New Economics Papers
on Collective Decision-Making
Issue of 2008‒04‒29
twelve papers chosen by

  1. Duality of Power in the European Parliament By František Turnovec
  2. Indicators of Electoral Victory By Pablo Amoros; M. Socorro Puy
  3. Secondary Issues and Party Politics: An Application to Environmental Policy By Anesi, Vincent; De Donder, Philippe
  4. Social Preferences and Redistribution Under Direct Democracy By Sanjit Dhami; Ali al-Nowaihi
  5. Moderating Political Extremism: Single vs. Dual Ballot Elections By Massimo Bordignon; Guido Tabellini
  6. Group formation and governance By Ludovic Renou
  7. The Discursive Dilemma and Probabilistic Judgement Aggregation By Pivato, Marcus
  8. Social Preferences and Public Economics: Mechanism Design when Social Preferences Depend on Incentives By Samuel Bowles; Sung-Ha Hwang
  9. Civil Conflict, Federalism and Strategic Delegation of Leadership By Colin Jennings; Hein Roelfsema
  10. Political economics and normative analysis By Colin Jennings; Iain McLean
  11. Elections Can be Manipulated Often By Ehud Friedgut; Gil Kalai; Noam Nisan
  12. Effective Political Contests By Kaplan, Todd; Sela, Aner

