Sebastian Eckardt
  11. From Violence to Voting: War and political participation in Uganda By Christopher Blattman
  12. The Impact of Direct Democracy and Local Autonomy on Tax Morale in Switzerland By Benno Torgler

  1. By: John Duggan (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Jeffrey S. Banks (Division of Humanities and Social Sciences, California Institute of Technology)
    Abstract: We propose a general model of repeated elections. In each period, a challenger is chosen from the electorate to run against an incumbent politician in a majority-rule election, and the winner then selects a policy from a multidimensional policy space. Individual policy preferences are private information, whereas policy choices are publicly observable. We prove existence and continuity of equilibria in “simple” voting and policy strategies; we provide examples to show the variety of possible equilibrium patterns in multiple dimensions; we analyze the effects of patience and office-holding benefits on the persistence of policies over time; and we identify relationships between equilibrium policies and the core of the underlying voting game. As a byproduct of our analysis, we show how equilibrium incentives may lead elected representatives to make policy compromises, even when binding commitments are unavailable. We provide an informational story for incumbency advantage. Finally, we give an asymptotic version of the median voter theorem for the one-dimensional model as voters becomes arbitrarily patient.
    Date: 2008–03
  2. By: Oliveros, Santiago
    Abstract: We study aggregation of information when voters can collect information of different precision, with increased precision entailing an increasing marginal cost. In order to properly understand the incentives to collect information we introduce another dimension of heterogeneity: on top of the ideological dimension we allow for different levels of intensity in preferences. Contrary to traditional models of endogenous information, in equilibrium, there are voters that use signals of different qualities. Our strategy to show existence allows us to deal with 1) different voting rules, 2) asymmetric priors, and 3) asymmetric distribution of types. After characterizing all symmetric Bayesian equilibria in pure strategies, we show that information aggregation implies a very unique relation between the parameters of the electorate and the voting rule. In a sense, information aggregation is a knife edge result: it is not robust to small changes in the electorate. We also show that, under the same symmetric conditions in Martinelli's (2006) more specialized model, the Condorcet Jury Theorem holds under the same cost conditions.
    Keywords: Endogenous Information; Aggregation of Information; Heterogeneity.
    JEL: D71 D72 D82
    Date: 2077–10–11
  3. By: Gagliarducci, Stefano (CEMFI, Madrid); Nannicini, Tommaso (Universidad Carlos III, Madrid); Naticchioni, Paolo (University of Rome La Sapienza)
    Abstract: Theory predicts that the majoritarian electoral system should produce more targeted redistribution and lower politicians’ rents than proportional representation. We test these predictions using micro data for the mixed-member Italian House of Representatives, which allow us to sidestep the identification problems of previous studies based on country-level data. In particular, we address the nonrandom selection into different electoral systems by exploiting a distinctive feature of the Italian two-tier elections from 1994 to 2006: candidates could run for both the majoritarian and the proportional tier, but if they won in both tiers they had to accept the majoritarian seat. Focusing on elections decided by a narrow margin allows us to generate quasi-experimental estimates of the impact of the electoral rule. The main results confirm theoretical predictions, as majoritarian representatives put forward a higher proportion of bills targeted at local areas and show lower absenteeism rates than their proportional colleagues.
    Keywords: electoral rule, politicians, targeted redistribution, rent-seeking, regression discontinuity design, treatment effect
    JEL: C20 D72 D78 P16
    Date: 2008–02
  4. By: Becker, Johannes; Peichl, Andreas; Rincke, Johannes
    Abstract: This paper deals with the impact of electoral competition on politicians' outside earnings. We propose a simple theoretical model with politicians facing a tradeoff between allocating their time to political effort or to an alternative use generating outside earnings. The model has a testable implication stating that the amount of time spent on outside work is negatively related to the degree of electoral competition. We test this implication using a new dataset on outside earnings of members of the German federal assembly. Taking into account the potential endogeneity of measures of political competition that depend on past election outcomes, we find that politicians facing low competition have substantially higher outside earnings.
    Keywords: Outside earnings; Electoral competition
    JEL: D72 J22 J45
    Date: 2008–03–12
  5. By: Arulampalam, Wiji (University of Warwick); Dasgupta, Sugato (Jawaharlal Nehru University); Dhillon, Amrita (University of Warwick); Dutta, Bhaskar (University of Warwick)
    Abstract: We construct a model of redistributive politics where the central government is opportunistic and uses its discretion to make transfers to state governments on the basis of political considerations. These considerations are the alignment between the incumbent parties at the central and state levels and whether a state is a swing state or not. A testable prediction from the model is that a state that is both swing and aligned with the central government is especially likely to receive higher transfers. We test this prediction using Indian data for 14 states from 1974-75 to 1996-97. We find that a state which is both aligned and swing in the last state election is estimated to receive 16% higher transfers than a state which is unaligned and non-swing.
    Keywords: redistributive politics, alignment, swing, electoral competition
    JEL: C72 D72
    Date: 2008–02
  6. By: Oliveros, Santiago
    Abstract: We study abstention when each voter selects the quality of information. We introduce conflict among committee members using two dimensions of heterogeneity: ideology (relative ratio of utilities) and concern or intensity (absolute level of utility). Our main result is that information and abstention need not be negatively correlated and, for some particular voters, it is actually positively correlated. In equilibrium voters collect information of different qualities and there are informed voters that abstain. There are no other models with heterogeneously informed voters when information is endogenous. The existence of an equilibrium in which voters collect information of different quality does not follow from a straightforward application of fixed point arguments. Instead of looking for a fixed point in the (infinite) space of best response functions, we construct a transformation with domain in a suitable finite-dimensional space reducing the problem to a traditional application of Brouwer's fixed point theorem.
