New Economics Papers
on Collective Decision-Making
Issue of 2008‒11‒04
eleven papers chosen by

  1. Coral Games and the Core of Cores By James Bono
  2. Power distribution and endogenous segregation By Catherine Bros
  3. An alternative approach of valence advantage in spatial competition By Guillaume Hollard; Stéphane Rossignol
  4. The optimal prize structure of symmetric Tullock contests By Paul Schweinzer; Ella Segev
  5. The Democratic Transition. A study of the causality between income and the Gastil democracy index By Martin Paldam; Erich Gundlach
  6. Income and Democracy. A Comment on Acemoglu, Johnson, Robinson, and Yared (2008) By Erich Gundlach; Martin Paldam
  7. Centrist's Curse? An Electoral Competition Model with Credibility Constraints By Selim Ergun
  8. Tax Salience, Voting, and Deliberation By Rupert Sausgruber; Jean-Robert Tyran
  9. The Road to Power: Partisan Loyalty and the Centralized Provision of Local Infrastructure By Marcelin Joanis
  10. Representation and aggregation of preferences under uncertainty By Thibault Gajdos; Jean-Marc Tallon; Jean-Christophe Vergnaud
  11. From Plurality Rule to Proportional Representation By Selim Ergun

  1. By: James Bono
    Abstract: Casual observation reveals that groups of people interact on many levels simultane- ously. Examples include political party formation and interaction; the interaction of ¯rms in research consortia; and labor union and confederation formation. In this paper, a model of hierarchical group structures is developed. The model generalizes the existing coalitional theory in several ways and reveals a new connection between characteristic and partition function theories; that they are both valuable components of an overall theory. The stability concept that emerges is called the core of cores. Several results are presented, including necessary and su±cient conditions for the existence of the core of cores and a theorem that demonstrates the relationship between the cores of each level of the organizational structure and the core of cores. The results establish that stability can arise from any combination of stable and unstable components, and suggest a re-thinking of existing coalitional models, taking into account the e®ect of \nearby" games. The framework developed here has immediate applications to various topics in political econ- omy and industrial organization, such as representative voting and corporate mergers.
    Keywords: The Core, Complexity in Game Theory, Hierarchies of Groups
    JEL: C62 C71 C79 D72
    Date: 2008–09
  2. By: Catherine Bros (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: The aim of this paper is to provide a detailed analysis of the process of segregation formation. The claim is that segregation does not originate from prejudice or exogenous psychological factors. Rather it is the product of strategic interactions among social groups in a setting where one group has captured power. While using a model featuring random matching and repeated games, it is shown that whenever one group seizes power, members of other groups will perceive additional value in forging long term relationships with the mighty. They will systematically cooperate with the latter either because it is in their interest to do so or because they do not have other choice. The mighty natural response to this yearning to cooperate is to refuse intergroup relationships. The dominated group will best reply to this new situation by in turn rejecting the relationships and a segregation equilibrium emerges. Segregation stems from the systematic cooperation by one group with another. However, not all societies that have experienced power captures converge towards segregation. It is shown that the proportion of individuals that are actually powerful within the mighty group determines convergence towards segregation.
    Keywords: Segration, discrimination, power, caste, repeated games, prisoner's dilemma, clubs, status, social organizations.
    Date: 2008–01
  3. By: Guillaume Hollard (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Stéphane Rossignol (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper explores a two-candidate spatial voting model, where one candidate has a valence advantage. Contrary to previous models, we introduce a multiplicative advantage, rather than an additive one. This takes into account the possible interaction between the quality of a candidate and his policy platform. This leads to a strikingly different model, in which all extreme voters support the favored candidate.
    Keywords: Spatial voting, Valence advantage
    Date: 2008–06
  4. By: Paul Schweinzer; Ella Segev (Department of Economics, University of Bonn, Lennéstraße 37, 53113 Bonn, Germany; Department of IE&M Ben Gurion University of the Negev, 1 Ben-Gurion Blvd, Beer Sheva, 84105, Israel)
    Abstract: We show that the optimal prize structure of symmetric n-player Tullock tournaments assigns the entire prize pool to the winner, provided that a symmetric pure strategy equilibrium exists. If such an equilibrium fails to exist under the winner-take-all structure, we construct the optimal prize structure which improves existence conditions by dampening efforts. If no such optimal equilibrium exists, no symmetric pure strategy equilibrium induces positive efforts.
    Keywords: Tournaments, Incentive structures, Rent seeking
    JEL: C7 D72 J31
    Date: 2008–10
  5. By: Martin Paldam; Erich Gundlach
    Abstract: The paper considers the transformation of the political system as countries pass through the Grand Transition from a poor developing country to a wealthy developed country. In the process most countries change from an authoritarian to a democratic political system. This is shown by using the Gastil democracy index from Freedom House. First, the basic pattern of correlations reveals that a good deal of the short- to medium-run causality appears to be from democracy to income. Then a set of extreme biogeographic instruments is used to demon¬strate that the long-run causality is from income to democracy. The long-run result survives various robustness tests. We show how the Grand Transition view resolves the seeming contradiction between the long-run and the short- to medium-run effects
    Keywords: Paths of development, democracy, biogeography
    JEL: B25 O10
    Date: 2008–10
  6. By: Erich Gundlach; Martin Paldam
