New Economics Papers
on Collective Decision-Making
Issue of 2008‒09‒13
eight papers chosen by

  1. Attitude-Dependent Altruism, Turnout and Voting By Julio J. Rotemberg
  2. Does Church Attendance Cause People to Vote? Using Blue Laws' Repeal to Estimate the Effect of Religiosity on Voter Turnout By Alan Gerber; Jonathan Gruber; Daniel M. Hungerman
  3. Elite Capture, Political Voice and Exclusion from Aid: An Experimental Study By D'Exelle, Ben; Riedl, Arno
  4. Democratic Errors By Christopher J. Ellis; John Fender
  5. Corporate Campaign Contributions as a Predictor for Abnormal Stock Returns after Presidential Elections By Jürgen Huber; Michael Kirchler
  6. Persistent Ideology and the Determination of Public Policies over Time By Song, Zheng
  7. The Microfoundations of Community: Small Groups as Bridges and Barriers to Participatory Democracy By Islam, Gazi
  8. The appearance of homo rivalis: Social preferences and the nature of rent seeking By Benedikt Herrmann; Henrik Orzen

  1. By: Julio J. Rotemberg
    Abstract: This paper presents a goal-oriented model of political participation based on two psychological assumptions. The first is that people are more altruistic towards individuals that agree with them and the second is that people's well-being rises when other people share their personal opinions. The act of voting is then a source of vicarious utility because it raises the well-being of individuals that agree with the voter. Substantial equilibrium turnout emerges with nontrivial voting costs and modest altruism. The model can explain higher turnout in close elections as well as votes for third-party candidates with no prospect of victory. For certain parameters, these third party candidates lose votes to more popular candidates, a phenomenon often called strategic voting. For other parameters, the model predicts "vote-stealing" where the addition of a third candidate robs a viable major candidate of electoral support.
    JEL: D64 D72
    Date: 2008–09
  2. By: Alan Gerber; Jonathan Gruber; Daniel M. Hungerman
    Abstract: Regular church attendance is strongly associated with a higher probability of voting. It is an open question as to whether this association, which has been confirmed in numerous surveys, is causal. We use the repeal of the laws restricting Sunday retail activity ("Blue laws") to measure the effects of church-going on political participation. The repeal of Blue Laws caused a 5 percent decrease in church attendance. We measure the effect of Blue Laws' repeal on political participation and find that following the repeal turnout falls by approximately 1 percentage point. This turnout decline, which is statistically significant and fairly robust across model specifications, is consistent with the large effect of church attendance on turnout reported in the literature, and suggests that church attendance may have significant causal influence on voter turnout.
    JEL: H1 J2
    Date: 2008–09
  3. By: D'Exelle, Ben (University of Antwerp); Riedl, Arno (Maastricht University)
    Abstract: We experimentally study the influence of local information conditions on elite capture and social exclusion in community-based development schemes with heterogeneous groups. Not only information on the distribution of aid resources through community-based schemes, but also information on who makes use of an available punishment mechanism through majority voting may be important. The main results are the following. First, many rich community representatives try to satisfy a political majority who would then abstain from using the punishment mechanism, and exclude those community members whose approval is then not required. The frequency of this exclusion strategy is highest with private information on the distribution and public voting. Second, when voting is public, responders are more reluctant to make use of the punishment mechanism, and representatives who follow the exclusion strategy are more inclined to exclude the poorest responder. Third, punishment is largely ineffective as it induces rich representatives to capture all economic resources. Fourth, if a poor agent takes the representative’s role, punishment rates drop, efficiency increases, and final distributions become more equal.
    Keywords: distribution of aid, inequality, social exclusion, laboratory experiment
    JEL: D72 C91
    Date: 2008–08
  4. By: Christopher J. Ellis (University of Oregon); John Fender
    Abstract: In this paper we combine Acemoglu’s model of the economic origins of democracy with Lohmann’s model of political massprotest. This alllows us to provide ananalysis of the economic causes of political regimec hange based on the micro foundations of rebellion. We are able tod erive conditons under which democracy arises peacefully, when it occurs only after a violent rebellion, and when oligarchy persists. We model these posibilities in a world of asymmetric information where information cascades are possible, and where these cascades may involve errors in a paratian sense.
    Keywords: Democracy, Information Cascades, Rebellion
    JEL: H0 P4 P16
    Date: 2008–04–01
  5. By: Jürgen Huber; Michael Kirchler
    Abstract: In the U.S. campaign contributions by companies play a major role in financing election campaigns. We analyze contributions by companies before an election and stock market performance after the election for the presidential elections from 1992 until 2004. We find that (i) the percentage of contributions given to the winner in a presidential election and (ii) the total contribution (divided by market capitalization) have a significant positive impact on a company's stock market performance after an election, with the second factor being more important. Furthermore, we find that hypothetical portfolios of the 30 highest contributors according to (i) would have earned significant abnormal returns of up to 0.54% per month (6.6% p.a.) during the first year after an election. Investing in a portfolio formed according to (ii) would have yielded abnormal returns of up to 1.21% per month (15.5% p.a.) for the same observation period.
    Keywords: Presidential Election, Corporate Campaign Contributions, Abnormal Returns
    JEL: D72 G10 P16
    Date: 2008–09
  6. By: Song, Zheng
    Abstract: This paper investigates how public policy responds to persistent ideological shifts in dynamic politico-economic equilibria. To this end, we develop a tractable model to analyze the dynamic interactions among public policy, individuals' intertemporal choice and the evolution of political constituency. Analytical solutions are obtained to characterize Markov perfect equilibria. Our main finding is that a right-wing ideology may increase the size of government. Data from a panel of 18 OECD countries confirm that after controlling for the partisan effect, there is a positive relationship between the right-wing political constituency and the government size. This is consistent with our theoretical prediction, but hard to explain by existing theories.
    JEL: E62 D72
    Date: 2008–03–08
  7. By: Islam, Gazi
    Date: 2008–10
  8. By: Benedikt Herrmann (University of Nottingham); Henrik Orzen (University of Nottingham)
    Abstract: While numerous experiments demonstrate how pro-sociality can influence economic decision-making, evidence on explicitly anti-social economic behavior has thus far been limited. In this paper we investigate the importance of spite in experimental rent-seeking contests. Although, as we show, existing evidence of excessive rent-seeking is in theory compatible with fairness considerations, our social preference elicitations reveal that subjects’ investments are driven by spite, not fairness or reciprocity. We also observe a striking disconnect between individuals’ revealed social preferences in our contest game and in a standard prisoner’s dilemma, rejecting the idea that there are consistent pro-social, selfish or anti-social “types”. Moreover, we find that cooperation and reciprocity rates drop substantially after subjects have been exposed to rent-seeking competition.
    Keywords: Contests; Other-regarding preferences; Experiments
    JEL: A13 C9 D0 D72
    Date: 2008–08

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