New Economics Papers
on Collective Decision-Making
Issue of 2009‒01‒10
seven papers chosen by

  1. Fairness and Squareness: Fair Decision Making Rules in the EU Council? By František Turnovec
  2. How does Party Fractionalization convey Preferences for Redistribution in Parliamentary Democracies ? By Bruno Amable; Donatella Gatti; Elvire Guillaud
  3. A Political Economy Theory of Partial Decentralization By John William Hatfield; Gerard Padró i Miquel
  4. Manipulation under k-approval scoring rules By Peters Hans; Roy Souvik; Storcken Ton
  5. Partnership Dissolution and Proprietary Information By Li, Jianpei
  6. Ex Ante Efficiency in School Choice Mechanisms: An Experimental Investigation By Clayton Featherstone; Muriel Niederle
  7. Behavioral Welfare Economics By B. Douglas Bernheim

  1. By: František Turnovec (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The concept of fair representation of voters in a committee representing different voters’ groups, such as national representations in union of states, is discussed. This concept, introduced into discussion about voting rights in the Council of European Union in 2004, was narrowed to proposal of distribution of voting weights among the member states proportionally to square roots of population. Such a distribution should guarantee the same indirect voting power to each EU citizen, measured by Penrose-Banzhaf index of voting power. In this paper we attempt to clarify this concept.
    Keywords: Council of Ministers, indirect voting power, Penrose-Banzhaf power index, Shapley-Shubik power index, square root rule, simple voting game
    JEL: C71 D72 H77
    Date: 2009–01
  2. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEPREMAP - CEntre Pour la Recherche EconoMique et ses APplications - Ministère de la recherche); Donatella Gatti (CEPN - Centre d'économie de l'Université de Paris Nord - CNRS : UMR7115 - Université Paris-Nord - Paris XIII, IZA - Institute for the Study of Labor, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris); Elvire Guillaud (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales - Ecole Nationale des Ponts et Chaussées - Ecole Normale Supérieure de Paris)
    Abstract: In this paper, we highlight the link between the political demand and social policy outcome while taking into account the design of the party system. The political demand is measured by indivudual preferences and the design of the party system is defined as the extent of party fractionalization. This is, to our knowledge, the first attempt in the literature to empirically link the political demand and the policy outcome with the help of a direct measure of preferences. Moreover, we account for an additional channel, so far neglected in the literature : The composition effect of the demand. Indeed, the heterogeneity of the demand within countries, more than the level of the demand itself, is shown to have a positive impact on welfare state generosity. This impact increases with the degree of fractionalization of the party system. We run regressions on a sample of 18 OECD countries over 23 years, carefully dealing with the issues raised by the use of time-series cross-section data.
    Keywords: Political demand, party fractionalization, redistribution, time-series-cross-section data.
    Date: 2008–11
  3. By: John William Hatfield; Gerard Padró i Miquel
    Abstract: We revisit the classic problem of tax competition in the context of federal nations, and derive a positive theory of partial decentralization. A capital poor median voter wants to use capital taxes to provide public goods. This results in redistributive public good provision. As a consequence, when all public goods are provided by the central government, capital taxes and public good provision are high. The expectation of high capital taxes, however, results in a small capital stock which lowers returns to redistribution. The median voter would therefore like to commit to a lower level of capital taxes. Decentralization provides such a commitment: local governments avoid using capital taxes due to the pressure of tax competition. We therefore obtain that the median voter favors a partial degree of decentralization. The equilibrium degree of decentralization is non-monotonic in inequality, increasing in the redistributive efficiency of public good provision, and decreasing in capital productivity. When public goods are heterogeneous in their capacity to transfer funds, all voters agree that goods with high redistributive capacity should be decentralized.
    JEL: D72 H11 H7 H77
    Date: 2008–12
  4. By: Peters Hans; Roy Souvik; Storcken Ton (METEOR)
    Abstract: Under a k-approval scoring rule each agent attaches a score of one to his k most preferred alternatives and zero to the other alternatives. The rule assigns the set of alternatives with maximal score. Agents may extend preferences to sets in several ways: they may compare the worst alternatives, or the best alternatives, or use a stochastic dominance criterion. In this paper we characterize the non-manipulable profiles for each of these set comparisons. For two-agent profiles we also determine the value(s) of k for which the number of non-manipulable profiles is maximal.
    Keywords: microeconomics ;
    Date: 2008
  5. By: Li, Jianpei
    Abstract: This paper studies different rules in dissolving a common value partnership where one partner holds proprietary information. In winner's bid auction (WBA) and loser's bid auction (LBA), there exists a unique mixed strategy equilibrium. ``Payoff equivalence'' is established in the sense that partners' expected payoffs are the same under the two auction formats. The informed partner benefits from an information rent while the uninformed suffers from an ``ownership's curse''. When cake-cutting mechanism (CCM) is applied, whether pure strategy equilibrium exists or not depends on the identity of the proposer. If the uninformed partner is the proposer, the informed partner receives an information rent in a pure strategy equilibrium. If the informed partner is the proposer, the asset value is shared equally between the two parties in a mixed strategy equilibrium. The paper then compares the information rents and prices offered for proprietary information by the three rules.
    Keywords: partnership dissolution; proprietary information; winner's bid auction; loser's bid auction; cake-cutting mechanism
    JEL: D86 D74 D82
    Date: 2009–01
  6. By: Clayton Featherstone; Muriel Niederle
    Abstract: Criteria for evaluating school choice mechanisms are first, whether truth-telling is sometimes punished and second, how efficient the match is. With common knowledge preferences, Deferred Acceptance (DA) dominates the Boston mechanism by the first criterion and is ambiguously ranked by the second. Our laboratory experiments confirm this. A new ex ante perspective, where preferences are private information, introduces new efficiency costs borne by strategy-proof mechanisms, like DA. In a symmetric environment, truth-telling can be an equilibrium under Boston, and Boston can first-order stochastically dominate DA in terms of efficiency, both in theory and in the laboratory.
    JEL: C78 C9 I2
    Date: 2008–12
  7. By: B. Douglas Bernheim
    Abstract: This paper discusses several competing proposals for general normative frameworks that would encompass non-standard models of choice. Most existing proposals equate welfare with well-being. Some assume that well-being flows from the achievement of well-defined objectives, and that those objectives also guide choices; the trick is to formulate a framework in which less-than-completely coherent choice patterns reveal the unobserved objectives. Others are predicated on the contention that well-being, and hence welfare, is directly measurable. Both of those approaches encounter serious conceptual difficulties. An alternative approach, developed by Bernheim and Rangel [2009], defines welfare directly in terms of choice. It entails a generalized welfare criterion that respects choice directly, without requiring any rationalization involving potentially unverifiable assumptions concerning underlying objectives and their relationships to choice. Because useful behavioral theories generally envision a substantial degree of underlying coherence in behavior, that criterion leads to a rich and tractable normative framework.
    JEL: D01 D60 H40
    Date: 2008–12

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