New Economics Papers
on Collective Decision-Making
Issue of 2009‒04‒13
eight papers chosen by

  1. Are State Elections Affected by the National Economy? Evidence from Australia By Andrew Leigh; Mark McLeish
  2. Characterization of multidimensional spatial models of elections with a valence dimension By Azrieli, Yaron
  3. Education and selective vouchers By Amedeo Piolatto
  4. Other-Regarding Preferences and Leadership Styles By Kocher, Martin G.; Pogrebna, Ganna; Sutter, Matthias
  5. Mehr zu den politischen Segnungen von Foederalismus By Schneider, Andrea; Zimmermann, Klaus W.
  6. Government Form and Public Spending: Theory and Evidence from U.S. Municipalities By Stephen Coate; Brian Knight
  7. The Breakdown of Morale By Nick Vikander
  8. Power indices taking into account agents' preferences By Aleskerov, Fuad

  1. By: Andrew Leigh; Mark McLeish
    Abstract: Using data from 191 Australian state elections, we test how voters respond to economic conditions. We find that unemployment has a strong impact on election outcomes, with each additional percentage point of unemployment reducing the incumbent’s re-election probability by 3-5 per cent. However, when we separate luck (unemployment in other states) from competence (unemployment in that state relative to the rest of Australia), we find that both luck and competence are equally important. This is consistent with a psychological theory of the ‘fundamental attribution error’, in which observers consistently underestimate the importance of situational constraints. We also find evidence that unemployment driven by a clearly exogenous source – the United States economy – has a non-trivial impact on the re-election probability of Australian state governments. Our results suggest that Australian voters either retain too many state governments in economic booms, vote out too many state governments in recessions, or perhaps both.
    Keywords: rational voting; political business cycles; unemployment; elections
    JEL: D72 D80
    Date: 2009–01
  2. By: Azrieli, Yaron
    Abstract: Spatial models of political competition are typically based on two assumptions. One is that all the voters identically perceive the platforms of the candidates and agree about their score on a "valence" dimension. The second is that each voter's preferences over policies are decreasing in the distance from that voter's ideal point, and that valence scores enter the utility function in an additively separable way. The goal of this paper is to examine the restrictions that these two assumptions impose, starting from a more primitive (and observable) data. Specifically, we consider the case where only the ideal point in the policy space and the ranking over candidates are known for each voter. We provide necessary and su±cient conditions for this collection of preference relations to be consistent with utility maximization as in the standard models described above. That is, we characterize the case where there are policies x1,...,xm for the m candidates and numbers v1,...,vm representing valence scores, such that a voter with an ideal policy y ranks the candidates according to vi-||xi-y||^2.
    Keywords: Elections; Spatial model; Valence; Euclidean preferences
    JEL: D72
    Date: 2009–03–30
  3. By: Amedeo Piolatto (Universidad de Alicante)
    Abstract: The literature on vouchers often concludes that a voucher-based system cannot be the outcome of a majority vote. This paper shows that it is possible to propose selective vouchers (of exogenous value) such that the majority of voters are in favour of selective vouchers. As long as the introduction of vouchers does not undermine the existence of public schools, introducing selective vouchers induces a Pareto improvement. Some agents use vouchers in equilibrium to buy private education, while the poorest agents continue attending public schools and enjoy an increase in per-capita expenditure.
    Keywords: positive public economics; education; vouchers; voting.
    JEL: H42 I20 I22 I28 I29 D70
    Date: 2009–03
  4. By: Kocher, Martin G. (University of Munich); Pogrebna, Ganna (Columbia University); Sutter, Matthias (University of Innsbruck)
    Abstract: We use a laboratory experiment to examine whether and to what extent other-regarding preferences of team leaders influence their leadership style in choice under risk. We find that leaders who prefer efficiency or report high levels of selfishness are more likely to exercise an autocratic leadership style by ignoring preferences of the other team members. Yet, inequity aversion has no significant impact on leadership styles. Elected leaders have a higher propensity than exogenously assigned leaders to use a democratic leadership style by reaching team consensus. Male leaders and leaders influenced by group membership tend to employ a democratic leadership style.
    Keywords: leadership style, other-regarding preferences, unobserved heterogeneity
    JEL: C91 C92 D70 D81
    Date: 2009–03
  5. By: Schneider, Andrea (Helmut Schmidt University, Hamburg); Zimmermann, Klaus W. (Helmut Schmidt University, Hamburg)
