New Economics Papers
on Collective Decision-Making
Issue of 2008‒08‒06
sixteen papers chosen by

  1. Turned Off or Turned Out? Campaign Advertising,Information, and Voting By Daniel Houser; Rebecca Morton; Thomas Stratmann
  2. Votes and Violence: Evidence from a Field Experiment in Nigeria By Paul Collier; Pedro C. Vicente
  3. Information aggregation & strategic abstention in large laboratory elections By Battaglimi, Marco; Morton, Rebecca; Palfrey, Thomas
  4. Inequality and size of the government when voters have other regarding preferences By Sanjit Dhami; Ali al-Nowaihi
  5. An experimental inquiry into the effect of yardstick competition on corruption: By Viceisza, Angelino
  6. Nothing but consultation: The place of organised civil society in EU policy-making across policies By Kröger, Sandra
  7. Lay people’s Europe: A Critical Assessment of the First EU Citizens’ Conferences By Boussaguet, Laurie; Dehousse, Renaud
  8. Corruption and Political Interest: Empirical Evidence at the Micro Level By Benno Torgler; Bin Dong
  9. The Problem of Maintaining Compliance within Stable Coalitions: Experimental Evidence By David M. McEvoy; James J. Murphy; John M. Spraggon; John K. Stranlund
  10. Legitimate Political Rule Without a State? An analysis of Josef H. H. Weiler’s justification of the legitimacy of the European Union qua non-statehood By Daniel Gaus
  11. A Model of Sovereign Debt in Democracies By Ali Alichi
  12. Contributing or Free-Riding? A Theory of Endogenous Lobby Formation By Hideo Konishi; Taiji Furusawa
  13. The Political Economy of Incentive Regulation: Theory and Evidence from US States By Carmine Guerriero
  14. Accountability in Government and Regulatory Policies: Theory and Evidence By Carmine Guerriero
  15. The Maximal Payoff and Coalition Formation in Coalitional Games By Jingang Zhao
  16. Multiple Membership and Federal Sructures By Alexei Savvateev; Michel Le Breton; Valery Makarov; Shlomo Weber

  1. By: Daniel Houser (Interdsciplinary Center for Economic Science, George Mason University); Rebecca Morton; Thomas Stratmann
    Abstract: We present results from laboratory experimental elections in which voter information is endogenously provided by candidates and voting is voluntary. We also compare advertisements that are costless to voters with those that reduce voter payoffs. We fi?nd that informative advertisements increase voter participation and thus informative campaign advertising "turns out" voters. However, the effect of information is less than that found in previous experimental studies where information is exogenously provided by the experimenter. Furthermore, we find that when advertising by winning candidates reduces voter payoffs, informed voters are less likely to participate, thus are "turned off" rather than "turned out."Finally, we discover that candidates tend to overadvertise, and contrary to theoretical predictions, advertise significantly more when voting is voluntary than when it is compulsory.
    Keywords: Voting, Campaign Finance, Abstention, Voter Turnout, Experiments
    Date: 2008–07
  2. By: Paul Collier (University of Oxford); Pedro C. Vicente (University of Oxford)
    Abstract: Following the wave of democratization during the 1990s, elections are now common in low-income societies. However, these elections are frequently flawed. We investigate the Nigerian general election of 2007, which is to date the largest election held in Africa and one seriously marred by violence. We designed and conducted a nationwide field experiment based on randomized anti-violence grassroots campaigning. We find direct effects on violence outcomes from exploring both subject-surveying and independent data sources. Crucially, we establish that voter intimidation is effective in reducing voter turnout, and that the violence was systematically dissociated from incumbents. We suggest that incumbents have a comparative advantage in alternative strategies, vote buying and ballot fraud. Voter intimidation may be a strategy of the weak analogous to terrorism.
