New Economics Papers
on Collective Decision-Making
Issue of 2008‒06‒21
thirteen papers chosen by

  1. On the Benefits of Costly Voting By Vijay Krishna; John Morgan
  2. Condorcet Methods - When, Why and How? By Stensholt, Eivind
  3. Are Voters Sensitive to Terrorism?: Direct Evidence from the Israeli Electorate By Claude Berrebi; Esteban F. Klor
  4. Voces Populi and the Art of Listening By Stensholt, Eivind
  5. This article exposes the dynamics of electoral promises, building on an electoral competition model with endogenous policies. This framework allows to deal with the intertemporal dimension needed to understand the prevalent cycle of promises, disappointment, new promises, new disappointment By Etienne Farvaque; Gaël Lagadec
  6. The Retrenchment Hypothesis and the Extension of the Franchise in England and Wales By Aidt, T.S.; Daunton, M.; Dutta, J.
  7. Predicting elections from politicians’ faces By Armstrong, J. Scott; Green, Kesten C.; Jones, Randall J.; Wright, Malcolm
  8. Gibbard-Satterthwaite and an Arrovian Connection By Stensholt, Eivind
  9. Decade of dissent: explaining the dissent voting behavior of Bank of England MPC members By Harris, Mark; Spencer, Christopher
  10. Studying the role of political competition in the evolution of government size over long horizons By Ferris, J. Stephen; Park, Soo-Bin; Winer, Stanley L.
  11. The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence By David M. McEvoy; James J. Murphy; John M. Spraggon; John K. Stranlund
  12. Corporate Governance Reforms in the EU: Do They Matter and How? By Petya Koeva Brooks; Iryna V. Ivaschenko
  13. Separating Real Incentives and Accountability By Ferdinand M. Vieider

  1. By: Vijay Krishna (Department of Economics, Pennsylvania State University); John Morgan (Department of Economics, University of California, Berkeley)
    Abstract: We study strategic voting in a Condorcet type model in which voters have identical preferences but differential information. Voters incur private costs of going to the polls and may abstain if they wish; hence voting is voluntary. We show that under majority rule with voluntary voting, it is an equilibrium to vote sincerely. Thus, in contrast to situations with compulsory voting, there is no conflict between strategic and sincere behavior. In large elections, the equilibrium is shown to be unique. Furthermore, participation rates are such that, in the limit, the correct candidate is elected with probability one. Finally, we show that in large elections, voluntary voting is welfare superior to compulsory voting.
    Date: 2008–05
  2. By: Stensholt, Eivind (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: Geometric representations of 3-candidate profiles are used to investigate properties of preferential election methods. The representation visualizes both the possibility to win by agenda manipulation, i.e. introducing a third and chanceless candidate in a 2-candidate race, and the possibility to win a 3-candidate election through different kinds of strategic voting. Here the focus is on the "burying" strategy in single-winner elections, where the win is obtained by ranking a main competitor artificially low. Condorcet methods are compared with the major alternatives (Borda Count, Approval Voting, Instant Runoff Voting). Various Condorcet methods are studied, and one method is proposed that minimizes the number of noncyclic profiles where burying is possible.
    Keywords: Preferential election methods; agenda manipulation; strategic voting
    JEL: D72
    Date: 2008–06–12
  3. By: Claude Berrebi; Esteban F. Klor
    Abstract: This paper relies on the variation of terror attacks across time and space as an instrument to identify the causal effects of terrorism on the preferences of the Israeli electorate. The authors find that the occurrence of a terror attack within three months of the elections is associated with a 1.35 percentage points increase on the local support for the right bloc of political parties out of the two blocs vote. This effect is of a significant political magnitude given the level of terrorism in Israel and the fact that its electorate is closely split between the right and left blocs. Moreover, a terror fatality has important electoral effects beyond the locality where the attack is perpetrated, and their electoral impact is stronger the closer to the elections they occur. Interestingly, the observed political effects are not affected by the identity of the party holding office. These results provide empirical support for the hypothesis that the electorate shows a highly sensitive reaction to terrorism, and substantiate the claim that terror organizations especially target democratic regimes because these regimes are more prone to make territorial concessions.