    Abstract: The political blessings of federalism are the core of our discussion. These benefits are operationalized as the decrease in the number of outvoted in a federal system with majority voting as an important source of regime satisfaction. The approach originates from the work of Roland Pennock who developed a similar methodology exactly 50 years ago although he applied it to a slightly different topic. First, we show that decentralized decision-making is advantageous in the majority of logical cases since the expected value of the number of outvoted is lower compared to centralized decision-making. Comparing different cases, we conclude that the political force of the decentralization-theorem (Oates) is a sole and inverse function of the population size of the nation, implying that there is no structural effect of differing populations within regions. Next, the question is addressed how the gains from federalism react to variations in the number of regions: Measured as the difference of the shares of the sum of the highest number of outvoted to the national population between federalism and centralism, the gains of federalism are a direct function of the number of regions, in a 3-regions-case as well as in a generalized formal model. Therefore, a decrease of the population at the national level and an increase of the number of regions boost the gains of federalism representing a successful path to enhance regime satisfaction. The complementary question what happens to the gains of federalism when increasing the number of alternatives to vote for is more difficult to answer for set-ups with more than 2 alternatives. In our special case with 2 regions and 3 alternatives, the model shows that augmenting the number of alternatives exerts a negative effect on the gains of federalism if we use our first indicator - the share of the sum of the highest number of outvoted. If instead we employ the shares of the average number of outvoted, then there is still a slight increase in the gains of federalism. Using the last indicator, a case-related comparison of both effects shows that an increase in the number of regions has a stronger positive impact on the gains than letting the number of alternatives grow. Employing the other indicator of the share of the sum of the highest number of outvoted, then there is clearly a positive effect of the number of regions. But the effect of the number of alternatives is negative, implying that this last indicator underestimates the gains of federalism to a certain extent. Our integrative model explaining the gains of federalism reconfirms these interdependencies with the share of the sum of the highest numbers of outvoted: The first derivative is positive for more than 2 regions and the same holds for the size of the population at the national level in an unrestricted manner. Differentiating the number of alternatives, however, leads to a casuistic of 4 different domains separating positive and negative effects. Finally, we return to the opening question by analyzing the cumulative frequency distributions of the number of outvoted: Here, even if federalization is preferable as a whole, centralized decision-making is more advantageous for low numbers of outvoted, implying that the domain of decentralized decision-making seems to be connected to higher levels of the outvoted.
    Keywords: Federalism; Decentralization; Outvoted
    JEL: D72 H77
    Date: 2009–04–07
  6. By: Stephen Coate; Brian Knight
    Abstract: There are two main forms of government in U.S. cities: council-manager and mayor-council. This paper develops a theory of fiscal policy determination under these two forms. The theory predicts that expected public spending will be lower under mayor-council, but that either form of government could be favored by a majority of citizens. The latter prediction means that the theory is consistent with the co-existence of both government forms. Support for the former prediction is found in both a cross-sectional analysis and a panel analysis of changes in government form.
    JEL: D7 H7
    Date: 2009–04
  7. By: Nick Vikander (Erasmus University Rotterdam)
    Abstract: This paper studies how morale in teams can break down. It interprets high morale as team members working together productively, either because of a sense of fairness or because of implicit incentives from repeated interactions. Team members learn that lay-offs will occur at a fixed future date, which will eventually cause morale to break down. The paper shows that the breakdown of morale can vary in size and the equilibrium outcomes can be Pareto ranked. A firm's measures to encourage cooperation may actually hurt morale, by convincing opportunistic team members to imitate and later take advantage of cooperative colleagues.
    Keywords: morale; teams; cooperation
    JEL: M50 M54 L22
    Date: 2009–03–12
  8. By: Aleskerov, Fuad (State University 'Higher School of Economics' and Institute of Control Sciences, Russian Academy of Sciences)
    Abstract: A set of new power indices is introduced extending Banzhaf power index and allowing to take into account agents’ preferences to coalesce. An axiomatic characterization of intensity functions representing a desire of agents to coalesce is given. A set of axioms for new power indices is presented and discussed. An example of use of these indices for Russian parliament is given.
    Date: 2009

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