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on Collective Decision-Making |
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Issue of 2008‒04‒12
nineteen papers chosen by |
| By: | Gersbach, Hans |
| Abstract: | Although they would yield social benefits, some political projects may not be implemented in democracies. Prominent examples are the reform of European labour markets, the reduction of government debt or the reduction of greenhouse gases. We suggest introducing political contracts to make liberal democracy more efficient without altering its fundamental values. Furthermore, such contracts can foster the public's trust in politics. We discuss four archetypes of political contracts and ways of implementing them. We outline the certification and control procedures for political contracts and address the major concerns arising with regard to contractual democracy. |
| Keywords: | contractual democracy; elections; political contracts |
| JEL: | D7 H1 H4 K1 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6763&r=cdm |
| By: | Bouton, Laurent; Castanheira, Micael |
| Abstract: | This paper compares the properties of three electoral systems when voters have imperfect information. Imperfect information blurs voter decisions and may divorce the electoral outcome from the true preferences of the electorate. The challenge for electoral design is therefore to translate the (sometimes contradictory) elements of information dispersed in the electorate into the most efficient aggregate outcome. We propose a novel model of multi-candidate elections in Poisson games, and show that Approval Voting produces a unique equilibrium that is fully efficient: the candidate who wins the election is the one preferred by a majority of the electorate under full information. By contrast, traditional systems such as Plurality and Runoff elections cannot cope satisfactorily with information imperfections. |
| Keywords: | Approval Voting; Information Aggregation; Multicandidate Elections; Poisson Games |
| JEL: | C72 D72 D81 D82 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6695&r=cdm |
| By: | Dimitri Vandercruyssen |
| Abstract: | In this paper 16 different voting procedures for one-seat elections are analysed: the rules of Borda, Condorcet, Black, Copeland, Simpson, Hare, Coombs, Baldwin, Nanson and the plurality, anti-plurality, majority, approval and runoff rules. The 2 criteria we use as a measure for the validity of the voting procedures are Condorcet efficiency (the number of times a voting procedure selects the Condorcet winner) and Borda efficiency (the number of times a voting procedure selects the Borda winner). Computer simulations calculate efficiencies for the 16 voting procedures. We find that the Borda rule is about 85% Condorcet efficient while some voting procedures are always 100 % Condorcet efficient (Black, Copeland, Simpson, Baldwin, Nanson). Another rule is only 100 % Condorcet efficient with single peaked profiles (Coombs). This can be proven theoretically. Another feature from single peaked profiles seems to be that some voting procedures select the same winner (Simpson, Baldwin, and Nanson). This result may be interesting for future research. Considering Borda efficiencies we see that the Black rule scores well, followed by the rules of Copeland, Nanson and Baldwin. Taking both Condorcet and Borda efficiencies into account, we can state that the Black rule is superior. Then come the rules of Copeland, Simpson, Nanson and Baldwin. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9911&r=cdm |
| By: | Marco Bonomo (EPGE/FGV and CIREQ); Cristina Terra (THEMA/Université de Cergy-Pontoise and EPGE/FGV) |
| Abstract: | In this paper we build a framework where the interplay between the lobby power of special interest groups and the voting power of the majority of the population leads to political business cycles. We apply our set up to explain electoral cycles in government expenditure composition as well as to cycles in aggregate expenditures and in real exchange rates. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:ema:worpap:2008-18&r=cdm |
| By: | Ueda, Michiko |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1283&r=cdm |
| By: | Hardouvelis, Gikas A; Thomakos, Dimitrios D |
| Abstract: | We investigate the behavior of consumer confidence around national elections in the EU-15 countries during 1985:1-2007:3. Consumer confidence increases before the date of elections and falls subsequently by almost the same amount. It is able to predict the strength of the performance of the incumbent party and its probability of re-election both alone and in the presence of macro- economic and fiscal variables. The post-election drop is negatively related to the previous run up and is a function of the political - but not the economic - environment. A similar rise and fall characterizes consumer confidence in the United States. |
| Keywords: | consumer confidence; EU-15; fiscal conditions; incumbent party; macro-economy; national elections; political business cycle; USA |
| JEL: | D7 E6 H3 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6701&r=cdm |
