New Economics Papers
on Collective Decision-Making
Issue of 2009‒12‒11
nine papers chosen by

  1. Electoral accountability in a country with two-tiered government By Granlund, David
  2. Unifying EU Representation at the IMF Executive Board By Brandner, Peter; Grech, Harald; Paterson, Iain
  3. On the manipulability of approval voting and related scoring rules By Peters Hans; Roy Souvik; Storcken Ton
  4. Using Eurobarometer data on voter participation in the 2004 European elections to test the RECON models By Dionysia Tamvaki
  5. Vote Splitting, Reelection and Electoral Control: Political Gridlocks, Ideology and the War on Terror By Bugarin, Mauricio S.
  6. America's secret competitive advantage is a dirty secret By Sreedharan, Ranjan
  7. Do re-election probabilities influence public investment? By Jon H. Fiva; Gisle James Natvik
  8. The Making of Policy: Institutionalized or Not? By Carlos Scartascini; Mariano Tommasi
  9. Endogenous formation of alliances in conflicts By Francis Bloch

  1. By: Granlund, David (Department of Economics, Umeå University)
    Abstract: In democracies, elections are the primary mechanism for making politicians act in voters' interests. Voters' ability to ensure that politicians act in their interests is weakened when a second level of government is added, resulting in more resources being diverted to political rents. With two levels of government, the political rents can be reduced by voters increasing the beneficial public expenditures they require for reelecting incumbents. Both these results work for higher taxes with two levels of government than with one. The results also show that voters can strengthen their power by holding politicians also liable for decisions made by the other level of government. When the incumbent at one level acts as a Stackelberg leader with respect to the other, there is no risk of this leading to Leviathan policies on the part of the incumbents.
    Keywords: moral hazard; separation of powers; Stackelberg; transparency; voting theory
    JEL: D72 H00 H77
    Date: 2009–11–27
  2. By: Brandner, Peter (Federal Ministry of Finance, Austria); Grech, Harald (Oesterreichische Nationalbank); Paterson, Iain (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: The consequences of consolidating EU representation at the IMF Executive Board by regrouping the 27 Member States into two EU constituencies, euro area and non-euro area, are discussed. In particular we contrast voting power as proposed by Penrose-Banzhaf (PBI) and Shapley-Shubik (SSI), and other respectively related measures of blocking (or veto) power and decision efficiency as proposed by Coleman and Paterson. Hitherto, IMF-specific literature is PBI-based. However, theoretical reasons and empirical plausibility arguments for the SSI are compelling. The (SSI) voting power of the two large constituencies – U.S.A. and euro area – reflects their corresponding voting shares over a range of majority thresholds, whereas PBI voting power reduces to only half of vote share at the majority threshold of 85% needed for some Executive Board decisions. SSI-related estimates of veto power are generally lower than the Coleman indices. Correspondingly, the efficiency of collective decision-making is considerably underestimated by the Coleman measure;
    Keywords: International Monetary Fund, European Union, Voting power analysis, Veto power
    JEL: C71 D71
    Date: 2009–11
  3. By: Peters Hans; Roy Souvik; Storcken Ton (METEOR)
    Abstract: We characterize all preference profiles at which the approval (voting) rule is manipulable, under three extensions of preferences to sets of alternatives: by comparison of worstalternatives, best alternatives, or by comparison based on stochastic dominance. We perform a similar exercise for $k$-approval rules, where voters approve of a fixed number $k$ of alternatives. These results can be used to compare ($k$-)approval rules with respect to their manipulability. Analytical results are obtained for the case of two voters, specifically, the values of $k$ for which the $k$-approval rule is minimally manipulable -- has the smallest number of manipulable preference profiles -- under the various preference extensions are determined. For the number of voters going to infinity, an asymptotic result is that the $k$-approval rule with $k$ around half the number of alternatives is minimally manipulable among all scoring rules. Further results are obtained by simulation and indicate that $k$-approval rules may improve on the approval rule as far as manipulability is concerned.
    Keywords: public economics ;
    Date: 2009
  4. By: Dionysia Tamvaki
    Keywords: democracy; European elections; European Parliament
    Date: 2009–11–15
  5. By: Bugarin, Mauricio S.
    Date: 2009–10
  6. By: Sreedharan, Ranjan
    Abstract: Michael E Porter, a leading management thinker, identifies seven uniquely American competitive advantages to explain the country’s pre-eminence. He points to America’s environment for entrepreneurship, its science, technology, and innovation machine, its institutions for higher learning, its strong commitment to competition and free markets, its efficient capital markets (especially for risk capital), and its fundamental dynamism and resilience that embraces a willingness to restructure and take losses. In this paper, I argue there is another critical competitive advantage for America in relation to its other democratic peers. It is the fact that in American presidential and congressional elections, about half of the electorate never turns out to vote. And the unique competitive advantage arises from the fact that unlike in other Western democracies, the people who end up staying away from voting in the U.S. belong overwhelmingly to its poorest, least educated sections. Before considering why this should amount to a competitive advantage, I look at reasons why the poor in America vote in far lesser proportions than their numbers. For instance, the rules governing voter-eligibility are determined by state, as well as, federal laws. Historically, many of the southern states have had a nasty record of officially and unofficially making it more difficult for blacks and poor whites to vote, a position that largely prevailed until the Voting