    Keywords: terrorism, democracy, voters' preferences
    JEL: D7 N4
    Date: 2008–04
  4. By: Stensholt, Eivind (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: The strategy most damaging to many preferential election methods is to give insincerely low rank to the main opponent of one’s favorite candidate. Theorem 1 determines the 3-candidate Condorcet method that minimizes the number of noncyclic profiles allowing this strategy. Theorems 2, 3, and 4 establish conditions for an anonymous and neutral 3-candidate single-seat election to be monotonic and still avoid this strategy completely. Plurality elections combine these properties; among the others "conditional IRV" gives the strongest challenge to the plurality winner. Conditional IRV is extended to any number of candidates. Theorem 5 is an impossibility of Gibbard-Satterthwaite type, describing 3 specific strategies that cannot all be avoided in meaningful anonymous and neutral elections.
    Keywords: Preferential Election methods; Plurality Election methods
    JEL: D72
    Date: 2008–06–12
  5. By: Etienne Farvaque (Equippe - Universités de Lille, Faculté des Sciences Economiques et Sociales, France.); Gaël Lagadec (Université de Nouvelle-Calédonie)
    Keywords: Lobbies, Promises, Elections, Electoral competition, Lies
    JEL: D72 P16
    Date: 2008–06
  6. By: Aidt, T.S.; Daunton, M.; Dutta, J.
    Abstract: Does local democracy help or hinder the solution of collective action problems? We study this question in the context of public spending on health-related urban amenities in a panel of 75 municipal boroughs in England and Wales in 1868, 1871 and 1886. We .nd evidence of a U-shaped relationship between spending on urban amenities and the extension of the local voting franchise. We argue that this retrenchment e¤ect arose because middle class taxpayers were unwilling to pay the cost of poor sanitation and the urban elites, elected on a narrow franchise, were instrumental for sanitary improvements. Our model of taxpayer democracy suggests that the retrenchment e¤ect is related to forced enfranchisement of the middle class through nation-wide reforms.
    Keywords: Voting franchise, retrenchment, local public goods, sanitation.
    JEL: D62 D78 H71 N93
    Date: 2008–04
  7. By: Armstrong, J. Scott; Green, Kesten C.; Jones, Randall J.; Wright, Malcolm
    Abstract: Prior research found that people’s assessments of relative competence predicted the outcome of Senate and Congressional races. We hypothesized that snap judgments of "facial competence" would provide useful forecasts of the popular vote in presidential primaries before the candidates become well known to the voters. We obtained facial competence ratings of 11 potential candidates for the Democratic Party nomination and of 13 for the Republican Party nomination for the 2008 U.S. Presidential election. To ensure that raters did not recognize the candidates, we relied heavily on young subjects from Australia and New Zealand. We obtained between 139 and 348 usable ratings per candidate between May and August 2007. The top-rated candidates were Clinton and Obama for the Democrats and McCain, Hunter, and Hagel for the Republicans; Giuliani was 9th and Thompson was 10th. At the time, the leading candidates in the Democratic polls were Clinton at 38% and Obama at 20%, while Giuliani was first among the Republicans at 28% followed by Thompson at 22%. McCain trailed at 15%. Voters had already linked Hillary Clinton’s competent appearance with her name, so her high standing in the polls met our expectations. As voters learned the appearance of the other candidates, poll rankings moved towards facial competence rankings. At the time that Obama clinched the nomination, Clinton was ahead in the popular vote in the primaries and McCain had secured the Republican nomination with a popular vote that was twice that of Romney, the next highest vote-getter.
    Keywords: accuracy; appearance; forecasting methods; snap judgments
    JEL: C53 D81 D72 C42
    Date: 2008–06–16
  8. By: Stensholt, Eivind (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: A very close link of G-S, the Gibbard-Satterthwaite theorem to Arrow’s "impossibility" theorem is shown. G-S is derived as a corollary: from a strategy-proof singleseat election method F is constructed an election method G that contradicts Arrow’s theorem.
