New Economics Papers
on Collective Decision-Making
Issue of 2009‒07‒28
eleven papers chosen by

  1. Model of the 2000 Presidential Election: Instrumenting for Ideology By Fernandez, Jose; Cataiefe, Guido
  2. Monetary Policy Committees: meetings and outcomes. By Jan Marc Berk; Beata K. Bierut
  3. Local public education and childless voting: the arising of an "ends with the middle" coalition By Berardino Cesi
  4. Contractually Stable Networks By Vincent Vannetelbosch; Jean-François Caulier; Ana Mauleon
  5. The Effects of Electoral Institutions in Rwanda: Why Proportional Representation Supports the Authoritarian Regime By Alexander Stroh
  6. `Two's Company, Three's a Group' The impact of group identity and group size on in-group favouritism By Donna Harris; Benedikt Herrmann; Andreas Kontoleon
  7. Federalism and Accountability with Distorted Election Choices By Sebastian G. Kessing
  8. Kingmakers and Leaders in Coalition Formation By Marc Kilgour; Steven J. Brams
  9. WHEN CONSENSUS CHOICE DOMINATES INDIVIDUALISM: Jensen's Inequality and Collective Decisions under Uncertainty By Charles F. Manski
  10. A Relation-algebraic Approach to Simple Games By Rudolf Berghammer; Harrie De Swart; Agnieszka Rusinowska
  11. Power in the Heterogeneous Connections Model: The Emergence of Core-Periphery Networks By Dotan Persitz

  1. By: Fernandez, Jose; Cataiefe, Guido
    Abstract: In a spatial model of voting, a voter's utility for a candidate is a function of ideological distance from the candidate and a candidate's quality. Candidate quality can potentially bias the measure of ideological distance in two ways. First, voters may be more drawn to high quality candidates thereby reducing the ideological distance. Second, a candidate's ideological position is a function of rivalsqualities and his own quality. We derive a theoretical model to sign the direction of both biases analytically. Next, using techniques established in the industrial organization literature, we estimate the model using two sets of instrumental variables.
    Keywords: spatial voting; discrete choice; instrumental variables
    JEL: C35 D72
    Date: 2009–04–21
  2. By: Jan Marc Berk (De Nederlandsche Bank, Statistics & Information Division, PO Box 98, 1000AB Amsterdam, the Netherlands.); Beata K. Bierut (De Nederlandsche Bank, Economics & Research Division, PO Box 98, 1000AB Amsterdam, the Netherlands)
    Abstract: Monetary Policy Committees differ in the way the interest rate proposal is prepared and presented in the policy meeting. In this paper we show analytically how different arrangements could affect the voting behaviour of individual MPC members and therefore policy outcomes. We then apply our results to the Bank of England and the Federal Reserve. A general finding is that when MPC members are not too diverse in terms of expertise and experience, policy discussions should not be based on pre-repared policy options. Instead, interest rate proposals should arise endogenously as a majority of views expressed by the members, as is the case at the Bank of England and appears to be the case in the FOMC under Chairman Bernanke. JEL Classification: E58, D71, D78.
    Keywords: monetary policy committee, voting, Bank of England, Federal Open Market Committee.
    Date: 2009–07
  3. By: Berardino Cesi (Université de Cergy-Pontoise, THEMA. Site des Chênes I, 33 Bd du Port, F-95000, Cergy- Pontoise, France)
    Abstract: We show that capitalization of local education into the housing price induces childless voters to support local education. In particular, low income childless households vote for a tax raise when capitalization is strong, whereas high income childless supports a higher tax when capitalization is weak. The median income voter is never pivotal because "ends with the middle" coalitions arise: high income households (with and without a child) makes coalition with middle income class with a child, whereas low income households (with and without a child) make coalition with childless middle income class. We ?nd that the income of the childless median voter is higher than the median income, whereas median voter with a child has income lower than the median. Thus the equilibrium tax preferred by the median voter (childless or not), is higher than the tax preferred by the childless median income voter and lower than the tax preferred by the median income voter with a child. This result implies that it is not possible to exclude voting equilibria in which the tax of the childless median voter is higher than the tax of the median voter with a child.
