New Economics Papers
on Collective Decision-Making
Issue of 2008‒10‒07
twelve papers chosen by

  1. Strategic Registration of Voters: The Chilean Case By Giacomo De Luca
  2. How monetary policy committees impact the volatility of policy rates By Etienne Farvaque; Norimichi Matsueda; Pierre-Guillaume Méon
  3. Shifting the Blame: On Delegation and Responsibility By Björn Bartling; Urs Fischbacher
  4. I Will Survive: Capital Taxation, Voter Turnout and Time Inconsistency By Matteo Bassi
  5. Voting in the European Union - Central Europe’s lost voice By Ondřej Schneider
  6. Individual behavior and group membership: Comment By Matthias Sutter
  7. International Coordination and Domestic Politics By Kimiko Terai
  8. An Afriat Theorem for the collective model of household consumption By Laurens Cherchye; Bram De Rock; Frederic Vermeulen
  9. Tribalism as a Minimax-Regret Strategy: Evidence from Voting in the 2007 Kenyan Elections By Mwangi S. Kimenyi; Roxana Gutierrez Romero
  10. Politician's Reputation and Policy (Un)persistence By Iconio Garrì
  11. Identity, Grievances, and Economic Determinants of Voting in the 2007 Kenyan Elections By Mwangi S. Kimenyi; Roxana Gutierrez Romero
  12. Lobbying, Corruption and Other Banes By Nauro F. Campos; Francesco Giovannoni

  1. By: Giacomo De Luca
    Abstract: In this paper we investigate how the employment relationship, if it implies transfer of rents, may allow employers to control the voting behavior of their workers and lead to strategic registration of voters. This is feasible when individual voting behavior is observable, as in open ballot elections. More easily controlled voters are more likely registered providing an even larger impact of vote controlling on election results. Making individual vote truly secret (for instance with the adoption of a secret ballot) significantly reduces this control. Moreover, we show that as long as electoral districts are heterogeneous enough, i.e., contain also free voters, any attempt to control votes on the basis of district aggregate results is bound to fail. We test the predictions of the model by examining in detail the effects of the introduction of thesecret ballot in Chile in 1958.
    Date: 2008–06
  2. By: Etienne Farvaque (Equippe - Universités de Lille, Faculté des Sciences Economiques et Sociales, Université de Lille 1, France); Norimichi Matsueda (School of Economics, Kwansei Gakuin University, Japan); Pierre-Guillaume Méon (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)
    Abstract: This paper relates the volatility of interest rates to the collective nature of monetary policymaking in monetary unions. Several decision rules are modelled, including hegemonic and democratic procedures, and also committees headed by a chairman. A ranking of decision rules in terms of the volatility of policy rates is obtained, showing that the presence of a chairman has a cooling effect. However, members of a monetary union are better off under symmetric rules (voting, averaging, bargaining), unless they themselves chair the union. The results are robust to the inclusion of heterogeneities among members of the monetary union.
    Keywords: Monetary Policy Committees, Decision Procedures, Interest-rate, Monetary Union
    JEL: D70 E43 E58 F33
    Date: 2008–09
  3. By: Björn Bartling; Urs Fischbacher
    Abstract: To fully understand the motives for delegating a decision right, it is important to study responsibility attributions for outcomes of delegated decisions. We conducted an experiment in which subjects were able to delegate the choice between a fair or unfair allocation, and used a punishment option to elicit responsibility attributions. Our results show that, first, responsibility attribution can be effectively shifted and, second, this constitutes a powerful motive for the delegation of a decision right. Furthermore, we propose a formal measure of responsibility and show that this measure outperforms measures based on outcome or intention in predicting punishment behavior.
