New Economics Papers
on Collective Decision-Making
Issue of 2008‒12‒14
twelve papers chosen by

  1. Democratization as a cost-saving device By Luis Angeles
  2. What do majority-voting politics say about redistributive taxation of consumption and factor income? Not much. By Jim Dolmas
  3. Conditional Corruption By Bin Dong; Uwe Dulleck; Benno Torgler
  4. The Constitutionalisation of a Compound Democracy: Comparing the European Union with the American Experience By Sergio Fabbrini
  5. Rebate Rules in Threshold Public Good Provision By Michael A. Spencer; Stephen K. Swallow; Jason F. Shogren; John A. List
  6. Bayesian Group Belief By Dietrich Franz
  7. Axiomatizations of a Positional Power Score and Measure for Hierarchies By René van den Brink; Frank Steffen
  8. The aggregation of propositional attitudes: towards a general theory By Dietrich Franz; List Christian
  9. Bargaining, coalitions and externalities: A comment on Maskin By Geoffroy de Clippel; Roberto Serrano
  10. A coalition formation value for games in partitionfunction form By Michel Grabisch; Yukihiko Funaki
  11. The core of games on distributive lattices : how to share benefits in a hierarchy By Michel Grabisch; Lijue Xie
  12. A model of influence in a social network By Michel Grabisch; Agnieszka Rusinowska

  1. By: Luis Angeles
    Abstract: We propose a theoretical analysis of democratization processes in which an elite extends the franchise to the poor when threatened with a revo- lution. The poor could govern without changing the political system by maintaining a continuous revolutionary threat on the elite. Revolutionary threats, however, are costly to the poor and democracy is a superior sys- tem in which political agreement is reached through costless voting. This provides a rationale for democratic transitions that has not been discussed in the literature
    Date: 2008–11
  2. By: Jim Dolmas
    Abstract: Tax rates on labor income, capital income and consumption-and the redistributive transfers those taxes finance-differ widely across developed countries. Can majority-voting methods, applied to a calibrated growth model, explain that variation? The answer I fund is yes, and then some. In this paper, I examine a simple growth model, calibrated roughly to U.S. data, in which the political decision is over constant paths of taxes on factor income and consumption, used to finance a lump-sum transfer. I first look at outcomes under probabilistic voting, and find that equilibria are extremely sensitive to the specification of uncertainty. I then consider other ways to restrict the range of majority-rule outcomes, looking at the model's implications for the shape of the Pareto set and the uncovered set, and the existence or non-existence of a Condorcet winner. Solving the model on discrete grid of policy choices, I find that no Condorcet winner exists and that the Pareto and uncovered sets, while small relativeto the entire issue space, are large relative to the range of tax policies we see in data for a collection of 20 OECD countries. Taking that data as the issue space, I find that none of the 20 can be ruled out on effciency grounds, and that 10 of the 20 are in the uncovered set. Those 10 encompass policies as diverse as those of the US, Norway and Austria. One can construct a Condorcet cycle including all 10 countries' tax vectors. ; The key features of the model here, as compared to other models on the endogenous determination of taxes and redistribution, is that the issue space is multidimensional and, at the same time, no one voter type is suffciently numerous to be decisive. I conclude that the sharp predictions of papers in this literature may not survive an expansion of their issue spaces or the allowance for a slightly less homogeneous electorate.
    Keywords: Taxation ; Consumption (Economics) ; Income tax ; Fiscal policy
    Date: 2008
  3. By: Bin Dong; Uwe Dulleck; Benno Torgler
    Abstract: We argue that the decision to bribe bureaucrats depends on the frequency of corruption within a society. We provide a behavioral model to explain this conduct: engaging in corruption results in a disutility of guilt. This implies that people observe a lower probability to be involved in corruption if on average the guilt level of others within a country is higher. We also explore whether - and to what extent - group dynamics or socialization and past experiences affect corruption. In other words, we explore theoretically and empirically whether corruption is contagious and whether conditional cooperation matters. We use the notion of “conditional corruption” for these effects. The empirical section presents evidence using two data sets at the micro level and a large macro level international panel data set covering almost 20 years. The results indicate that the willingness to engage in corruption is influenced by the perceived activities of peers and other individuals. Moreover, the panel data set at the macro level indicates that the past level of corruption has a strong impact on the current corruption level.