Rights Act of 1965. Other reasons include the disenfranchisement of its prison population, which, at two million, is the largest in the world. Moreover, felony disenfranchisement laws in most states make it difficult for ex-felons to vote. As a result, about 5.4 million offenders and ex-offenders (about 2.5 percent of the electorate) were excluded from the voting rolls in the 2004 presidential election. Also, the fact that Election Day in the U.S. is not a national holiday makes it difficult for those holding low paying jobs (where wages are paid by the hour) to go out and vote. The upshot of it all is that the average voter turnout in America has been historically lower compared to its peers, and the poor in America vote in far lesser proportions than their numbers. For instance, during the presidential elections of 2008, despite extraordinary efforts by the Obama campaign to mobilize poor and minority voters, a CNN exit poll found that only 18 percent of those who turned out to vote, earned an income of less than $30,000 per annum against the 34 percent of American households that belong to this category. Why should this amount to a competitive advantage for the American economy? A critical factor which determines the economic success of a country is how well it strikes a balance between its short term needs and long term requirements. The short term interests veer towards more spending and consumption, while the long term interests lie in greater investment for the future and in shaping an environment conducive to creation of wealth.Essentially, the poor and the disadvantaged within a country would tend to have a short term outlook. Their interest would lie in having the government spend more on generous social security benefits and subsidies and in laws that protect labour. They would be far less enthused by the investments and sacrifice required to further the economic well-being of the country over the long term, or in promoting the entrepreneurial class. I argue that it is the short term considerations that hold sway in democracies where the poor vote in large numbers. I cite the example of India where populist policies have always pulled in the votes, with negative long term economic consequences. America’s overriding economic success has much to do with its “national consensus”, built around old-fashioned virtues like respect for property rights, free trade and free markets, lower taxes, flexible labour laws, and a culture that fosters individual responsibility and celebrates individual success. I contend that this consensus has been kept alive in large measure by keeping its poor away from voting. In contrast, Western Europe and Canada have seen an alternative consensus emerge which emphasises more frequent state intervention in economic matters, a comprehensive social security net, and a tax regime with a higher burden on the rich—in the cause of a more equitable society. Arguably, this alternative consensus could emerge in Europe because the national elections in these countries do not effectively (and insidiously) keep out the poor as they do in the U.S. In the concluding parts, I look at some of the recent trends in the voting patterns in U.S. national elections and predict a swing towards the more liberal values of the Democratic Party. I argue that the current “Republican revolution” that began with Reagan in 1980 may have come to an end for now. I conclude with the contention that America is headed towards a future where it becomes more equitable (like Europe) but at likely cost to its hitherto extraordinary competitive edge.
    Keywords: competitive advantage; disenfranchisement and economic competitiveness; American competitive advantage
    JEL: F00 O51
    Date: 2009–09–01
  7. By: Jon H. Fiva (University of Oslo); Gisle James Natvik (Norges Bank)
    Abstract: We identify exogenous variation in incumbent policymakers’ re-election probabilities and explore empirically how this variation affects their investments in physical capital. Our results indicate that a higher re-election probability leads to higher investments, particularly in the purposes preferred more strongly by the incumbents. This aligns with a theoretical framework where political parties disagree about which public goods to produce using labor and predetermined public capital.
    Keywords: Political economics, strategic capital accumulation, identifying popularity shocks.
    JEL: E62 H40 H72
    Date: 2009
  8. By: Carlos Scartascini; Mariano Tommasi
    Abstract: This paper develops a framework for analyzing different policymaking styles, their causes and their consequences in Latin America, finding that lower institutionalization and greater use of alternative political technologies (APTs) are more likely the lower the cost of using these technologies, the higher the potential damage they can cause, the lower the wealth of the economy, and the more asymmetric the distribution of de jure political power. Moreover, strategic complementarity exists in the use of alternative political technologies; for instance "bribes by the rich" and "protests by the poor" are likely to be countervailing forces, and will both occur in polities with weaker political institutions.
    Keywords: Political institutions, Public policies, Institutional strength, Protests, Alternative Political Technologies, Development, Judicial independence, Party institutionalization, Congress capabilities, Cabinet stability, Corruption
    JEL: D72 D74 D78 H89 K42
    Date: 2009–11
  9. By: Francis Bloch (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X)
    Abstract: This paper studies the endogenous formation of alliance in conflicts offering a survey of the recent literature and providing new results. We analyze the effect of group sizes on conflict, study endogenous alliance formation in a general model of conflict with linear technology and discuss recent developments of the theory of alliance formation, involving the determination of sharing rules inside the alliance and dynamic alliance formation in nested conflicts.
    Keywords: alliance formation, conflicts, rent-seeking contest, collective action, the paradox of group size, sharing rules, nested conflicts
    Date: 2009

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