    Keywords: delegation, decision rights, moral responsibility, blame shifting
    Date: 2008
  4. By: Matteo Bassi (Università di Salerno, CSEF Toulouse School of Economics (GREMAQ))
    Abstract: This paper reconsiders the debate around the political determination of capital income taxes and explains why such taxes survive in most OECD countries. The political economy literature on redistributive politics (Persson and Tabellini 2003) emphasizes the role played by the lower class in the political arena: being labor more concentrated than capital, the majority of the population benefits by overtaxing capital and undertaxing labour. However, in reality, political participation (voting, lobbying, protesting etc.) is positively correlated with income. Therefore, a paradoxical result emerges: why do the upper class, who is politically more active and own most of the capital, still favour a positive capital tax? Hence, voters' income is not the sole relevant variable in the political determination of the capital tax. To reconcile this apparent puzzle, we propose a model that incorporates time inconsistency à la Laibson in individual preferences We show that time inconsistent individuals are politically more homogeneous (or “single-minded”) than far-sighted, and prefer to tax more capital income, instead of labor income, since accumulated saving are below the planned (and optimal) level and the distortionary effects of a higher capital tax are not only reduced but also delayed in time. We demonstrate that, since politicians find easier to please hyperbolic voters by proposing a tax policy that includes lower labor and higher capital taxes compared to an economy with only far sighted. Moreover, we show that, as the proportion of time inconsistent individuals in the population increases, the tax policy becomes more and more biased towards capital taxation.
    Keywords: Political Economy, Multidimensional Voting, Capital Taxation, Redistribution, Hyperbolic Discounting
    JEL: A12 D72 H21 H24 H31
    Date: 2008–09–26
  5. By: Ondřej Schneider (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; CESifo, Munich, Germany; Georgetown University)
    Abstract: Ten Central European countries became members of the European Union in the years 2004 - 2007. They constitute 20% of the EU’s total population; and even though their economic output is much lower, it rises dynamically. New members’ impact on the EU policies has nevertheless been limited. This is due not only to the arcane voting rules within the EU, but also to the lack of a common agenda among the Central European countries. Our paper illustrates that the new members rarely vote together and that their influence is thus fairly limited. We argue that as the EU seemingly lacks energy to implement further reforms that would stimulate its economy, impetus for change may come from Central European countries. To that end, however, they have to coordinate their voting and become a more coherent voting group than they are now.
    Keywords: European Union, voting system, European Council, new member states
    JEL: J08 J51 K31
    Date: 2008–09
  6. By: Matthias Sutter
    Abstract: Charness et al. (2007b) have shown that group membership has a strong effect on individual decisions in strategic games when group membership is salient through payoff commonality. In this comment I show that their findings also apply to non-strategic decisions, even when no outgroup exists, and I relate the effects of group membership on individual decisions to joint decision making in teams. I find in an investment experiment that individual decisions with salient group membership are largely the same as team decisions. This finding bridges the literature on team decision making and on group membership effects.
    Keywords: Individual Behavior, Group Membership, Team Decision Making, Experiment
    JEL: C91 C92 D71
    Date: 2008–09
  7. By: Kimiko Terai (Hosei University)
    Abstract: We examine how international coordination between countries generates a trend to establish an international institution for the provision of global public goods. In the present model, the forces creating movement to international agreement are a politician's opportunistic motive for re-election, and his optimistic expectation of unanimous consent on agreement between countries. If a politician expects another politician in a neighboring country to signal his good performance to his citizens by participating in the agreement, he also decides to participate in the agreement, which then brings benefit spillovers to his country. Furthermore it is shown that, by dividing political authorities for coordination between the executive and politicians, observed over-compliance in the agreement by participating countries can be explained.
    Keywords: International environmental agreements; Global public goods; Re-election pressure; Division of authorities
    JEL: D72 D78 D82 H87 Q58
    Date: 2008–09
  8. By: Laurens Cherchye; Bram De Rock; Frederic Vermeulen
    Abstract: We provide a nonparametric ‘revealed preference’ characterization of rational household behavior in terms of the collective consumption model, while accounting for general (possibly non-convex) individual preferences. We establish a Collective Axiom of Revealed Preference (CARP), which provides a necessary and sufficient condition for data consistency with collective rationality. Our main result takes the form of a ‘collective’ version of the Afriat Theorem for rational behavior in terms of the unitary model. This theorem has some interesting implications. With only a finite set of observations, the nature of consumption externalities (positive or negative) in the intra-household allocation process is non-testable. The same non-testability conclusion holds for privateness (with or without externalities) or publicness of consumption. By contrast, concavity of individual utility functions (representing convex preferences) turns out to be testable. In addition, monotonicity is testable for the model that assumes all household consumption is public.