    Keywords: local public education; housings; local tax; capitalization; childless voting
    JEL: H52 H72 I22 R2
    Date: 2009
  4. By: Vincent Vannetelbosch (CORE, Université catholique de Louvain); Jean-François Caulier (Universitaires Saint-Louis); Ana Mauleon (FNRS and CEREC, CORE, Université catholique de Louvain)
    Abstract: We develop a theoretical framework that allows us to study which bilateral links and coalition structures are going to emerge at equilibrium. We define the notion of coalitional network to represent a network and a coalition structure, where the network specifies the nature of the relationship each individual has with his coalition members and with individuals outside his coalition. To predict the coalitional networks that are going to emerge at equilibrium we propose the concept of contractual stability which requires that any change made to the coalitional network needs the consent of both the deviating players and their original coalition partners. We show that there always exists a contractually stable coalitional network under the simple majority decision rule and the component-wise egalitarian or majoritarian allocation rules. Moreover, requiring the consent of group members may help to reconcile stability and efficiency.
    Keywords: Networks, Coalition Structures, Contractual Stability, Allocation Rules
    JEL: A14 C70
    Date: 2009–06
  5. By: Alexander Stroh (GIGA Institute of African Studies)
    Abstract: While much has been written about the special design of Rwanda’s judiciary in order to handle the aftermath of the genocide in 1994, other institutional actions resulting from the 2003 constitution have rarely been addressed in research. However, the second (partial) par-liamentary elections in September 2008 revealed some of the implications which the care-fully designed electoral system has for Rwanda’s political development. As a starting point, the paper emphasises the need to link the debates on institutional design in divided societies with elections in authoritarian regimes. Under different regime types, “institutional engi-neers” may pursue different goals. The paper concludes that in the case of Rwanda propor-tional representation (PR) has been implemented to support undemocratic goals. PR limits the local accountability of politicians in a political environment in which the government is not controlled by a democratic opposition. Thus, Rwanda’s current PR system facilitates the maintenance of authoritarian power in the country, whereas small constituencies would es-tablish closer links between the local populations and their representatives.
    Keywords: Rwanda, electoral authoritarianism, electoral system, parliament, constituency size
    Date: 2009–07
  6. By: Donna Harris (Department of Land Economy, University of Cambridge); Benedikt Herrmann (CeDEx, School of Economics, University of Nottingham); Andreas Kontoleon (Department of Land Economy, University of Cambridge)
    Abstract: In this study, we use an allocation experiment to study the effects of group identity and group size on in-group favouritism when the person's own payoff is not affected by her decision. In a triadic setting when subjects are asked to allocate a fixed amount of resource between two other anonymous individuals, the majority of the subjects choose to allocate equal amounts to both the in-group and the out-group members. Telling the subjects that they belong to the same `group' does not increase the amount al- located to the in-group member relative to the out-group member in a triadic setting. However, once the sizes of the in-group and the out-group are increased from one recipient to three (which we refer to as `the favour game'), we observe a sharp increase in in-group favouritism. Our results suggest that no special treatment is needed in a one-shot experiment to induce the distinction between the in-group and the out-group when groups consist of more than two group members.
    Keywords: Favouritism, Group Identity, Group Behaviour, Group Size, Design of Laboratory Experiment
    JEL: D73 C92
    Date: 2009–07
  7. By: Sebastian G. Kessing
    Abstract: This study analyzes the interaction between distorted election choices and the architecture of government with a focus on the implications for the accountability of politicians. Contrasting centralized with decentralized political systems, it is shown that centralization is likely to result in higher accountability if election choices are subject to small random distortions. Furthermore, equity and efficiency arguments for uniform policies in centralized systems are derived as these are likely to result in the better overall performance of politicians and in more equal performance across regions.
