New Economics Papers
on Collective Decision-Making
Issue of 2009‒05‒09
eight papers chosen by

  1. Downsian Model with Asymmetric Information: Possibility of Policy Divergence By Kikuchi, Kazuya
  2. Universal Social Orderings By Fleurbaey, Marc; Tadenuma, Koichi
  3. Economic Growth, Governance and Voting Behaviour: an Application to Indian Elections By Arvind Virmani
  4. Non-cooperative Bargaining and the Incomplete Information Core By Okada, Akira
  5. Government Instability Indicators and the Exercise of limited "Consensus" in post-communist Romania 1992-2004 By Olimid, Anca Parmena
  6. Large powerful shareholders and cash holding By Anderson, Ronald W.; Hamadi, Malika
  7. Political cleavages in Romania. A theoretical overview of the post-communist parties and party systems By OLIMID, ANCA PARMENA
  8. Choosing and Sharing By Laurent-Lucchetti, Jérémy; Leroux, Justin

  1. By: Kikuchi, Kazuya
    Abstract: This paper presents a model of Downsian political competition in which voters are imperfectly informed about economic fundamentals. In this setting, parties' choices of platforms influence voters' behavior not only through voters' preferences over policies, but also through formation of their expectation on the unknown fundamentals. We show that there exist pure-strategy equilibria in this political game with asymmetric information at which the two parties' policies diverge with positive probability. This result is in contrast with the well-known median voter theorem in the classical model of Downsian competition. We also study refinement of equilibria, and identify the perfect equilibria (Selten, 1975) and the strictly perfect equilibria (Okada, 1981). The Nash equilibria with the strongest asymmetry in the parties' strategies are proved to be strictly perfect.
    Date: 2008–09
  2. By: Fleurbaey, Marc; Tadenuma, Koichi
    Abstract: We propose the concept of a universal social ordering, defined on the set of pairs of an allocation and a preference profile of any finite population. It is meant to unify evaluations and comparisons of social states with populations of possibly different sizes with various characteristics. The universal social ordering not only evaluates policy options for a given population but also compares social welfare across populations, as in international or intertemporal comparisons of living standards. It also makes it possible to evaluate policy options which affect the size of the population or the preferences of its members. We study how to extend the theory of social choice in order to select such orderings on a rigorous axiomatic basis. Key ingredients in this analysis are attitudes with respect to population size and the bases of interpersonal comparisons.
    Keywords: social choice, universal social orderings, maximin principle, interpersonal comparisons
    JEL: D63 D71
    Date: 2009–01
  3. By: Arvind Virmani
    Abstract: The focus of this paper is on the potential economic factors underlying voter behaviour in a democracy. It develops a simplified model based on economic theory (welfare & conditional probabilities) and governance problems prevalent in developing countries and emerging economies. [WP No. 138].
    Keywords: potential economic factors, voter, elections, democracy, developing countries, India,
    Date: 2009
  4. By: Okada, Akira
    Abstract: We consider information transmission in the core of an exchange economy with incomplete information by non-cooperative bargaining theory. Reformulating the coalitional voting game by Serrano and Vohra [Information transmission in coalitional voting games, J. of Economic Theory (2007), 117-137] so that an informed agent proposes an allocation, we define a notion of the informational core. A coalition has an informational objection to the status-quo allocation if and only if there exists an equilibrium rejection in the coalitional voting game. We present a non-cooperative sequential bargaining game in which coalitional voting games are repeated, and prove that a refinement of a sequential equilibrium of the bargaining game necessarily yields an allocation in the informational core.
    Keywords: core, exchange economy, incomplete information, information transmission, non-cooperative bargaining
    JEL: C71 C72 D51 D82
    Date: 2009–02
  5. By: Olimid, Anca Parmena
    Abstract: During the 1990s post communist societies faced similar challenges at the level of executive government. Since the early studies of Rosenthal (1978), political science literature’s focus is on the different continuums of political stability.In recent years there has been an increased interest in analyzing the effects of political instability in post communist Romania. This article is an effort to look at the indicators of political instability (redefined as Government instability) in an unconsolidated democracy. The issue of political stability in post-communist Romania must of course be analyzed in relation to the challenges of reform and the sources of the limited consensus in government coalition in Romania (1992-2004).
    Keywords: government; post-communist society; political stability;crisis of governality
    JEL: H11
    Date: 2008–11–22
  6. By: Anderson, Ronald W.; Hamadi, Malika
    Abstract: We study the relationship between liquid asset holding and the pattern of share ownership and control structures within the firm. We explore these issues using a data set of Belgian firms that is particularly well suited to studying the institutions of control oriented finance. The data include information on ownership concentration, voting alliances, managerial ownership, membership in family groups, institutional cross-share holdings, and coordination centers which under Belgian law permit consolidation of earnings and cash flow for a group of firms. We show that financial structures in Belgium are strongly control oriented as evidenced by the very high levels of observed ownership concentration and the prevalence of pyramids, voting alliances, and participation in family groups. We find that the level of liquid asset holding is positively associated with ownership concentration and that this effect is particularly marked for family firms. Given the difficulties of family firms in achieving effective wealth diversification we interpret these results as indicating liquid asset holding is largely motivated by risk aversion. Cash holding is negatively associated with institutional cross share holdings, suggesting that these cross holdings facilitate an effective internal capital market. We find little evidence that managers have an independent influence on cash holdings.
    Keywords: Corporate governance; Family firms; Liquid assets
    JEL: C23 G32
    Date: 2009–05
    Abstract: The following article examines the emergence of parties in post-communist Romania concluding that the theoretical basis of cleavages (the Lipset-Rokkanian model) is almost impossible to apply in this country. Accordingly, the historical evolution of the post-communist society and the strategic moves of political actors during democratization were often perceived as an „expected moments lacking any theoretical model”. Contrary to this assumption, I argue that even an incipient cleavage suggests at least two questions about the significance of an ideological framework and a stable party system.
    Keywords: post-communist cleavages; post-communist party systems; transition; the Lipset-Rokkanian model; electoral behavior.
    JEL: P20
    Date: 2009–02–15
  8. By: Laurent-Lucchetti, Jérémy; Leroux, Justin
    Abstract: Implementing a project, like a nationwide nuclear waste disposal, which benefits all involved agents but brings major costs only to the host is often problematic. In practice, revelation issues and redistributional concerns are significant obstacles to achieving stable agreements. We address these issues by proposing the first mechanism to implement the efficient site (the host with the lowest cost) and share the exact cost while retaining total control over realized transfers. Our mechanism is simple and in the vein of the well-known Divide and Choose procedure. The unique Nash equilibrium outcome of our mechanism coincides with truthtelling, is budget-balanced, individually rational and immune to coalitional deviations. More generally, our mechanism can also handle the symmetric case of positive local externalities (e.g., Olympic Games) and even more complex situations where the usefulness of the project---regardless of its location---is not unanimous.
    Keywords: Public goods; local externalities; NIMBY; implementation; mechanism design; VCG mechanisms.
    JEL: H41 D61 C70
    Date: 2009–04

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