  1. By: František Turnovec (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: Increasing number of studies is focusing attention to constitutional analysis of European Union institutions and distribution of intra-institutional and inter-institutional influence in the European Union decision making. Most of the studies are related to distribution of voting power in the EU Council of Ministers as reflecting the influence of member states (or, more precisely, member states governments). Significantly less attention is paid to the analysis of European Parliament (EP). In this paper we address the following question: Taking as decisional units national chapters of European political parties, is there a difference between a priori voting power of national groups in the case of “national” coordination of voting and in the case of “partisan” coordination of voting? By coordination of voting we mean two step process: in the first step there is an internal voting in the groups of units (national or partisan), in the second step there is a voting of aggregated groups (European political parties or national representations) in the EP. In the both cases the voting has an ideological dimension (elementary unit is a party), difference is only in dimension of aggregation. Power indices methodology is used to evaluate voting power of national party groups in the cases of partisan and national coordination of voting behaviour.
    Keywords: a priori voting power, European Parliament, European political parties, power indices, Shapley-Shubik power index
    JEL: D71 D74
    Date: 2008–04
  2. By: Pablo Amoros (Department of Economic Theory, Universidad de Málaga); M. Socorro Puy (Department of Economic Theory, Universidad de Málaga)
    Abstract: We study a two-party contest where candidates strategically allocate their campaign resources between two salient issues. We analyze to what extent the following indicators of a party's success predict the electoral victory: (1) the pre-campaign advantage, (2) the advantage on every salient issue, and (3) the advantage on campaign resources. We show that the electoral victory is guaranteed only when a party has a "sufficiently large" advantage on every salient issue. Otherwise no combination of these indicators ensures the electoral victory.
    Keywords: Election campaign, salient issues, majority voting
    JEL: D72 C70
    Date: 2008–04
  3. By: Anesi, Vincent; De Donder, Philippe
    Abstract: The paper develops a political economy model to assess the interplay between political party formation and an environmental policy dimension viewed as secondary to the redistributive dimension. We define being a secondary issue in terms of the intensity of preferences over this issue rather than in terms of the proportion of voters who care for the environment. We build on Levy (2004) for the political equilibrium concept, defined as the solution to a two stage game where politicians first form parties and where parties then compete by choosing a policy bundle in order to win the elections. We obtain the following results: i) The Pigouvian tax never emerges in an equilibrium; ii) The equilibrium environmental tax is larger when there is a minority of green voters; iii) Stable green parties exist only if there is a minority of green voters and income polarization is large enough relative to the saliency of the environmental issue. We also study the redistributive policies advocated by green parties.
    Keywords: electoral competition; income polarization; party formation; salience; stable green party
    JEL: D72 H23
    Date: 2008–04
  4. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: There is growing evidence on the roles of fairness and social preferences as fundamental human motives, in general, as well as in voting contexts. In contrast, models of political economy are based on selfish-voters who derive utility solely from 'own' payoff. We examine the implications of introducing voters with social preferences, as in Fehr and Schmidt (1999), in a simple general equilibrium model with endogenous labour supply. We demonstrate the existence of a Condorcet winner for voters, with heterogeneous social preferences (including purely selfish preferences), using the single crossing property of voters’ preferences. Relatively small changes in the preference of voters can have relatively large redistributive consequences. We implications for the size of the welfare state; regional integration; and issues of culture, identity and immigration.
    Keywords: Direct democracy; redistribution; other-regarding preferences; single-crossing property
    JEL: D64 D72 D78
    Date: 2008–04
  5. By: Massimo Bordignon; Guido Tabellini
    Date: 2008–04–18
  6. By: Ludovic Renou
    Abstract: This paper studies the impact of the governance of a group, whether be it unanimity, simple majority or qualified majority, on its (endogenously derived) size, composition, and inclination to change the status quo. Somewhat surprisingly, we show that not only unanimity might favor the formation of larger groups than majority, but also a change of status quo.
    Keywords: groups; endogenous formation; economies of scale; loss of control; governance; unanimity; majority
    JEL: D7
    Date: 2008–04
  7. By: Pivato, Marcus
    Abstract: Let S be a set of logically related propositions, and suppose a jury must decide the truth/falsehood of each member of S. A `judgement aggregation rule' (JAR) is a rule for combining the truth valuations on S from each juror into a collective truth valuation on S. Recent work has shown that there is no reasonable JAR which always yields a logically consistent collective truth valuation; this is referred to as the `Doctrinal Paradox' or the `Discursive Dilemma'. In this paper we will consider JARs which aggregate the subjective probability estimates of the jurors (rather than Boolean truth valuations) to produce a collective probability estimate for each proposition in S. We find that to properly aggregate these probability estimates, the JAR must also utilize information about the private information from which each juror generates her own probability estimate.
    Keywords: discursive dilemma; doctrinal paradox; judgement aggregation; statistical opinion pool; interactive epistemology; common knowledge; epistemic democracy; deliberative democracy
    JEL: D71 D83
    Date: 2008–04–23
  8. By: Samuel Bowles; Sung-Ha Hwang
    Abstract: Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evidence indicates that conventional economic incentives and social preferences may be either complements or substitutes, explicit incentives crowding in or crowding out social preferences. We investigate the design of optimal incentives to contribute to a public good under these conditions. We identify cases in which a sophisticated planner cognizant of these non-additive effects would make either more or less use of explicit incentives, by comparison to a naive planner who assumes they are absent
    Keywords: Social preferences, implementation theory, incentive contracts, incomplete contracts
    JEL: D52 D64 H21 H41
    Date: 2008–03
  9. By: Colin Jennings (Department of Economics, University of Strathclyde); Hein Roelfsema (Utrecht School of Economics, Utrecht University)
    Abstract: This article analyses negative externalities that policy makers in one region or group may impose upon the citizens of neighbouring regions or groups. These externalities may be material, but they may also be psychological (in the form of envy). The latter form of externality may arise from the production of "conspicuous" public goods. As a result, decentralized provision of conspicuous public goods may be too high. Potentially, a centralized legislature may internalize negative externalities. However, in a model with strategic delegation we argue that the median voter in each jurisdiction may anticipate a reduction in local public goods supply and delegates to a policymaker who cares more for public goods than she does herself. This last effect mitigates the expected benefits of policy centralization. The authors' theory is then applied to the setting of civil conflict, where they discuss electoral outcomes in Northern Ireland and Yugoslavia before and after significant institutional changes which affected the degree of centralization. These case studies provide support for the authors' theoretical predictions.
    Keywords: conflict; federalism; strategic delegation
    JEL: D72 D74 H77
    Date: 2008–03
  10. By: Colin Jennings; Iain McLean (Department of Economics, University of Strathclyde; Nuffield College, University of Oxford)
    Abstract: The approaches and opinions of economists often dominate public policy discussion. Economists have gained this privileged position partly (or perhaps mainly) because of the obvious relevance of their subject matter, but also because of the unified methodology (neo-classical economics) that the vast majority of modern economists bring to their analysis of policy problems and proposed solutions. The idea of Pareto efficiency and its potential trade-off with equity is a central idea that is understood by all economists and this common language provides the economics profession with a powerful voice in public affairs. The purpose of this paper is to review and reflect upon the way in which economists find themselves analysing and providing suggestions for social improvements and how this role has changed over roughly the last 60 years. We focus on the fundamental split in the public economics tradition between those that adhere to public finance and those that adhere to public choice. A pure public finance perspective views failures in society as failures of the market. The solutions are technical, as might be enacted by a benevolent dictator. The pure public choice view accepts (sometimes grudgingly) that markets may fail, but so, it insists, does politics. This signals institutional reforms to constrain the potential for political failure. Certain policy recommendations may be viewed as compatible with both traditions, but other policy proposals will be the opposite of that proposed within the other tradition. In recent years a political economics synthesis emerged. This accepts that institutions are very important and governments require constraints, but that some degree of benevolence on the part of policy makers should not be assumed non-existent. The implications for public policy from this approach are, however, much less clear and perhaps more piecemeal. We also discuss analyses of systematic failure, not so much on the part of markets or politicians, but by voters. Most clearly this could lead to populism and relaxing the idea that voters necessarily choose their interests. The implications for public policy are addressed. Throughout the paper we will relate the discussion to the experience of UK government policy-making.
    Keywords: public finance; public choice; political economics; normative analysis
    JEL: D6 D7
    Date: 2008–03
  11. By: Ehud Friedgut; Gil Kalai; Noam Nisan
    Date: 2008–04–18
  12. By: Kaplan, Todd; Sela, Aner
    Abstract: We study two-stage political contests with private entry costs. We show that these political contests could be ineffective, namely, the chance of low ability candidates participating in the contest might be higher than the chance of high ability candidates participating in the contest (and winning). However, by imposing a costly requirement (fee) on the winner of the contest, one can guarantee that the contest will be effective.
    Keywords: All-pay auctions; Contests; Entry costs
    JEL: D44 O31 O33
    Date: 2008–04

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