    Keywords: corruption; contagion effect; conditional cooperation; interdependent preferences
    JEL: K42 D72 D64 O17 J24
    Date: 2008–11
  4. By: Sergio Fabbrini
    Abstract: Based on an interpretation of the European Union (EU) as a compound democracy, this article argues that the constitutionalisation of the European Union is necessarily a contested process.. A compound democracy is defined as a union of states constituted by units of different demographic size, political history and geographical interests, and as such is necessarily characterized by different views on its constitutional identity. The EU experience is analyzed from the perspective of the United States (US), which is a compound democracy by design. In both cases, constitutionalisation has been an open and contested process. However, whereas the US process was based on a common constitutional framework, at least since the Civil War, and has been ordered by a supermajority procedure for settling disputes, the EU lacks a document that embodies a shared language and a procedure that is able to solve the disputes. As a result, the process of constitutionalisation in the EU, contrary to the one in the US, ends up periodically in stalemate.
    Keywords: constitutional change; constitution building; Constitution for Europe; European Convention
    Date: 2008–11–03
  5. By: Michael A. Spencer; Stephen K. Swallow; Jason F. Shogren; John A. List
    Abstract: This paper considers how six alternative rebate rules affect voluntary contributions in a threshold public-good experiment. The rules differ by (1) whether an individual can receive a proportional rebate of excess contributions, a winner-takes-all of any excess contributions, or a full rebate of one’s contribution in the event the public good is provided and excess contributions exist, and (2) whether the probability of receiving a rebate is proportional to an individual’s contribution relative to total contributions or is a simple uniform probability distribution set by the number of contributors. The paper adds to the existing experimental economics literature on threshold public goods by investigating both aggregate and individual demand revelation under the winner-take-all and random full-rebate rules. Half of the rules (proportional rebate, winner-take-all with uniform probability among all group members, and random full-rebate with uniform probability) provide total contributions that nearly equal total benefits, while the rest (winner-take-all with proportional probability, winner-take-all with uniform probability among contributors only, and random full-rebate with proportional probability) exceed benefits by over 30 percent. Only the proportional rebate rule is found to achieve both aggregate and individual demand revelation. Our experimental results have implications for both fundraisers and valuation practitioners.
    JEL: C9 C91 C92 H4 H41 Q0 Q5
    Date: 2008–12
  6. By: Dietrich Franz (METEOR)
    Abstract: If a group is modelled as a single Bayesian agent, what should its beliefs be? I propose an axiomatic model that connects group beliefs to beliefs of group members, who are themselves modelled as Bayesian agents, possibly with different priors and different information. Group beliefs are proven to take a simple multiplicative form if people''s information is independent, and a more complex form if information overlaps arbitrarily. This shows that group beliefs can incorporate all information spread over the individuals without the individuals having to communicate their (possibly complex and hard-to-describe) private information; communicating prior and posterior beliefs suffices.
    Keywords: mathematical economics;
    Date: 2008
  7. By: René van den Brink (VU University Amsterdam); Frank Steffen (The University of Liverpool and University of Hamburg)
    Abstract: Power is a core concept in the analysis and design of organizations. One of the problems with the extant literature on positional power in hierarchies is that it is mainly restricted to the analysis of power in terms of the bare positions of the actors. While such an analysis informs us about the authority structure within an organization, it ignores the decision-making mechanisms completely. The few studies which take into account the decision-making mechanisms make all use of adaptations of well-established approaches for the analysis of power in non-hierarchical organizations such as the Banzhaf measure; and thus they are all based on the structure of a simple game, i.e. they are `membership-based'. In van den Brink and Steffen (2008) it is demonstrated that such an approach is in general inappropriate for characterizing power in hierarchies as it cannot be extended to a class of decision-making mechanisms which allow certain actors to terminate a decision before all other members have been involved. As this kind of sequential decision-making mechanism turns out to be particularly relevant for hierarchies, we suggested an action-based approach - represented by an extensive game form - which can take the features of such mechanisms into account. Based on this approach we introduced a power score and power measure that can be applied to ascribe positional power to actors in sequential decision making mechanisms. In this paper we provide axiomatizations of this power score and power measure for one of the most studied decision models, namely that of binary voting.