    Abstract: Acemoglu, Johnson, Robinson, and Yared (2008) demonstrate that estimation of the standard adjustment model with country-fixed and time-fixed effects removes the statistical significance of income as a causal factor of democracy. We argue that their empirical approach must produce insignificant income effects and that a small change in the estimation process immediately reveals the strong effect of income on democracy
    Keywords: Democracy, Modernization hypothesis, fixed-effects estimation
    JEL: D72 O43
    Date: 2008–10
  7. By: Selim Ergun (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: I analyze a model of electoral competition in which a candidate?s reputation and his need of cred- ibility restricts his policy choice to a certain subset of the policy space, its ideology set. Candidates are o¢ ce-motivated. They care about winning and also about the share of votes they get. I consider both two and three party systems. I describe the equilibrium outcomes assuming that plurality rule applies, and obtain for two party competition, in some cases, equilibrium outcomes di¤erent than what the median voter theorem suggests because of the restrictions on the ideology sets implied by the credibility constraints. I show that centrist parties are disadvantaged compared to leftist and rightist ones, since, in equilibrium, leftist and rightist parties choose policy points that are as close as possible to each other and obtain votes from the centrist parties?ideology set. A centrist candidate needs a higher concentration of voters in his credibility set compared to his opponents in order to have a chance to win. I also analyze a run-off system for three parties and show that centrist parties have more opportunities to win under this rule than under plurality rule.
    Keywords: Electoral competition, plurality, run-off, credibility, spatial models.
    JEL: D72
    Date: 2008–10–23
  8. By: Rupert Sausgruber (University of Innsbruck); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: Tax incentives can be more or less salient, i.e. noticeable or cognitively easy to process. Our hypothesis is that taxes on consumers are more salient to consumers than equivalent taxes on sellers because consumers underestimate the extent of tax shifting in the market. We show that tax salience biases consumers’ voting on tax regimes, and that experience is an effective de-biasing mechanism in the experimental laboratory. Pre-vote deliberation makes initially held opinions more extreme rather than correct and does not eliminate the bias in the typical committee. Yet, if voters can discuss their experience with the tax regimes they are less likely to be biased.
    Keywords: tax salience; learning; deliberation; voting
    JEL: C92 H22 D72
    Date: 2008–10
  9. By: Marcelin Joanis (Université de Sherbrooke, GREDI and CIRANO)
    Abstract: Because they yield durable and visible benefits to voters, public infrastructure expenditures are an attractive instrument for politicians to build enduring electoral support in their constituencies. Static models of special-interest politics typically predict that public spending should be targeted at swing voters, at the expense of voters who display strong partisan loyalty. Yet static theories are not well-suited to capture the implications of long-run relationships between political parties and their loyal supporters. To address this limitation, I set out a simple dynamic probabilistic voting model in which a government allocates a fixed budget across electoral districts that differ in their loyalty to the ruling party. The model predicts that the contemporaneous geographic pattern of spending depends on the way the government balances long-run ‘machine politics’ considerations with the more immediate concern to win over swing voters. To assess the empirical relevance of both forces, I analyze rich data on road spending from a panel of electoral districts in Québec. Empirical results exploiting the province’s linguistic fragmentation provide robust evidence that partisan loyalty is a key driver of the geographic allocation of spending, in contrast with the standard ‘swing voter’ view.
    Keywords: partisan loyalty, swing voters, political competition, local public goods, distributive politics, long-run relationships
    Date: 2008
  10. By: Thibault Gajdos (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Jean-Marc Tallon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Jean-Christophe Vergnaud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: We axiomatize in the Anscombe–Aumann setting a wide class of preferences called rank-dependent additive preferences that includes most known models of decision under uncertainty as well as state dependent versions of these models. We prove that aggregation is possible and necessarily linear if and only if (society's) preferences are uncertainty neutral. The latter means that society cannot have a non-neutral attitude toward uncertainty on a subclass of acts. A corollary to our theorem is that it is not possible to aggregate multiple prior agents, even when they all have the same set of priors. A number of ways to restore the possibility of aggregation are then discussed.
    Keywords: Aggregation; Uncertainty
    Date: 2008
  11. By: Selim Ergun (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: I consider the decision of a parliament that might change the electoral system for the forthcoming elections from plurality rule to proportional representation. Parties are o¢ ce-motivated. They care about winning and about the share of seats obtained. I consider two di¤erent scenarios of how parties in the government share the spoils of o¢ ce: Equally or proportionally to their share of seats. If the government is formed by a single party and parties expect that each party will obtain the same share of votes in the next election the electoral rule will never be changed. That is, for a change to occur the government should be formed by a coalition. I ?nd that a change is more likely to occur when the number of parties is larger and also when the spoils of o¢ ce are shared equally among the members in the governing coalition. I extend these results to analyze the decision of a change from a less proportional rule to a more proportional one.
    Keywords: Electoral systems, Plurality, Proportional Representation, Coalitions.
    JEL: D72 H10
    Date: 2008–10–23

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