New Economics Papers
on Collective Decision-Making
Issue of 2008‒11‒25
eighteen papers chosen by

  1. Politicians: Be Killed or Survive By Bruno S. Frey; Benno Torgler
  2. General solutions for choice sets: The Generalized Optimal-Choice Axiom set By Andrikopoulos, Athanasios; Zacharias, Eleftherios
  3. Micro evidence on inter-party vote movements in turkey: Who voted for AKP in 2002? By Baslevent, Cem; Akarca, Ali T.
  4. Gender Gaps in Policy Making: Evidence from Direct Democracy in Switzerland By Patricia Funk; Christina Gathmann
  5. Rent Seeking and the Common Agricultural Policy: Do member countries free ride on lobbying? By Furtan, W.H.; Jensen, M.S.; Sauer, J.
  6. Does partisan alignment affect the electoral reward of intergovernmental transfers? By Albert Sole-Olle; Pilar Sorribas-Navarro
  7. Demographics, ideology and voting behaviour:A factor analysis of state-wide ballot measures By Russell Hillberry
  8. Ideology, Competence and Luck: What determines general election results? By John Maloney; Andrew Pickering
  9. Strategic Voting in Multiparty Systems: A Group Experiment By Meffert, Michael F.; Gschwend, Thomas
  10. Good Policy Choices Even When Voters Entertain Biased Beliefs: A Model with Endogenous Valence By Ivo Bischoff; Lars Siemers
  11. DRG prospective payment system: refine or not refine? By Nattavudh Powdthavee; Paul Dolan, Robert Metcalfe
  12. Natural Resources, Democracy and Corruption By Sambit Bhattacharyya; Roland Hodler
  13. Power, hierarchy and social preferences By Bosco, Luigi
  14. Consitutional Rules and Agricultural Policy Outcomes By Olper, Alessandro; Raimondi, Valentina
  16. Term Length and Political Performance By Ernesto Dal Bó; Martín Rossi
  17. Political Institutions, Voter Turnout and Policy Outcomes By Eileen Fumagalli and Gaia Narciso
  18. Determinants of Agricultural Protection in an International Perspective: The Role of Political Institutions By Henning, Christian

  1. By: Bruno S. Frey; Benno Torgler
    Abstract: In the course of history, a large number of politicians have been assassinated. Rational choice hypotheses are developed and tested using panel data covering more than 100 countries over a period of 20 years. Several strategies, in addition to security measures, are shown to significantly reduce the probability of politicians being attacked or killed: extended institutional and governance quality, democracy, voice and accountability, a well functioning system of law and order, decentralization via the division of power and federalism, larger cabinet size and strengthened civil society. There is also support for a contagion effect.
    Keywords: Assassinations; rational choice; governance; democracy; dictatorship; deterrence; protection
    JEL: D01 D70 K14 K42 Z10
    Date: 2008–10
  2. By: Andrikopoulos, Athanasios; Zacharias, Eleftherios
    Abstract: In this paper we characterize the existence of best choices of arbitrary binary relations over non finite sets of alternatives, according to the Generalized Optimal-Choice Axiom condition introduced by Schwartz. We focus not just in the best choices of a single set X, but rather in the best choices of all the members of a family K of subsets of X. Finally we generalize earlier known results concerning the existence (or the characterization) of maximal elements of binary relations on compact subsets of a given space of alternatives.
    Keywords: Generalized Optimal-Choice Axiom; maximal elements; acyclicity; consistency; ≻-upper compactness.
    JEL: D11
    Date: 2008
  3. By: Baslevent, Cem; Akarca, Ali T.
    Abstract: Using data drawn from a survey conducted shortly after the 2002 elections, we investigate the Justice and Development Party’s (AKP) election victory from the perspective of inter-party vote movements. Our aim is not only to identify the parties from which the AKP votes originated, but also the segments of these parties' voter bases the party appealed to in particular. Descriptive statistics suggest that almost all of the voters who had voted for the pro-Islamist party in 1999, about half of those who supported the center-right and the ultra-nationalist parties, and one-fifth to two fifth of the supporters of the center-left parties were captured by the AKP. Given that the actual vote share of the party was 34.3 percent, we interpret these figures as evidence of further voter realignment after the election. Our econometric work reveals that confidence in the economic performance of the party was a leading factor in the election outcome. For the voters attracted from the left-of-center parties, ideological factors also played an important role, whereas in the case of voters transferred from the far-right pro-Islamist and ultra-nationalist parties, it was the demographic factors. For the voters coming from the center-right, both sets of variables were important.