    Keywords: Preferential election methods; impossibility theorem
    JEL: D72
    Date: 2008–06–12
  9. By: Harris, Mark; Spencer, Christopher
    Abstract: We examine the dissent voting record of the Bank of England Monetary Policy Committee (MPC) in its first decade. Probit estimates indicate the impact of career experience on dissent voting is negligible, whereas the impact of forecast inflation is pronounced. In addition to finding a role for dynamics, we also find a role for unobserved heterogeneity in the form of member-specific fixed-effects, suggesting previous literature characterizing voting behavior as largely determined by whether members are appointed from within or outside the ranks of Bank of England staff (internal and external members respectively) is overly simplistic.
    Keywords: Bank of England; Monetary Policy Committee; career background effects; dissent voting; unobserved heterogeneity
    JEL: D7 E5 C35
    Date: 2008–06
  10. By: Ferris, J. Stephen; Park, Soo-Bin; Winer, Stanley L.
    Abstract: We argue for the use of cointegration and error correction analysis as a method to combine economic factors that are nonstationary with political factors that are stationary into a dynamic, empirical model of the evolution of public policy over long periods. The approach we develop is applied to disentangle the contributions of economics and politics to the evolution of public expenditure by the Government of Canada over 130 years, from the origin of the modern state to the end of the 20th century. Political competition emerges robustly as the primary political factor affecting government size in the long run as well as over shorter horizons.
    Keywords: political competition, conditional convergence, cointegration, public expenditure, size of government, politics versus economics
    JEL: D7 H1 H3 H5
    Date: 2008–06
  11. By: David M. McEvoy; James J. Murphy; John M. Spraggon; John K. Stranlund
    Abstract: This study examines the performance of stable cooperative coalitions that form to provide a public good when coalition members have the opportunity to not comply with their commitments. A stable coalition is one in which no member wishes to leave and no non-member wishes to join. To counteract the incentive to violate their commitments, coalition members fund a third-party enforcer. This leads to the theoretical conclusion that stable coalitions are larger (and provide more of a public good) when their members must finance enforcement relative to when compliance is ensured without the need for costly enforcement. However, our experiments reveal that giving coalition members the opportunity to violate their commitments while requiring them to finance enforcement to maintain compliance reduces the overall provision of the public good. The decrease in the provision of the public good is attributed to an increase in the participation threshold for a theoretically stable coalition to form and to significant levels of noncompliance. When we abandon the strict stability conditions and require all subjects to join a coalition for it to form, the average provision of the public good increases significantly. Key Words: stable coalitions, self-enforcing agreements, compliance, enforcement, public goods
    JEL: H41 C92
    Date: 2008
  12. By: Petya Koeva Brooks; Iryna V. Ivaschenko
    Abstract: This paper proposes a new approach to quantifying the effects of corporate governance reforms, by focusing on the dynamics of the voting premiums, a measure of the private benefits of control in a corporation. The results indicate that the reforms have been successful in reducing the voting premiums EU-wide. Moreover, more intense and broad reform efforts (such as introducing national reforms beyond and above the EU-wide initiatives) bring higher and longer lasting benefits. Our findings also suggest that the market for corporate control in Europe has become more integrated, as illustrated by the lower dispersion in voting premiums across countries and over time.
    Date: 2008–04–17
  13. By: Ferdinand M. Vieider (Faculty of Economics, Erasmus University Rotterdam)
    Abstract: In experimental investigations of the effect of real incentives, accountability—the implicit or explicit expectation of a decision maker that she may have to justify her decisions in front of somebody else—is often confounded with the incentives themselves. This confounding of accountability with incentives makes causal attributions of any effects found problematic. We separate accountability and incentives, and find different effects. Accountability is found to reduce preference reversals between frames, for which incentives have no effect. Incentives on the other hand are found to reduce risk seeking for losses, where accountability has no effect. In a choice task between simple and compound events, accountability increases the preference for the simple event, while incentives have a weaker effect going in the opposite direction. It is thus shown that the confounding of accountability and incentives is relevant for studies on the effect of the latter, and that existing conclusions on the effect of incentives need to be reconsidered in light of this issue.
    Keywords: Real v. hypothetical incentives; experimental economics; accountability; dual processing models; internal validity; simple and compound events; external validity; anchoring and adjustment; framing effects
    JEL: C91 D71 D81 Z13
    Date: 2008–06–02

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