    Keywords: Violence, Conflict, Electoral Politics, Political Economy, Randomized Experiment, Field Experiment, Nigeria, West Africa
    JEL: D72 D74 O55 P16
    Date: 2008–06
  3. By: Battaglimi, Marco; Morton, Rebecca; Palfrey, Thomas
  4. By: Sanjit Dhami; Ali al-Nowaihi
    Abstract: The celebrated relation between inequality and redistribution is based on selfish voters who care solely about own-payoffs. A growing empirical literature highlights the importance of other regarding preferences (ORP) in voting over redistribution. We reexamine the relation between inequality and redistribution, within a simple general equilibrium model, when voters have ORP. Our contribution is five-fold. First, we demonstrate the existence of a Condorcet winner. Second, poverty can lead to increased redistribution (which implies a countercyclical social spending to GDP ratio). Third, we show that disposable income 'strongly median-dominates' factor income. Fourth, we show that fair voters respond to an increase in 'strong median-dominance' by engaging in greater redistribution. Fifth, an illustrative empirical exercise using OECD data points to the importance of fairness in explaining redistribution.
    Keywords: Redistribution; Other regarding preferences; Single crossing property; Income inequality; Difference dominance; Median dominance; American Exceptionalism.
    JEL: D64 D72 D78
    Date: 2008–07
  5. By: Viceisza, Angelino
    Abstract: "This study reports theory-testing laboratory experiments on the effect of yardstick competition on corruption. The results reveal that on the incumbent's side, yardstick competition acts as a corruption-taming mechanism only if the incumbent politician is female. On the voter's side, voters focus on the difference between the tax rate in their own jurisdiction versus that in another jurisdiction. If the voters' tax rate is deemed unfair compared to that in the other jurisdiction, voters are less likely to re-elect. These findings support the claim by Besley and Case (1995) that incumbent behavior and tax setting are tied together through the nexus of yardstick competition, suggesting that our laboratory experiments have some external validity." from Author's Abstract
    Keywords: Corruption, Yardstick competition, Political agency, Asymmetric and private information, Experiments, Social protection, Institutions,
    Date: 2008
  6. By: Kröger, Sandra
    Abstract: In recent years, not only governance, but also civil society has been a veritable growth industry both in politics and academia. Depending on the author, organised civil society was associated with expectations of increasing input or output legitimacy. With regard to the EU, participation of civil society organisations are officially seen as a means of bridging the gap between the EU and its citizens, as materialised in the EU-discourse of participatory democracy. On the basis of an extensive literature review, the article examines the place of organised civil society in EU policy-making processes, in particular in the following policy fields: social affairs, health, consumer protection, environment, and trade as well as in the Convention process. It does so by evaluating the democratic core norms of participation, representation and accountability and comes to disillusioning conclusions. The inclusion of organised civil society contributes little to the democratic legitimacy of the EU and is instrumental to institutional power games of the European Commission and the European Parliament. Worse, the Commission, through its consultation practices, may be contributing to an aggravation of the democratic deficit. Furthermore, there is little empirical evidence that would confirm the normative expectations of deliberative democracy.
    Keywords: civil society; deliberative democracy; democracy; European public space; interest representation; legitimacy; multilevel governance; participation; European Commission; political science
    Date: 2008–07–21
  7. By: Boussaguet, Laurie; Dehousse, Renaud
    Abstract: Citizens’ conferences attempt to include citizens in the decisional and political process. Created to foster deliberation and public debate on disputed issues, they place ordinary citizens in the spotlight and ask them to express their views, after having debated the issues with specialists. Whereas the conferences conducted in a domestic context have been well analyzed, little attention has been given so far to the first attempts to replicate the experience at the European level, and to the specific problems that may be encountered in so doing. Two main reasons have prompted the EU to pay interest to this participatory mechanism: functional reasons (the need to take position on a socio-technological controversy whose stakes are controversial) and political legitimacy (the absence of a strong democratic legitimacy at the EU level). Based on an analysis of the first two experiments organized in the EU, devoted to “the city of tomorrow” and to brain sciences respectively, this article argues that achieving such citizen deliberation is not without problems. In many respects, these problems point to the difficulty entailed in the creation of a European public space: the elusive quest for a “European people”; the question of representation according to the size of the countries; the issue of languages. At the same time, the main potential of this instrument may lie in its cognitive impact, since the interpretations and knowledge surrounding the issues which are debate may influence both the agenda-setting and the decision-making process.