    Keywords: Turkey; elections; party choice; voter behavior; logit estimation
    JEL: D7 D72
    Date: 2008–11–20
  4. By: Patricia Funk; Christina Gathmann
    Abstract: In spite of increasing representation of women in politics, little is known about their impact on policies. Comparing outcomes of parliaments with different shares of female members does not identify their causal impact because of possible differences in the underlying electorate. This paper uses a unique data set on voting decisions to sheds new light on gender gaps in policy making. Our analysis focuses on Switzerland, where all citizens can directly decide on a broad range of policies in referendums and initiatives. We show that there are large gender gaps in the areas of health, environmental protection, defense spending and welfare policy which typically persist even conditional on socio-economic characteristics. We also find that female policy makers have a substantial effect on the composition of public spending, but a small effect on the overall size of government.
    Keywords: Female Policy Makers, Political Gender Gaps, Switzerland
    JEL: H10 J16
    Date: 2008–11
  5. By: Furtan, W.H.; Jensen, M.S.; Sauer, J.
    Abstract: The Common Agricultural Policy is modelled as a club good providing the European Union (EU) farmer with financial benefits. We build an economic model which explains how much farmers in individual EU countries invest in rent-seeking activities in order to test for free-riding behaviour on lobbying costs. For our investigation we group the EU member countries by farm structure, and the type of benefit received. We explain the fees paid by farmers for lobbying by other countries fees, political variables, and country and regional agricultural characteristics. The model shows that some member countries free ride on others. This suggests a form of policy path dependency and leads to a suboptimal investment on lobbying of 7.5%.
    Keywords: free-riding, rent-seeking, Common Agricultural Policy, Agricultural and Food Policy, International Relations/Trade, Political Economy, D72, Q18,
    Date: 2008
  6. By: Albert Sole-Olle; Pilar Sorribas-Navarro (Universitat de Barcelona)
    Abstract: In this paper we test the hypothesis that intergovernmental grants allocated to co-partisans buy more political support than grants allocated to local governments controlled by opposition parties. We use a rich Spanish database containing information about the grants received by 617 municipalities during the period 1993-2003 from two different upper-tier governments (Regional and Upper-local), as well as data of municipal voting behaviour at three electoral contests held at the different layers of government during this period. Therefore, we are able to estimate two different vote equations, analysing the effects of grants given to aligned and unaligned municipalities on the vote share of the incumbent party/parties at the regional and local elections. We account for the endogeneity of grants by instrumenting them with the average amount of grants distributed by upper-layer governments. The results suggest that grants given to co-partisans buy some political support, but that grants given to the opposition do not bring any votes, suggesting that the grantee reaps as much political credit from intergovernmental grants as the grantor.
    Keywords: grants, voting, parties
    JEL: D72 C72
    Date: 2008
  7. By: Russell Hillberry
    Abstract: Formal dimension-reduction techniques are frequently used to interpret data on legislative voting behavior. This study applies one such technique to countylevel election returns on 11 ballot measures in South Dakota’s 2006 general election. The measures on the 2006 ballot proposed substantial legal and policy changes, and spanned a broad area of the policy space. This and South Dakota’s high voter turnout levels makes it especially well-suited for the purpose of analyzing links between election returns and demographic and economic data. The factor analysis suggests a puritan-libertarian spectrum as the best 1-dimensional characterization of political divisions within the state. A county’s location on this spectrum is most strongly associated with measures of its population age and per capita income. Factor scores are very good predictors of support for the reelection of the incumbent Governor
    JEL: D72 Y80
    Date: 2007
  8. By: John Maloney; Andrew Pickering
    Abstract: This paper investigates the impact of luck, defined as global economic growth, and competence, defined as the difference between domestic and world growth, on voting in general elections since 1960. The vote of incumbent parties of the right is found to be sensitive to luck, whereas that of incumbent parties of the left is not. This is consistent with the Clientele Hypothesis given electorates which fail to perfectly distinguish luck from competence. Economic competence plays a strong role in determining the vote, especially in high-income democracies. The electoral reward to competence is essentially equal across parties of either ideology, contra to the Saliency Hypothesis. The data are also supportive of the Territory Hypothesis, namely that greater ideological territory increases a party's relative vote share.