| By: | Bénabou, Roland |
| Abstract: | I develop a model of ideologies as collectively sustained (yet individually rational) distortions in beliefs concerning the proper scope of governments versus markets. In processing and interpreting signals of the efficacy of public and market provision of education, health insurance, pensions, etc., individuals optimally trade off the value of remaining hopeful about their future prospects (or their children's) versus the costs of misinformed decisions. Because these future outcomes also depend on whether other citizens respond to unpleasant facts with realism or denial, endogenous social cognitions emerge. Thus, an equilibrium in which people acknowledge the limitations of interventionism coexists with one in which they remain obstinately blind to them, embracing a statist ideology and voting for an excessively large government. Conversely, an equilibrium associated with appropriate public responses to market failures coexists with one dominated by a laissez-faire ideology and blind faith in the invisible hand. With public-sector capital, this interplay of beliefs and institutions leads to history-dependent dynamics. The model also explains why societies find it desirable to set up constitutional protections for dissenting views, even when ex-post everyone would prefer to ignore unwelcome news. |
| Keywords: | cognitive dissonance; ideology; institutions; laissez-faire; political economy; psychology; statism; wishful thinking |
| JEL: | D72 D83 H11 P16 Z1 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6754&r=cdm |
| By: | Alvarez, R. Michael; Katz, Gabriel |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1287&r=cdm |
| By: | Mark Schelker |
| Abstract: | Public auditors should reduce agency problems and improve transparency. We address the question of whether auditors should be elected by the citizens or appointed by either the legislature or the executive, and explore the influence of conducting performance audits. We construct a unique dataset at the US State level capturing differences in the institutional design of state auditing institutions. We estimate the influence of auditor characteristics on different outcome variables reflecting government performance and implement an alternative identification strategy relying on citizens’ electoral decisions. We examine whether citizens use divided government – a costly mechanism to control the government – as a substitute, when other effective, but less costly mechanisms are not available. Even if the empirical results are sometimes difficult to interpret, we generally find that (1) performance audits tend to be beneficial and (2) elected auditors with a strong mandate to conduct performance audits seem to outperform other institutional arrangements. |
| Keywords: | Public auditors; audit courts; political institutions; political economics |
| JEL: | D70 H10 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2008-04&r=cdm |
| By: | Gersbach, Hans; Hahn, Volker |
| Abstract: | We study a two-period model of committee decision-making where members differ in their levels of efficiency. They may acquire costly information that enhances their ability to make a correct decision. We focus on the impact of transparency. We show that the principal's initial utility is higher under transparency, because members exert more effort, which makes correct decisions more likely. The principal also benefits from transparency later, unless transparency leads to an alignment of the signal qualities of highly efficient and less efficient committee members. In general, committee members are harmed by transparency. |
| Keywords: | career concerns; committees; experts; information acquisition; transparency |
| JEL: | D70 |
| Date: | 2008–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6677&r=cdm |
| By: | Konrad, Kai A; Kovenock, Dan |
| Abstract: | The formation of an alliance in conflict situations is known to suffer from a collective action problem and from the potential of internal conflict. We show that budget constraints of an intermediate size can overcome this strong disadvantage and explain the formation of alliances. |
| Keywords: | Alliance formation puzzle; budget constraints; military conflict |
| JEL: | D72 D74 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6741&r=cdm |
| By: | Michel Le Berton; Vera Zaporozhets |
| Abstract: | In this paper we develop a duopolistic model of legislative lobbying. Two lobbies compete to influence the votes of a group of legislators who have a concern for both social welfare and campaign contributions. The type of a legislator is the relative weight he/she places on social welfare as compared to money. We study the equilibria of this lobbying game under political certainty and uncertainty and examine the circumstances under which the policy is socially efficient, and the amount of money that has been invested in the political process. Special attention is paid to three primitives of the environment: the intensity of the competition between the lobbies, the internal organisation of the legislature and the proportion of bad and good legislators in the political area |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0710&r=cdm |