    Keywords: Abstention; Information Acquisition; Heterogeneity.
    JEL: D71 D72 D82
    Date: 2008–02–12
  7. By: Casey B. Mulligan; Kevin K. Tsui
    Abstract: This paper presents a theory of competition for political leadership between incumbent leaders and their challengers in which the possible equilibrium political market structures range from pure monopoly (unchallenged dictatorship) to perfectly competitive (ideal democracy). Leaders are constrained by the threat of "entry" or their ability to tax (or both), so that regimes with no challengers may nonetheless implement policies in the public interest. We offer economic interpretations of why democratic countries are associated with higher wages, why resource abundant countries tend to be nondemocratic, and how technological change affects political development. By focusing on the incentives for political entry, we show how trade sanctions and other policies designed to promote democracy may actually have the unintended consequences of discouraging political competition.
    JEL: H11 L12 P16
    Date: 2008–03
  8. By: Dahlberg, Matz (IFAU - Institute for Labour Market Policy Evaluation); Mörk, Eva (IFAU - Institute for Labour Market Policy Evaluation)
    Abstract: Do governments increase public employment in election years? This paper investigates this question by using data from Sweden and Finland, two countries that are similar in many respects but in which local elections are held at different points in time. We can thereby separate an election effect from other time effects. Our results indicate that there is a statistically significant election year effect in local public employment, a production factor that is highly visible in the welfare services provided by the local governments in the Scandinavian countries. The effect also seems to be economically significant; the municipalities employ 0.6 more full-time employees per 1,000 capita in election years than in other years (which correspond to an increase by approximately 1 percent).
    Keywords: Election cycle; public employment; exogenous elections
    JEL: D72 H72 P16
    Date: 2008–03–10
  9. By: Jens Steffek
    Abstract: In the literature on European and global governance there is a trend to conceptualize ‘public accountability’ as accountability to national executives, to peers, to markets, to ombudsmen, or to courts. While the empirical analysis of multiple accountability relations within governance networks has its merits the creeping re-conceptualization of ‘public accountability’ as an umbrella term tends to obfuscate one crucial dimension of it: the critical scrutiny of citizens and the collective evaluation of governance through public debate. This paper critically discusses the advance of managerial and administrative notions of accountability into international governance and advocates a return to a narrow conception of public accountability as accountability to the wider public. It then proceeds to investigate the public sphere of European and global governance, its actors, achievements and shortcomings, in order to assess the prospects for public accountability beyond the state. Evidence is found to support the claim that the transnational public sphere is capable of putting pressure on governance institutions in case of massive maladministration, and of generating and promoting new political concerns and demands that in turn are taken up by the institutions of governance.
    Keywords: accountability; European public space; governance; institutions; networks
    Date: 2008–02–15
  10. By: Sebastian Eckardt
    Abstract: What makes governments tick? Why are some public institutions more successful than others in managing resources and delivering services? And even more vitally, how can malfunctioning institutions be reformed so that they perform their responsibilities more effectively? This paper contributes to our understanding of theses overarching questions by exploring the interactions between political institutions and public sector performance in the context of decentralization and local governance. It shows -both theoretically and empirically- that performance outcomes are determined by the extent to which people can hold their governments accountable through political institutions. The basic hypothesis underlying this research is that political accountability, either by encouraging sanctions upon non-compliant public agents or simply by reducing the informational gap regarding government activities, will create forceful incentives for elected officials and civil servants to reduce opportunistic behavior and improve performance. Using a cross-sectional regression the hypothesis is empirically tested against evidence from newly empowered local governments in Indonesia. The empirical findings broadly support our hypotheses. Improved public services on the ground, both in terms of quantity and quality, require informed and well functioning decision making processes that allocate resources to priority areas that meet the demand of the broader community.
    Keywords: governance, public services, fiscal decentralization
    JEL: D2 D7 H2 H7 O1
    Date: 2007–02
  11. By: Christopher Blattman (Center for Global Development & Yale University)
    Abstract: What is the political legacy of violent conflict? This paper presents evidence for a link between war, violence and increased individual political participation and leadership among former combatants and victims of violence, and uses this link to understand the deeper determinants of individual political behavior. The setting is northern Uganda, where rebel recruitment methods generated quasiexperimental variation in who became a rebel conscript and who did not. Original survey data shows that the exogenous element of conscription (by abduction) leads to significantly greater political participation later in life. The principal determinant of this increased political participation, moreover, appears to be war violence experienced. Meanwhile, abduction and violence do not appear to affect multiple nonpolitical types of community participation. I show that these patterns are not easily explained by models of participation based on simple rational preferences, social preferences, mobilization by elites, or information availability. Only ‘expressive’ theories of participation appear consistent with the patterns observed, whereby exposure to violence augments the value a person places on the act of political expression itself. The implications for general theories of political participation are discussed.
    Date: 2008–01
  12. By: Benno Torgler
    Abstract: This paper analyses the impact of direct democracy and local autonomy on tax morale and the size of the shadow economy. We use two different data sets on tax morale at the individual level (World Values Survey and International Social Survey Programme) and the macro data of the size of the shadow economy to systematically analyse the effects of institutions in Switzerland, a country where participation rights and the degree of federalism vary across different cantons. The findings suggest that direct democratic rights and local autonomy, have a significantly positive effect on tax morale and the size of the shadow economy.
    Keywords: Tax Morale, Shadow Economy, Tax Compliance, Tax Evasion, Direct Democracy, LocalAutonomy
    JEL: H26 H73 D70
    Date: 2007–12

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