    Keywords: voting, ideology, luck, competence
    JEL: D72
    Date: 2008–11
  9. By: Meffert, Michael F. (Sonderforschungsbereich 504); Gschwend, Thomas (Sonderforschungsbereich 504)
    Abstract: The paper tests the theory of strategic voting for multiparty systems with proportional representation and coalition governments at the micro-level. The study focuses in particular on the question whether participation in repeated elections allows voters to learn from experience and enables them to optimize their decision behavior. An economic group experiment with decision scenarios of varying degrees of difficulty was used to test decision making at both the individual and group level. The results suggest that a majority of voters were able to pursue successful decision strategies and that the difficulty of the decision scenarios affected the voting performance of the participants as expected. However, a learning effect is not supported by the data.
    Date: 2008–07–17
  10. By: Ivo Bischoff (Justus-Liebig-University Gießen, Department of Economics); Lars Siemers (RWI Essen – Institute for Economic Research, Department of Public Finance)
    Abstract: In “The Myth of the Rational Voter” Brian Caplan shows that voters entertain systematically biased beliefs on a number of essential issues of economic policy and concludes that this leads democracies to choose bad policies. We introduce the psychological concept of mental models to address voters’ naive reasoning about the economy and thereby explain the persistent bias in beliefs. Next, we develop a game-theoretical model to show that this does not automatically lead to bad policy choices. The model formalizes Caplan’s thought experiment No. 4 by introducing endogenous party valence to a model of probabilistic voting. In so doing, we provide an investigation of when good policies are chosen in democracy. Based on our findings, we discuss the impact of different political institutions on economic outcomes.
    Keywords: Voting behaviour, dynamic party competition, valence, VP-functions, biased voting
    JEL: D72 D78 D83 D90 P16
    Date: 2008
  11. By: Nattavudh Powdthavee; Paul Dolan, Robert Metcalfe
    Abstract: What causes us to vote and what do we get out of it? We approach these questions using data on voting and subjective well-being (SWB) from a large household panel dataset in the UK. We find some evidence that SWB can affect voting intention but no evidence that the results of three recent elections have any effect on SWB.
    Keywords: Voting, life satisfaction, subjective wellbeing
    JEL: D7
    Date: 2008–10
  12. By: Sambit Bhattacharyya; Roland Hodler
    Abstract: We study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions. Our game-theoretic model predicts that natural resources lead to an increase in corruption if the quality of the democratic institutions is relatively poor, but not otherwise. We use panel data covering the period 1980 to 2004 and 99 countries to test this theoretical prediction. Our estimates confirm that the relationship between resource abundance and corruption depends on the quality of the democratic institutions. In particular, resource abundance is positively associated with corruption only in countries that have endured a nondemocratic regime for more than 60 percent of the years since 1956. Our main results hold when we control for the effects of income, time varying common shocks, regional fixed effects and various additional covariates. They are also robust to various alternative measures of natural resources, corruption and the quality of the democratic institutions. These findings imply that democratization can be a powerful tool to reduce corruption in resource-rich countries.
    Keywords: Natural resources; democracy; political institutions; corruption
    JEL: D7 O1
    Date: 2008
  13. By: Bosco, Luigi
    Abstract: I ran an experiment in order to evaluate the relationship, if any, between power, or the search for power, and the degree of altruism. In particular I experimentally tested whether an organization structured in a strictly hierarchical way was able to reduce the degree of altruism of a group of experimental subjects. The subjects were divided into groups and played a series of dictator and ultimatum games with the members of other groups; for each experimental euro that they earned, the experimenter assigned half of it to the group. Two different settings were analyzed according to how this group surplus was distributed among group members. In the control setting (treatment A) the group surplus was distributed equally among group members, while in the power setting (treatment B) there was a ranking of the earnings in the group, and the subject who earned the higher sum was given the power to decide the distribution scheme of the group different from her own. It was found that the introduction of a hierarchical structure generated a significant decrease in the rate of altruism, measured in terms of the allocation given to the receiver in the dictator game. In this case the tournament among group members for leadership and the competition for power was a very strong means to induce behaviour more in line with the classical assumption of economics. A remarkable gender effect emerges, suggesting that women seem less attracted and trapped by competition for power.