    Keywords: accountability, federalism, decentralization, retrospective voting
    Date: 2009
  8. By: Marc Kilgour (Wilfrid Laurier University); Steven J. Brams (New York University)
    Abstract: Assume that players strictly rank each other as coalition partners. We propose a procedure whereby they “fall back” on their preferences, yielding internally compatible, or coherent, majority coalition(s), which we call fallback coalitions. If there is more than one fallback coalition, the players common to them, or kingmakers, determine which fallback coalition will form. The players(s) who are the first to be acceptable to all other members of a fallback coalition are the leader(s) of that coalition. The effects of different preference assumptions—particularly, different kinds of single-peakedness—and of player weights on the number of coherent coalitions, their connectedness, and which players become kingmakers and leaders are investigated. The fallback procedure may be used (i) empirically to identify kingmakers and leaders or (ii) normatively to select them.
    Keywords: Coalition, Fallback Process, Kingmaker Leader, Cardinally Single-peaked, Ordinally Single-peaked
    JEL: C71 C78 D72
    Date: 2009–05
  9. By: Charles F. Manski
    Abstract: Research on collective provision of private goods has focused on distributional considerations. This paper studies a class of problems of decision under uncertainty in which the argument for collective choice emerges from the mathematics of aggregating individual payoffs. Consider decision making when each member of a population has the same objective function, which depends on an unknown state of nature. If agents knew the state of nature, they would make the same decision. However, they may have different beliefs or may use different decision criteria. Hence, they may choose different actions even though they share the same objective. Let the set of feasible actions be convex and the objective function be concave in actions, for all states of nature. Then Jensen's inequality implies that consensus choice of the mean privately-chosen action yields a larger aggregate payoff than does individualistic decision making, in all states of nature. If payoffs are transferable, the aggregate payoff from consensus choice may be allocated to Pareto dominate individualistic decision making, in all states of nature. I develop these ideas. I also use Jensen's inequality to show that a planner with the power to assign actions to the members of the population should not diversify. Finally, I give a version of the collective choice result that holds with consensus choice of the median rather than mean action.
    JEL: D7 D81 H42
    Date: 2009–07
  10. By: Rudolf Berghammer (Computer-Aided Program Development - Institute of Computer Science - Christian-Albrechts-Universität, Kiel); Harrie De Swart (Faculteit Wijsbegeerte-Logica en taalanalyse - Universiteit van Tilburg); Agnieszka Rusinowska (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines)
    Abstract: Simple games are a powerful tool to analyze decision-making and coalition formation in social and political life. In this paper, we present relation-algebraic models of simple games and develop relational algorithms for solving some basic problems of them. In particular, we test certain fundamental properties of simple games (being monotone, proper, respectively strong) and compute specific players (dummies, dictators, vetoers, null players) and coalitions (minimal winning coalitions and vulnerable winning coalitions). We also apply relation-algebra to determine central and dominant players, swingers and power indices (the Banzhaf, Holler-Packel and Deegan-Packel indices). This leads to relation-algebraic specifications, which can be executed with the help of the BDD-based tool RelView after a simple translation into the tool's programming language. In order to demonstrate the visualization facilities of RelView we consider an example of the Catalonian Parliament after the 2003 election.
    Keywords: relation algebra; RelView; simple game; winning coalition; swinger; dominant player; central player; power index
    Date: 2009
  11. By: Dotan Persitz (Tel Aviv University)
    Abstract: The heterogeneous connections model is a generalization of the homogeneous connections model of Jackson and Wolinsky (1996) in which the intrinsic value of each connection is set by a discrete, positive and symmetric function that depends solely on the types of the two end agents. Core periphery networks are defined as networks in which the agents' set can be partitioned into two subsets, one in which the members are completely connected among themselves and the other where there are no internal links. A two-type society is defined as "power based" if both types of agents prefer to connect to one of the types over the other, controlling for path length. An exhaustive analysis shows that core periphery networks, in which the "preferred" types are in the core and the "rejected" types are in the periphery, are crucial in the "power based" society. In particular, if the linking costs are not too low and not too high, at least one such network is pairwise stable. Moreover, in many cases these networks are the unique pairwise stable networks and in all cases they are the unique strongly efficient networks. The set of efficient networks often differs from the set of pairwise stable networks, hence a discussion on this issue is developed. These results suggest heterogeneity accompanied by "power based" linking preferences as a natural explanation for many core-periphery structures observed in real life social networks.
    Keywords: Network Formation, Heterogeneity, Pairwise Stability
    JEL: D85 L14
    Date: 2009–05

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