    Keywords: hierarchies; decision-making mechanism; power; positional power; power score; power measure; binary voting; axiomatization
    JEL: C79 D02 D71
    Date: 2008–11–24
  8. By: Dietrich Franz; List Christian (METEOR)
    Abstract: How can the propositional attitudes of several individuals be aggregated into overall collective propositional attitudes? Although there are large bodies of work on the aggregation of various special kinds of propositional attitudes, such as preferences, judgments, probabilities and utilities, the aggregation of propositional attitudes is seldom studied in full generality. In this paper, we seek to contribute to filling this gap in the literature. We sketch the ingredients of a general theory of propositional attitude aggregation and prove two new theorems. Our first theorem simultaneously characterizes some prominent aggregation rules in the cases of probability, judgment and preference aggregation, including linear opinion pooling and Arrovian dictatorships. Our second theorem abstracts even further from the specific kinds of attitudes in question and describes the properties of a large class of aggregation rules applicable to a variety of belief-like attitudes. Our approach integrates some previously disconnected areas of investigation.
    Keywords: mathematical economics;
    Date: 2008
  9. By: Geoffroy de Clippel (Brown University); Roberto Serrano (Brown University)
    Abstract: We first observe that two of Maskin´s results do not extend beyond three players: we construct a four-player partition function with nonpositive externalities whose unique solution is inefficient, as well as a four-player characteristic function that has a unique efficient solution for each ordering of the players, but for which the payoff vector obtained by averaging these solutions over the different orderings does not coincide with the Shapley value. On the other hand, we reinforce Maskins insight that externalities may play a crucial role in generating inefficiency. Many existing solutions on how to share profits assume or derive the property of efficiency. Yet we argue that players may have an interest to choose with whom to bargain. We illustrate how this may trigger inefficiency, especially in the presence of externalities, even if bargaining among any group of agents results in an efficient distribution of the surplus they can produce. We also provide some sufficient conditions for efficiency.
    Keywords: externalities; coalition formation; Shapley value
    JEL: C7 D62
    Date: 2008–11–20
  10. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Yukihiko Funaki (Waseda University - School of Political Science & Economics)
    Abstract: The coalition formation problem in an economy with externalities can be adequately modeled by using games in partition function form (PFF games), proposed by Thrall and Lucas. If we suppose that forming the grand coalition generates the largest total surplus, a central question is how to allocate the worth of the grand coalition to each player, i.e., how to find an adequate solution concept, taking into account the whole process of coalition formation. We propose in this paper the original concepts of scenario-value, process-value and value, which represent the average contribution of players in a scenario (a particular sequence of coalitions within a given coalition formation process), in a process (a sequence of partitions of the society), and in the whole (all processes being taken into account), respectively. We give an application to Cournot oligopoly, and two axiomatizations of our solution concept. A comparison with the value proposed by Macho-Stadler et al. for PFF games is done.
    Keywords: Coalition formation, games in partition function form, solution concept, Cournot oligopoly.
    Date: 2008–11
  11. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Lijue Xie (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: Finding a solution concept is one of the central problems in cooperative game theory, and the notion of core is the most popular solution concept since it is based on some rationality condition. In many real situations, not all possible coalitions can form, so that classical TU-games cannot be used. An interesting case is when possible coalitions are defined through a partial ordering of the players (or hierarchy). Then feasible coalitions correspond to teams of players, that is, one or several players with all their subordinates. In these situations, it is not obvious to define a suitable notion of core, reflecting the team structure, and previous attempts are not satisfactory in this respect. We propose a new notion of core, which imposes efficiency of the allocation at each level of the hierarchy, and answers the problem of sharing benefits in a hierarchy. We show that the core we defined has properties very close to the classical case, with respect to marginal vectors, the Weber set, and balancedness.
    Keywords: Cooperative game, feasible coalition, core, hierarchy.
    Date: 2008–10
  12. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Agnieszka Rusinowska (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: In the paper, we study a model of influence in a social network. It is assumed that each player has an inclination to say YES or NO which, due to influence of other players, may be different from the decision of the player. The point of departure here is the concept of the Hoede-Bakker index - the notion which computes the overall decisional "power" of a player in a social network. The main drawback of the Hoede-Bakker index is that it hides the actual role of the influence function, analyzing only the final decision in terms of success and failure. In this paper, we separate the influence part from the group decision part, and focus on the description and analysis of the influence part. We propose among other descriptive tools a definition of a (weighted) influence index of a coalition upon an individual. Moreover, we consider different influence functions representative of commonly encountered situations. Finally, we propose a suitable definition of a modified decisional power.
    Keywords: Influence function, influence index, decisional power, social network.
    Date: 2008–11

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