New Economics Papers
on Collective Decision-Making
Issue of 2008‒12‒07
eight papers chosen by

  1. Voting experiments: Bandwagon voting or false-consensus effect? By Ivo Bischoff; Henrik Egbert
  2. Storable Votes and Agenda Order Control Theories and Experiments By Alessandra Casella
  3. Social choice on complex objects: A geometric approach By Luigi Marengo; Simona Settepanella
  4. Acyclicity of improvements in finite game forms By Kukushkin, Nikolai S.
  5. The Right of Withdrawal in the Treaty of Lisbon: A game theoretic reflection on different decision processes in the EU By Susanne Lechner; Renate Ohr
  6. Spurious Consensus and Opinion Revision: Why Might People Be More Confident in Their Less Accurate Judgments? By Ilan Yaniv; Shoham Choshen-Hillel; Maxim Milyavsky
  7. The Value of Information in Public Decisions By Arvind Magesan; Matthew A. Turner
  8. Intergovernmental Grants and Bureaucratic Power By Dahlberg, Matz; Lundqvist, Heléne; Mörk, Eva

  1. By: Ivo Bischoff (Justus-Liebig-University Gießen, Department of Economics); Henrik Egbert (Justus-Liebig-University Gießen, Department of Economics)
    Abstract: In an experiment designed to test for expressive voting, Tyran (JPubEc 2004) found a strong positive correlation between the participants’ approval for a proposal to donate money for charity and their expected approval rate for fellow voters. This phenomenon can be due to bandwagon voting or a false consensus effect. The social science literature reports both effects for voting decisions. Replicating Tyran’s experiment and adding new treatments, we provide evidence for a false consensus effect but find no support for bandwagon voting.
    Keywords: voting, experiments, bandwagon voting, false consensus effect
    JEL: C90 D72
    Date: 2008
  2. By: Alessandra Casella (Columbia University - Department of Economics)
    Abstract: The paper studies a voting scheme where members of a committee voting sequentially on a known series of binary proposals are each granted a single extra bonus vote to cast as desired - a streamlined version of Storable Votes. When the order of the agenda is exogenous, a simple sufficient condition guarantees the existence of welfare gains, relative to simple majority voting. But if one of the voters controls the order of the agenda, does the scheme become less efficient? The endogeneity of the agenda gives rise to a cheap talk game, where the chair can use the order of proposals to transmit information about his priorities. The game has multiple equilibria, differing systematically in the precision of the information transmitted. The chair can indeed benefit, but the aggregate welfare e¡èects are of ambiguous sign and very small in all parameterizations studied. The theoretical conclusions are tested through laboratory experiments. Subjects have difficulty identifying the informative strategies, and tend to cast the bonus vote on their highest intensity proposal. As a result, realized payoffs are effectively identical to what they would be if the agenda were exogenous. The bonus vote matters; the chair's control of the agenda does not.
    Date: 2008
  3. By: Luigi Marengo; Simona Settepanella
    Abstract: Marengo and Pasquali (2008) present a model of object construction in majority voting and show that, in general, by appropriate changes of such bundles, different social outcomes may be obtained. In this paper we extend and generalize this approach by providing a geometric model of individual preferences and social aggregation based on hyperplanes and their arrangements. As an application of this model we give a necessary condition for existence of a local social optimum. Moreover we address the question if a social decision rule depends also upon the number of voting agents. More precisely: are there social decision rules that can be obtained by an odd (even) number of voting agent which cannot be obtained by only three (two) voting agent? The answer is negative. Indeed three (or two) voting agent can produce all possible social decision rules.
    Keywords: Social choice; object construction power; agenda power; intransitive cycles; arrangements; graph theory.
    JEL: D71 D72
  4. By: Kukushkin, Nikolai S.
    Abstract: Game forms are studied where the acyclicity, in a stronger or weaker sense, of (coalition or individual) improvements is ensured in all derivative games. In every game form generated by an ``ordered voting'' procedure, individual improvements converge to Nash equilibria if the players restrict themselves to ``minimal'' strategy changes. A complete description of game forms where all coalition improvement paths lead to strong equilibria is obtained: they are either dictatorial, or voting (or rather lobbing) about two outcomes. The restriction to minimal strategy changes ensures the convergence of coalition improvements to strong equilibria in every game form generated by a ``voting by veto'' procedure.
