New Economics Papers
on Collective Decision-Making
Issue of 2008‒10‒13
ten papers chosen by

  1. International Environmental Agreement: a Dynamic Model of Emissions Reduction By Marta Biancardi; Andrea Di Liddo
  2. The political economy of public spending composition: evidence from a panel of OECD countries By Maria Manuel Pinho
  3. Voters’ dissatisfaction, abstention and entropy: analysis in European countries By Paulo Ferreira; Andreia Dionisio
  4. Individual behavior and group membership: Comment By Matthias Sutter
  5. A note on the U-shaped relationship between political competition and economic freedom By Antonio Saravia
  6. Ideology and Competence in Alternative Electoral Systems By Matias Iaryczower; Andrea Mattozzi
  7. Partial Prescriptions For Decisions With Partial Knowledge By Charles F. Manski
  8. Effects of social norms and fractionalization on voting behavior in Japan By yamamura, eiji
  9. The Farm, the City, and the Emergence of Social Security By Caucutt, Elizabeth M.; Cooley, Thomas F.; Guner, Nezih
  10. Strategic Voting in Sequential Committees By Matias Iaryczower

  1. By: Marta Biancardi; Andrea Di Liddo
    Abstract: We model an International Environmental Agreement as a two stages game: during the first stage each country decides whether or not to join the agreement while, in the second stage, the quantity of emissions reduction is choosen. Players determine their abatement levels in a dynamic setting, given the dynamics of pollution stock and the strategies of other countries. Players may act cooperatively, building coalitions and acting according to the interest of the coalition, or they make their choices taking care of their individual interest only. Countries can behave myopically or in a farsighted way. As a consequence, the size of stable coalition can completely change. A continuous time framework is choosen in the present paper and consequently the problem is studied by a differential game.
    Keywords: IEA, Differential games, Coalition stability.
    Date: 2008–09
  2. By: Maria Manuel Pinho (CEMPRE and Faculdade de Economia, Universidade do Porto)
    Abstract: We evaluate the influence of political and institutional features in public spending and its functional composition, by focussing on political actors’ preferences, both opportunistic and partisan, as well as on institutional arrangements as political fragmentation, the electoral system and the political regime. We use a dataset covering 23 OECD countries from 1970 to 2004. Empirical evidence supports the opportunistic approach in the sense that governments tend to engage in fiscal policy manipulation in order to win the next parliamentary election. This pre-electoral manipulation seems to be stronger in new democracies and under center and left-wing governments. There is, however, no evidence of pure partisan behavior. Furthermore, political fragmentation, with regard to both the government and the parliament, seems to favor fiscal indiscipline, particularly on social items.
    Keywords: public spending; functional composition; political economy
    JEL: D72 H5
    Date: 2008–10
  3. By: Paulo Ferreira (Universidade de Evora, CEFAGE-UE); Andreia Dionisio (Universidade de Evora, CEFAGE-UE)
    Abstract: This paper intends to explore the utilization of entropy through politics and election results, an area just slightly explored. It generalizes the interpretation of entropy, considering it a measure of dissatisfaction and disillusion of populations in relation to politics. Some phenomena like the increase of abstention in a country, consequence of the dissatisfaction of population and of their alienation in relation to politics could be detected and analysed. This discontentment could result, for example, in the appearance of new political parties, with more division of votes and increasing entropy (result of the discontentment and uncertainty by electors). Absolute majorities, while imply less dispersion of votes, are synonym of more confidence in a given party, making a reduction of entropy.
    Keywords: Entropy;Electoral Results; Satisfaction and Dissatisfaction of Population.
    JEL: C19 D72
    Date: 2008
  4. By: Matthias Sutter (Department of Public Finance, University of Innsbruck, and Department of Economics, University of Gothenburg.)
    Abstract: Charness et al. (2007) 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: 2008–10–07
  5. By: Antonio Saravia (American University of Sharjah, United Arab Emirates)
    Abstract: We investigate a recent political theory of institutional change according to which institutions of economic freedom are more likely to be adopted at the extreme cases of strong and weak political competition than at cases in between. We find that such a U-shaped relationship is verified when controlling for other political variables and past economic growth, but disappears when controlling for the initial level of development. In this case, the relationship between political competition and the adoption of institutions of economic freedom appears to be positive and linear as suggested by the political principal-agent paradigm.
    Keywords: Economic Freedom, Institutional Change, Political Competition, Political Institutions
    JEL: D72 H11 O57 P16
    Date: 2008–10
  6. By: Matias Iaryczower; Andrea Mattozzi
    Date: 2008–10–05
  7. By: Charles F. Manski
    Abstract: This paper concerns the prescriptive function of decision analysis. I suppose that an agent must choose an action yielding welfare that varies with the state of nature. The agent has a welfare function and beliefs, but he does not know the actual state of nature. It is often argued that such an agent should adhere to consistency axioms which imply that behavior can be represented as maximization of expected utility. However, our agent is not concerned the consistency of his behavior across hypothetical choice sets. He only wants to make a reasonable choice from the choice set that he actually faces. Hence, I reason that prescriptions for decision making should respect actuality. That is, they should promote welfare maximization in the choice problem the agent actually faces. I conclude that any decision rule respecting weak and stochastic dominance should be considered rational. Expected utility maximization respects dominance, but it has no special status from the actualist perspective. Moreover, the basic consistency axiom of transitivity has a clear normative foundation only when actions are ordered by dominance.
    JEL: D81
    Date: 2008–10
  8. By: yamamura, eiji
    Abstract: This paper uses prefecture-level panel data from Japan, spanning the period 1989–2003, to examine the influence of social norms and fractionalization on voting behavior. The key findings obtained from analysis via the fixed effects estimation, which controls for unobserved prefecture-specific fixed effects, are as follows: (1) the voter turnout is higher in close-knit communities, indicating that social norms enhance voting; (2) fractionalization, from both economic and generational standpoints, lowers the voter turnout; and (3) a lack of social capital can lead to the distribution of votes being spread thinly among the competing parties.
    Keywords: Voter turnout ・ Distribution of votes ・ Social norms ・ Fractionalization
    JEL: D70 D72 Z13
    Date: 2008–05–25
  9. By: Caucutt, Elizabeth M. (University of Western Ontario); Cooley, Thomas F. (New York University); Guner, Nezih (Universidad Carlos III, Madrid)
    Abstract: In this paper we study the social, demographic and economic origins of social security. The data for the U.S. and for a cross section of countries make it clear that urbanization and industrialization are strongly associated with the rise of social insurance. We describe a model economy in which demographics, technology, and social security are linked together. We study an economy with two locations (sectors), the farm (agricultural) and the city (industrial). The decision to migrate from rural to urban locations is endogenous and linked to productivity differences between the two locations and survival probabilities. Furthermore, the level of social security is determined by majority voting. We show that a calibrated version of this economy is consistent with the historical transformation in the United States. Initially a majority of voters live on the farm and do not want to implement social security. Once a majority of the voters move to the city, the median voter prefers a positive social security tax. In the model social security emerges and is sustained over time as a political and economic equilibrium. Modeling the political economy of social security within a model of structural change leads to a rich economic environment in which the median voter is identified by both age and location.
    Keywords: social security, political economy, structural change, migration
    JEL: H55 H3 D72
    Date: 2008–09
  10. By: Matias Iaryczower
    Date: 2008–10–05

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