    Keywords: Altruism; Dictator game; Ultimatum game; Hierarchy
    JEL: C92 D64 C91
    Date: 2008–09
  14. By: Olper, Alessandro; Raimondi, Valentina
    Abstract: The analysis deals with the effect of constitutional rules on agricultural policy outcomes in a panel of 74 developing and developed countries, observed in the 1955-2005 period. Testable hypotheses are drawn from recent develop in comparative politics that see political institutions as key elements in shaping public policies. We focus the attention on the effect of both broad political reforms €Ӡreforms in (and out of) democracy €Ӡand on narrow details of democracy, such as electoral rules and forms of government. Using differences-in-differences estimation we find a positive effect of a transition into democracy on agricultural protection. However, the average effect masks substantial heterogeneities across different forms of democracy. Transitions into parliamentary and, especially, proportional democracy €Ӡas opposed to presidential and majoritarian €Ӡappear to produce the most increase in agricultural protection and support.
    Keywords: Constitutional Rules, Agricultural Protection, Differences-in-differences estimation, Agricultural and Food Policy,
    Date: 2008
  15. By: Caruso, Raul
    Abstract: This short paper aims to find an empirical evidence that al Qaeda behaves as a contest organizer rewarding an indivisible prize – namely, official membership and economic rewards – to candidate extremists groups. Would-be terrorists must then compete with each other to prove their commitment and ability. Hence to maximize their own probability of winning the prize, each group (maximizes its effort) tries to make attacks at least equally destructive as the foregoing attacks. The testable implication is that: the number of victims must depend upon the number of victims of past attacks. Resulting evidence confirms the hypothesis. At the same time, results show that al Qaeda-style terrorist activity depends also upon grievance for poverty and socio-economic conditions.
    Keywords: Terrorism; al Qaeda; Contest Theory; Tournament; Information.
    JEL: H40 D74 D72 D80
    Date: 2008–11
  16. By: Ernesto Dal Bó; Martín Rossi
    Abstract: We evaluate the effects of the duration of legislative terms on the performance of legislators. We exploit a natural experiment in the Argentine House of Representatives where term lengths were assigned randomly. Results for various objective measures of legislative output show that longer terms enhance legislative performance. We use a second experiment in the Argentine Senate to determine whether our results are specific to a particular chamber and a particular time. The results from the Senate reinforce the idea that longer terms enhance legislative productivity. Our results highlight limits to classic theories of electoral discipline (Barro 1973, Ferejohn 1986) predicting that shorter terms, by tightening accountability, will incentivize hard work by politicians. We discuss and test possible explanations. Our results suggest that the "accountability logic" is overcome by an "investment logic."
    JEL: H1
    Date: 2008–11
  17. By: Eileen Fumagalli and Gaia Narciso
    Abstract: We question whether the impact of constitutions on economic outcomes (Persson and Tabellini, 2004) is direct. We show that voter turnout is a channel through which forms of government affect economic policies. We provide evidence of the existence of two relationships: the first links constitutions to voter turnout; the second connects voter turnout to policy outcomes. Presidential regimes are found to induce less voter participation in national elections. We then analyze the impact of constitutional variables and voter participation in shaping fiscal policies. Forms of governments lose their explanatory power once participation is accounted for. Higher participation induces an increase in government expenditure, total revenues and welfare state spending. We conclude that forms of government affect policy outcomes through electoral participation.
    Date: 2008–11–14
  18. By: Henning, Christian
    Abstract: Abstract€Ԕhis paper studies the role of political institutions in determining the political success of agriculture in avoiding taxation or attracting government transfers in developing and industrialized countries, respectively. The model is based on a probabilistic voting environment, where in industrialized countries rural districts are less ideologically committed than urban districts, while in developing countries urban districts are less ideologically committed than rural districts. As a consequence, in industrialized (developing) countries rural (urban) districts are pivotal in determining the coalition that obtains a majority, whereas urban (rural) districts are pivotal within the majority itself. In bargaining at the legislature, this generates a conflict between the government, who will tend to favor rural (urban) districts, and its parliamentary majority, that will be dominated by urban (rural) concerns. As district size grows and the electoral system converges to a pure proportional system, both of these biases are attenuated. Overall, an opposite nonlinear relationship between district size and agricultural subsidies on the one hand and district size and taxation on the other hand follows, i.e. in developing countries taxation of agriculture first increases and then decreases with district magnitude, while in industrialized countries agricultural subsidization first increases and then decreases with district magnitude. Moreover, the impact of district magnitude on the level of agricultural subsidization is attenuated in presidential when compared to parliamentary systems, while the level of agricultural taxation is amplified in presidential systems. Empirical results from cross-country analysis including 37 countries over 20 years mainly support our theory.
    Keywords: Political Institutions, Agricultural Protection, Probabilistic Voting Model, International Relations/Trade,
    Date: 2008

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