nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2008‒04‒15
eight papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. A Theory of Military Dictatorships By Daron Acemoglu; Davide Ticchi; Andrea Vindigni
  2. Ideology By Benabou, Roland
  3. Proportional Payoffs in Majority Games By Maria Montero
  4. Is there an election cycle in public employment? Separating time effects from election year effects By Dahlberg, Matz; Mörk, Eva
  5. The impact of ballot access restrictions on electoral competition: Evidence from a natural experiment By Drometer, Marcus; Rincke, Johannes
  6. The Efficiency of Direct Public Involvement in Environmental Policymaking: An Experimental Test By Christopher Bruce; Jeremy Clark
  7. The Effect of Intragroup Communication on Preference Shifts in Groups By Brady, Michael P.; Wu, Steven Y.
  8. Who Is Punishing Corrupt Politicians – Voters or the Central Government? Evidence from the Brazilian Anti-Corruption Program By Fernanda Brollo

  1. By: Daron Acemoglu; Davide Ticchi; Andrea Vindigni
    Abstract: We investigate how nondemocratic regimes use the military and how this can lead to the emergence of military dictatorships. Nondemocratic regimes need the use of force in order to remain in power, but this creates a political moral hazard problem; a strong military may not simply work as an agent of the elite but may turn against them in order to create a regime more in line with their own objectives. The political moral hazard problem increases the cost of using repression in nondemocratic regimes and in particular, necessitates high wages and policy concessions to the military. When these concessions are not sufficient, the military can take action against a nondemocratic regime in order to create its own dictatorship. A more important consequence of the presence of a strong military is that once transition to democracy takes place, the military poses a coup threat against the nascent democratic regime until it is reformed. The anticipation that the military will be reformed in the future acts as an additional motivation for the military to undertake coups against democratic governments. We show that greater inequality makes the use of the military in nondemocratic regimes more likely and also makes it more difficult for democracies to prevent military coups. In addition, greater inequality also makes it more likely that nondemocratic regimes are unable to solve the political moral hazard problem and thus creates another channel for the emergence of military dictatorships. We also show that greater natural resource rents make military coups against democracies more likely, but have ambiguous effects on the political equilibrium in nondemocracies (because with abundant natural resources, repression becomes more valuable to the elite, but also more expensive to maintain because of the more severe political moral hazard that natural resources induce). Finally, we discuss how the national defense role of the military interacts with its involvement in domestic politics.
    JEL: H20 N10 N40 P16
    Date: 2008–04
  2. By: Benabou, Roland (Princeton University)
    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: ideology, statism, laissez-faire, cognitive dissonance, wishful thinking, institutions, political economy, psychology
    JEL: H11 D72 D83 P16 Z1
    Date: 2008–03
  3. By: Maria Montero (School of Economics, University of Nottingham)
    Abstract: This paper extends the Baron-Ferejohn model of legislative bargaining to general weighted majority games with two modifications: first, payoff division can only be agreed upon after the coalition has formed (two-stage bargaining); second, negotiations in the coalition can break down, in which case a new coalition may be formed (reversible coalitions). Under the most natural bargaining protocol, both expected payoffs and actual payoff division are proportional to the voting weights provided that the set of winning coalitions of minimum weight is weakly balanced and that the breakdown probability tends to 0. Homogeneity of the voting weights is neither necessary nor sufficient for proportional payoffs. Intermediate values of the breakdown probability produce predictions consistent with the empirical evidence on portfolio allocation in Europe: a moderate propoper advantage and a linear relationship between weights and ex post payoffs for all coalition members other than the proposer.
    Keywords: coalition formation, legislative bargaining, weighted majority games, proportional payoffs, reversible coalitions
    JEL: C71 C72 C78
    Date: 2008–03
  4. By: Dahlberg, Matz (Department of Economics); Mörk, Eva (Department of Economics)
    Abstract: Do governments increase public employment in election years? This paper investigates this question by using data from Sweden and Finland, two coun¬tries 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 visi¬ble in the welfare services provided by the local governments in the Scandina¬vian 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: 2008–03–28
  5. By: Drometer, Marcus; Rincke, Johannes
    Abstract: Measuring the effect of ballot access restrictions on electoral competition is complicated because the stringency of ballot access regulations cannot be treated as being exogenous to candidates' entry decisions. This paper exploits the 1968 U.S. Supreme Court decision to strike down Ohio's ballot access laws as a natural experiment to overcome the endogeneity problem. The evidence from difference-in-difference estimations suggests that the court decision and the accompanying sharp decrease in Ohio's petition requirements resulted in major parties facing a signifcant increase in competition from third party and independent candidates.
    Keywords: Ballot access; Petition requirements; Electoral competition; Natural experiment
    JEL: D D
    Date: 2008–04
  6. By: Christopher Bruce; Jeremy Clark
    Abstract: We use laboratory experiments to test whether a number of axiomatic models of bargaining can predict the behavior of the parties to environmental decision making. In recognition of the multi-dimensional aspect of most public land use conflicts, we ask pairs of subjects to negotiate over two goods, without the possibility of cash side payments. We thus provide one of the first experimental tests of a prediction associated with the Edgeworth Box: that parties with an initial endowment that is Pareto inefficient will make trades until they reach a Pareto efficient allocation. We further test whether parties in particular reach the Nash bargain when it coincides with or conflicts with outcomes that maximise the parties’ joint payoffs and with outcomes at which the parties’ receive equal payoffs. Finally, the effect of providing parties with full or partial information regarding payoffs is also examined.
    JEL: C90 D74 H44 Q58
    Date: 2008–01–19
  7. By: Brady, Michael P. (U.S. Department of Agriculture); Wu, Steven Y. (Ohio State University)
    Abstract: We use a laboratory gift-exchange game to examine decisions made by groups under three different procedures that dictate how group members interact and reach decisions in comparison to individuals acting alone. We find that group decisions do deviate from those of individuals, but the direction and magnitude of gift exchange depend critically on the procedure. This suggests that no general statements can be made concerning the propensity of groups to exhibit reciprocal or other-regarding behavior relative to individuals. The rules governing how group members can express their preferences and expectations to other group members are critical for determining group outcomes.
    Keywords: group behavior, teams, decision making, social preferences
    JEL: C91 C92
    Date: 2008–04
  8. By: Fernanda Brollo (Institute for Economic Development, Boston University; Bocconi University, Via Sarfatti 25 - 20136)
    Abstract: Corruption at local levels poses an important obstacle to economic development. In 2003, Brazil implemented an anti-corruption program in which municipalities are chosen at random to have their allocation of federal transfers audited. This paper investigates the channels through which this anti-corruption program acts. The results show that the Brazilian central government reduces the amount of infrastructure transfers to those local administrations that are more corrupt. Exploring the exogenous timing of released audit reports, there is evidence that the actual reduction on federal transfers does not have an impact on corrupt mayors’ probability of re-election. Instead, the disclosure to voters of information about corruption is the channel for electoral punishment. Poorer municipalities tend to be associated with higher levels of corruption reported. Hence the reduction in transfers to municipalities with many violations reported might hurt poor communities disproportionately without any compensating beneficial effects on corruption reduction.
    Date: 2008–03

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