    Keywords: participation; deliberative democracy; policy analysis
    Date: 2008–07–21
  8. By: Benno Torgler (Queensland University of Technology); Bin Dong (Queensland University of Technology)
    Abstract: The topic of corruption has recently attracted a great deal of attention, yet there is still a lack of micro level empirical evidence regarding the determinants of corruption. Furthermore, the present literature has not investigated the effects of political interest on corruption despite the interesting potential of this link. We address these deficiencies by analyzing a cross-section of individuals, using the World Values Survey. We explore the determinants of corruption through two dependent variables (perceived corruption and the justifiability of corruption). The impact of political interest on corruption is explored through three different proxies, presenting empirical evidence at both the cross-country level and the within-country level. The results of the multivariate analysis suggest that political interest has an impact on corruption controlling for a large number of factors.
    Keywords: Corruption, Political Interest, Social Norms
    JEL: K42 D72 O17 J24
    Date: 2008–04
  9. By: David M. McEvoy (Department of Economics, Appalachian State University, Boone, NC); James J. Murphy (Department of Economics, University of Alaska Anchorage, Anchorage, AK); John M. Spraggon (Department of Resource Economics, University of Massachusetts Amherst); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst)
    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.
    Keywords: stable coalitions, self-enforcing agreements, compliance, enforcement, public goods
    JEL: H41 C92
    Date: 2008–07
  10. By: Daniel Gaus
    Abstract: Contributions in the normative debate on the legitimacy of the EU are frequently based on two premises: The first premise is that the principles of the democratic constitutional state represent the normative ideal of political rule in the nation-state, but cannot justify the legitimacy of the EU. Consequently, it is claimed that there is an urgent need to re-set the standards by which we assess the legitimacy of European integration and of the institutions which guide the process (Majone). This implies a second premise, namely, that the validity of the norms to which our assessment of the legitimacy of political rule refers, could be re-set via an academic consensus. The paper seeks two counter both of these assumptions, which are assumptions about the structure of the interpretive pattern regarding the legitimacy of political rule. It claims to show an internal contradiction in the type of normative justification that aims to overcome a touch of stateness (Shaw/Wiener) by explaining the EU’s legitimacy with its assumed non-statal character. To this aim, it presents a detailed hemeneutical analysis of one example of this type, Joseph H. H. Weiler’s normative justification of the EU. Weiler explains the legitimacy of the EU with its non-statal constitutional architecture embodying a principle of constitutional tolerance. However, the analysis reveals that Weiler’s justification implicitly presupposes certain features for the EU which he has rejected before as essential elements of the ideal of the democratic constitutional state: a legal citizenship, hierarchically superior European law, and the principle of popular sovereignty. The paper concludes that this can be seen as an indicator speaking against the two premises: the principles of the democratic constitutional state seem to make-up a central component of our understanding of legitimate political rule in the nation-state as well as in the context of the EU.
    Keywords: democracy; ideas; legitimacy; Nation-state; rule of law
    Date: 2008–07–15
  11. By: Ali Alichi
    Abstract: This paper develops and empirically tests a political economy model of sovereign debt. The main incentive for repaying sovereign debt is to maintain access to international capital markets. However, in a democracy, one generation may choose default regardless of its consequences for future generations. An old generation with little concern for its country's access to capital markets can force a default on debt if it has the majority of voters. On the other hand, if the younger generation is more numerous, it can force repayment of previously defaulted debt. Other voter heterogeneities, such as in income, can generate similar results.