| By: | Katz, Gabriel |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1288&r=cdm |
| By: | Eef Delhaye; Staf Proost; Sandra Rousseau |
| Abstract: | According to Becker (1968) it is best to use very high fines and low inspection probabilities to deter traffic accidents because inspection is costly. This paper uses a political economy model to analyse the choice of the fine and the inspection probability. There are two lobby groups: the vulnerable road users and the ‘strong’ road users. If only vulnerable road users are effective in lobbying, we find that the expected fine is higher than if only the interests of car drivers are taken into account. When we consider the choice between inspection probability and the magnitude of the fine for a given expected fine, we find that the fine preferred by the vulnerable road users is higher than socially optimal. The reverse holds if only the car drivers are effective lobbyists. The orders of magnitude are illustrated numerically for speeding and contrasted with current fines for drunk driving in the European Union. |
| Keywords: | Political economy, enforcement, traffic safety |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0714&r=cdm |
| By: | Luc Lauwers |
| Abstract: | The topological approach to social choice was developed by Graciela Chichilnisky in the beginning of the eighties. The main result in this area (known as the resolution of the topological social choice paradox) shows that a space of preferences admits of a continuous, anonymous, and unanimous aggregation rule for every number of individuals if and only if this space is contractible. Furthermore, connections between the Pareto principle, dictatorship, and manipulation were established. Recently, Baryshnikov used the topological approach to demonstrate that Arrow's impossibility theorem can be reformulated in terms of the non-contractibility of spheres. This paper discusses these results in a self-contained way, emphasizes the social choice interpretation of some topological concepts, and surveys the area of topological aggregation. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces9912&r=cdm |
| By: | Mark Schelker; Reiner Eichenberger |
| Abstract: | In the economic literature various political institutions designed to control the government have been analyzed. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to analyze the budget draft and individual policy proposals. We argue that auditors with an extended mandate improve transparency and provide essential information on the impact of policy proposals on common pool resources. This leads to less wasteful spending and a more efficient allocation of public resources. We empirically analyze the policy impact of local auditors with an extended audit mandate in Switzerland. Auditors, who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. We find similar results with different datasets. These results are robust to various changes in the econometric specification. |
| Keywords: | auditor; audit court; special interests; political economics; public finance |
| JEL: | D70 H10 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2008-06&r=cdm |
| By: | Ueda, Michiko |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:clt:sswopa:1284&r=cdm |
| By: | László Á. Kóczy; Luc Lauwers |
| Abstract: | A set of outcomes for a TU-game in characteristic function form is dominant if it is, with respect to an outsider-independent dominance relation, accessible (or admissible)and closed. This outsider-independent dominance relation is restrictive in the sense that a deviating coalition cannot determine the payoffs of those coalitions that are not involved in the deviation. The minimal (for inclusion) dominant set is non-empty and for a game with a non-empty coalition structure core, the minimal dominant set returns this core. |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0220&r=cdm |
| By: | Lode Berlage; Bart Capeau; Philip Verwimp |
| Abstract: | Is it a matter of pure altruism or shortsightedness when a dictator spends an increasing amount of his revenues for the population, while cutting on own consumption? In order to be able to consume, the dictator first has to stay in power. We present a formal model of a power maximizing dictator. His revenues depend on the exports of a single crop. With the export earnings the dictator buys loyalty from the producers of the export crop by setting the domestic producer price. Revenues resulting from the di®erence between the international and the domestic price of the crop are used to finance a repressive apparatus. We characterize the optimal trade-o® between buying more loyalty and adapting the level of repression. The model is illustrated with a case study of Rwanda under president Habyarimana (1973-94). |
| Keywords: | dictatorship, political economy, co®ee, Rwanda. |
| JEL: | D72 H30 H56 |
| Date: | 2008–03 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces0311&r=cdm |