    Date: 2008–09
  9. By: Mwangi S. Kimenyi (University of Connecticut); Roxana Gutierrez Romero (University of Oxford)
    Abstract: Although many studies find that voting in Africa approximates an ethnic census in that voting is primarily along ethnic lines, hardly any of the studies have sought to explain ethnic voting following a rational choice framework. Using data of voter opinions from a survey conducted two weeks before the December 2007 Kenyan elections, we find that the expected benefits associated with a win by each of the presidential candidates varied significantly across voters from different ethnic groups. We hypothesize that decision to participate in the elections was influenced by the expected benefits as per the minimax-regret voting model. We test the predictions of this model using data of voter turnout in the December 2007 elections and find that turnout across ethnic groups varied systematically with expected benefits. The results suggest that individuals participated in the elections primarily to avoid the maximum regret should a candidate from another ethnic group win. The results therefore offer credence to the minimax regret model as proposed by Ferejohn and Fiorina (1974) and refute the Downsian expected utility model.
    Keywords: Economics of Voting, Voting Paradox, Minimax-regret, Ethnic Divisions
    JEL: D72
    Date: 2008–06
  10. By: Iconio Garrì (Università Cattolica)
    Abstract: We consider a political career concern model where politicians differ in their information on the states of the world in different periods and the outcome of a policy in different periods depends on the same state of the world. We show that a politician may continue to implement the past policy even when a policy change would be socially preferable (perverse policy persistence): changing his mind would indeed damage his reputation, and so reduce his probability of being reelected. Under the standard assumption that once ousted from office a politician cannot run again for election, the old politician is never reelected (incumbency disadvantage). However, when there is a positive probability that a politician who was ousted from office in the past will stand for reelection in the future, reputational concern may induce a new politician not to continue the policy introduced by another politician even when this is not socially desirable (perverse policy unpersistence): confirming a previous decision made by another politician would indeed improve the reputation of a potential rival in the next elections, and so reduce his probability of being reelected. When equilibrium exhibits policy persistence by the incumbent politician and policy unpersistence by the new politician, the voters' choice between the two politicians is actually a choice between changing or not changing the policy introduced in the previous period. Since politicians have policy expertise, voters believe that the initial policy is more likely to be the optimal one, and so they reelect the candidate who implemented it, i.e., the incumbent politician (incumbency advantage).
    Keywords: Policy persistence, policy unpersistence, reputation, incumbency advantage, incumbency disadvantage, bad reputation.
    JEL: D72 D82
    Date: 2008–09
  11. By: Mwangi S. Kimenyi (University of Connecticut); Roxana Gutierrez Romero (University of Oxford)
    Abstract: What might have caused the post-2007 election violence in Kenya? Was it election irregularities as widely claimed or could it have been simmering ethnic-rivalries waiting to spill over? While not directly focusing on the post-election violence, we investigate a number of issues that divided Kenyans in the 2007 Presidential election. Following a rational choice framework and using survey data of voter opinions, we find that Kenyan voters are strategic, seeking to maximize their well-being and influenced by a number of factors that go beyond their ethnicity such as their absolute and relative living standards, access to public goods and also grievances arising from perceptions of discrimination. The evidence suggests that Kenyan voting behavior is economically motivated, with retrospective interests, thus contrasting other studies that consider Kenyans to be wholly identity voters. The study also reveals significant heterogeneity depending on the voters' primary loci of identification-- either in terms of their ethnicity, occupation or nationalistic terms (Kenyans). The apparent ethnic divisions have resulted in a polarized society with consequential weakening of the institutional base for economic development. The study points to the necessity of institutional reforms that can better harmonize ethnic claims and avert conflicts in the future.
    Keywords: Election, Economics of Voting, Ethnic Divisions, Conflict
    JEL: D72 D74
    Date: 2008–09
  12. By: Nauro F. Campos; Francesco Giovannoni
    Abstract: Although the theoretical literature often uses lobbying and corruption synonymously, the empirical literature associates lobbying with the preferred mean for exerting influence in developed countries and corruption with the preferred one in developing countries. This paper challenges these views. Based on whether influence is sought with rule-makers or rule-enforcers, we develop a conceptual framework that highlights how political institutions are instrumental in defining the choice between bribing and lobbying. We test our predictions using survey data for about 6000 firms in 26 countries. Our results suggest that (a) lobbying and coruption are fundamentally different, (b) political institutions play a major role in explaining whether firms choose bribing or lobbying, (c) lobbying is more effective then corruption as an instrument of political influence, and (d) lobbying is more powerful than corruption as an explanatory factor for enterprise growth, even in poorer, often seen as highly corrupt, less developed countries.
    Date: 2008–09

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.