    Keywords: Working Paper , Sovereign debt , International capital markets , Political economy , Economic models , Data analysis ,
    Date: 2008–06–23
  12. By: Hideo Konishi (Boston College); Taiji Furusawa (Hitotsubashi University)
    Abstract: We consider a two-stage public goods provision game: In the first stage, players simultaneously decide if they will join a contribution group or not. In the second stage, players in the contribution group simultaneously offer contribution schemes in order to influence the government’s choice on the level of provision of public goods. Using perfectly coalition-proof Nash equilibrium (Bernheim, Peleg and Whinston, 1987 JET), we show that the set of equilibrium outcomes is equivalent to an "intuitive" hybrid solution concept, the free-riding-proof core, which is always nonempty but does not necessarily achieve global efficiency. It is not necessarily true that an equilibrium lobby group is formed by the players with highest willingness-to-pay, nor is it a consecutive group with respect to their willingnesses-to-pay. We also show that the equilibrium level of public goods provision shrinks to zero as the economy is replicated.
    Keywords: Common Agency, Public Good, Free Rider, Core, Lobby, Coalition Formation, Coalition-proof Nash Equilibrium
    JEL: C71 C72 F13 H41
    Date: 2008–03
  13. By: Carmine Guerriero (University of Cambridge)
    Abstract: The determinants of incentive regulation are a key issue in industrial policy. I study an asymmetric information model of incentive rules selection by a political principal endowed with an information-gathering technology whose efficiency increases with the effort exerted by two accountable supervisors (a regulator and a judge). This set up captures the institutions of several international markets. The model predicts that reforms toward higher powered rules are more likely the more inefficient (efficient) is the production (information-gathering) technology, the less tight is political competition and the greater are pro-consumer supervisors’ incentives. This prediction is consistent with evidence based on US electric power market data.
    Keywords: Incentive Schemes, Accountability Rules, Regulatory Capture
    JEL: D73 H11 L51 K2
    Date: 2008–04
  14. By: Carmine Guerriero (University of Cambridge)
    Abstract: This paper analyzes the political economy of regulatory and judicial appointment rules. I study a model of price-setting by a political principal faced with a firm with unknown costs, and endowed with an information-gathering technology whose efficiency rises with the effort exerted by two accountable supervisors (a regulator and a judge). This set-up captures the institutions of several international markets. The model predicts that reforms toward election rather than appointment of regulators are more likely the less efficient is the information-gathering technology, the less stringent are the investment concerns of society, the stronger are regulators’ revolving-door motivations, and the closer is political competition. These predictions are consistent with US electric power market data. Moreover, in accordance with the model, electricity rates are lower and respond less to shock in input costs in states that elect their regulators or their High Court judges.
    Keywords: Election, Agency, Judges, Regulation, Electricity
    JEL: K23 L51 Q43
    Date: 2008–06
  15. By: Jingang Zhao (University of Saskatchewan)
    Abstract: This paper first establishes a new core theorem using the concept of generated payoffs: the TU (transferable utility) core is empty if and only if the maximum of generated payoffs (mgp) is greater than the grand coalition’s payoff v(N), or if and only if it is irrational to split v(N). It then provides answers to the questions of what payoffs to split, how to split the payoff, what coalitions to form, and how long each of the coalitions will be formed by rational players in coalitional TU games. Finally, it obtains analogous results in coalitional NTU (non-transferable utility) games.
    Keywords: Coalition Formation, Core, Maximal Payoff, Minimum No-Blocking Payoff
    JEL: C62 C71
    Date: 2008–03
  16. By: Alexei Savvateev (New Economic School); Michel Le Breton (Universitè de Toulouse I, GREMAQ and IDEI); Valery Makarov (Central Economics and Mathematics Institute and New Economic School); Shlomo Weber (Southern Methodist University and CEPR)
    Abstract: We consider a model of the “world" with several regions that may create a unified entity or be partitioned into several unions (countries). The regions have distinct preferences over policies chosen in the country to which they belong and equally share the cost of public policies. It is known that stable \political maps" or country partitions, that do not admit a threat of secession by any group of regions, may fail to exist. To rectify this problem, in line with the recent trend for an increased autonomy and various regional arrangements, we consider federal structures, where a region can simultaneously be a part of several unions. We show that, under very general conditions, there always exists a stable federal structure.
    Keywords: Partitions, Federal Structures, Stability, Cooperative Games
    JEL: C71 D71 H41
    Date: 2008–05

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