    Keywords: Improvement dynamics; Game form; Perfect information game; Potential game; Voting by veto
    JEL: C72
    Date: 2008–11–27
  5. By: Susanne Lechner; Renate Ohr
    Abstract: The ways of decision making within the EU have significantly changed in the last decades: the rule of unanimity has been more and more substituted by majority voting in order to speed up decision-making processes in a Union of 27 heterogeneous member states. A third possibility is now offered by the Lisbon Treaty including a constitutional right of withdrawal: A member state encountering a loss in its benefits caused by a decision made by majority voting may now demand compensating transfers by using the right of withdrawal: It might threaten to leave the EU if the compensation is denied. Are member states becoming as powerful as they are under the rule of unanimity because they use the right of withdrawal as a threat point? Using a game theoretic approach we show that normally compensating transfers will be lower under majority decisions with exit option compared to decisions requiring unanimity; under certain conditions however transfers could also be as high as in the case of unanimity. In practise, the EU will offer compensating transfers depending on how credible a member state threatens to leave the Union. By using cheap talk a member state may increase the credibility of its outside option and therefore receive higher transfers.
    Keywords: European Integration, Game Theory, Secession
    JEL: C D
    Date: 2008–10–20
  6. By: Ilan Yaniv; Shoham Choshen-Hillel; Maxim Milyavsky
    Abstract: In the interest of improving their decision-making, individuals revise their opinions on the basis of samples of opinions obtained from others. However, such a revision process may lead decision-makers to experience greater confidence in their less accurate judgments. We theorize that people tend to underestimate the informative value of independently drawn opinions, if these appear to conflict with one another, yet place some confidence even in the "spurious consensus" which may arise when opinions are sampled interdependently. The experimental task involved people’s revision of their opinions (caloric estimates of foods) on the basis of advice. The method of sampling the advisory opinions (independent or interdependent) was the main factor. The results reveal a dissociation between confidence and accuracy. A theoretical underlying mechanism is suggested whereby people attend to consensus (consistency) cues at the expense of information on interdependence. Implications for belief-updating and for individual and group decisions are discussed.
    Date: 2008–11
  7. By: Arvind Magesan; Matthew A. Turner
    Abstract: This paper considers the problem of an imperfectly informed regulator constrained in his choice of environmental regulation by the political opposition of those affected by the policy. We compare the value of two types of information to the regulator: the social cost of pollution and the profitability of firms present in the economy. We find that in environments where small increases in the losses to regulated firms greatly affect the regulator's ability to implement the policy, it is most valuable to learn the types of firms, while it is most valuable to learn the social cost of pollution when small increases in losses are relatively ineffectual.
    Keywords: Environmental Policy, Pollution, Optimal Taxation
    JEL: H23 Q52 D81
    Date: 2008–12–03
  8. By: Dahlberg, Matz (Department of Economics); Lundqvist, Heléne (Department of Economics); Mörk, Eva (IFAU)
    Abstract: In their role as agenda setters and implementers of political decisions, bureaucrats potentially have the power to influence decisions in their own favor. It is however difficult to empirically test whether bureaucrats actually are involved in such actions. In this paper we suggest and apply a new way of testing the hypothesis that bureaucrats can and do in fact affect policy to their own benefit. Making use of a discontinuity in the Swedish grant system, we estimate causal effects of intergovernmental grants on different types of personnel employed by the local governments. On the margin, we find a large, positive effect of grants on the number of bureaucrats in the central administration, but no effects on the number of personnel in other important sectors run by the local government (child care, schools and elderly care). These results support the view that bureaucrats are able to, and do indeed, affect the allocation of grants within municipalities to support own goals.
    Keywords: Fiscal federalism; grants; bureaucrats; rent seeking; discontinuity analysis
    JEL: C33 H11 H70 H83 J45
    Date: 2008–10–20

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