New Economics Papers
on Collective Decision-Making
Issue of 2010‒01‒10
eleven papers chosen by

  1. Plurality versus proportional electoral rule: which is most representative of voters? By Amedeo Piolatto
  2. Democratic Citizenship: From Proportionality to a Continuum Approach to Political Participation By Anupama Roy
  3. Large powerful shareholders and cash holding By Malika Hamadi; Ronald W. Anderson
  4. Radical Moderation: Recapturing Power in Two-party Parliamentary Systems By Tasos Kalandrakis; Arthur Spirling
  5. Voting as a Lottery By Giuseppe Attanasi; Luca CORAZZINI; Francesco PASSARELLI
  6. Turnout Intention and Social Networks. By Constanza Fosco; Annick Laruelle; Angel Sanches
  7. The Political Resource Curse By Fernanda Brollo; Tommaso Nannicini; Roberto Perotti; Guido Tabellini
  8. The Composition of Government Expenditure in an Overlapping Generations Model By John Creedy; Shuyun May Li; Solmaz Moslehi
  9. Reshaping Political Space? The Impact of the Armed Insurgency in the Central African Republic on Political Parties and Representation By Andreas Mehler
  10. Mediation and Conflict Management By Gerald Eisenkopf
  11. Confidence in preferences By Hill, Brian

  1. By: Amedeo Piolatto (Universidad de Alicante)
    Abstract: This study compares the representativeness of voters in the proportional electoral system with the situation under plurality rule. Representativeness is commonly measured by comparing parties’ received votes with their shares of seats in the Parliament; this implies that proportional rule should always better represent voters. A coalition within the Parliament, however, rules the country without interference and supports the government; when a coalition is formed, the pivotal role of small parties and the proposal right of the formateur can significantly impact the distribution of power. Focusing on the coalition formation stage, I demonstrate that the proportional rule is more representative only under very specific conditions. If these conditions are not met, introducing some distortions in the distribution of seats among parties can actually improve representativeness.
    Keywords: Electoral systems, proportional rule, plurality rule, voters’ representation
    JEL: C72 D72 H1 P16
    Date: 2009
  2. By: Anupama Roy
    Abstract: This paper is an attempt to explore the meaning and significance of political participation within (a) the conceptual framework of democratic citizenship and (b) debates surrounding representative democracy. It consists of three parts; the first examines the idea of representative democracy and the manner in which democratic politics may be sought to be crafted as a continuum between representation and participation; the second looks at the global experience and experiments in electoral designs and political reservation for women; and the third examines debates on women’s political participation and representation in India along with election data to identify possible patterns, followed by a discussion of the ways in which civil society organisations have sought to address themselves to reforming the electoral system, in particular by addressing the voter or empowering her through specific rights. [CWDS OP].
    Keywords: electoral, political, India, election data, rights, voter, empowering, civil society, democratic citizenship, democracy, politics, participation, women,
    Date: 2009
  3. By: Malika Hamadi (Luxembourg School of Finance, University of Luxembourg); Ronald W. Anderson (London School of Economics and CEPR)
    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: Liquid assets, Corporate governance, Family firms.
    JEL: C23 G32
    Date: 2009
  4. By: Tasos Kalandrakis (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158); Arthur Spirling (Department of Government, Harvard University)
    Abstract: We estimate the parameters of a reputational game of political competition using data from five two-party parliamentary systems. We find that latent party preferences (and party reputations) persist with high probability across election periods, with one exception: parties with extreme preferences who find themselves out of power switch to moderation with higher probability than the equivalent estimated likelihood for parties in government (extreme or moderate) or for moderate parties in opposition. We find evidence for the presence of significant country-specific differences. Notably, we estimate that in the long-term, Australia is less than half as likely to experience extreme policies and Australian governments enjoy significantly longer spells in office as compared to their counterparts in Greece, Malta, New Zealand, and the United Kingdom. The model outperforms alternative naive models on a battery of goodness-of-fit tests.
    Date: 2009–11
  5. By: Giuseppe Attanasi; Luca CORAZZINI; Francesco PASSARELLI
    Date: 2009–12
  6. By: Constanza Fosco (Universidad Carlos III Madrid); Annick Laruelle (Ikerbasque and University of the Basque Country); Angel Sanches (Universidad Carlos III Madrid)
    Abstract: How can networking affect the turnout in an electrion? We present a simple model to explain turnout as a result of a dynamic process of formation of the intention to vote within Erdös-Renyi random networks. Citizens have fixed preferences for one of two parties and are embedded in a given social network. They decide whether or not to vote on the basis of the arritude of their immediate contacts. They may simply follow the behavior of the majority (followers) or make an adaptative local calculus of voting (Downsian behavior). So they either have the intention of voting when the majority of their social neighborhood that elections are "close". We study the long run average turnout, interpreted as the actual turnout observed in an lection. Depending on the combination of values of the two key parameters, the average connectivity and the probability of behaving as a follower or in a Downsian fashion, the system exhibits monostability (zero turnout), bistability (zero, moderate and high turnout). This means, in partituclar, that for a wide range of values ob both parameters, we obtain realistic turnout rates, i.e. between 50% and 90%.
    Keywords: Turnout, Social Networks, Adaptative Behavior
    Date: 2009–09–03
  7. By: Fernanda Brollo; Tommaso Nannicini; Roberto Perotti; Guido Tabellini
    Abstract: The paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with endogenous entry of political candidates. The evidence refers to municipalities in Brazil, where federal transfers to municipal governments change exogenously according to given population thresholds. We exploit a regression discontinuity design to test the implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger transfers increase political corruption and reduce the quality of candidates for mayor.
    Date: 2009
  8. By: John Creedy; Shuyun May Li; Solmaz Moslehi
    Abstract: This paper examines the choice of government expenditure on public goods and transfer payments (in the form of pension) under majority voting in an overlapping generations model, in which government expenditure is tax-?nanced on a pay-as-you-go (PAYG) basis. The condition required for majority support of the social contract involved in the PAYG scheme is established and shown to be independent of gov- ernment expenditure, so that the choice of expenditure composition can be made conditional on acceptance of this social contract. The model yields a closed-form solu-tion for the majority choice of the ratio of transfer payment to public goods, which depends negatively on the ratio of median to mean income, given parameters regarding preferences, tax, growth and interest rates. Informed by this result, a dataset for demo-cratic countries is examined, suggesting that income inequalities play a minor role in accounting for the substantial variations in the compostion of government expenditure across democratic countries, while di¤erent preferences for public goods resulting from cultural di¤erences may be an important determinant. Finally an alternative decision mechanism is also considered, in which a utilitarian government chooses expenditures to maximize a social welfare function. The solution is found to take a similar form to that of the majority voting context, except that a welfare-weighted average income replaces the median income.
    Keywords: Overlapping Generations; Majority Voting; Balanced Growth; Public Goods; Transfer Payments; Utilitarian Government
    JEL: D72 H41 H53 H11
    Date: 2009
  9. By: Andreas Mehler (GIGA Institute of Global and Area Studies)
    Abstract: This paper analyzes the declining importance of political parties in the Central African Republic (CAR). It argues that the problematic attitude of elites who are fluctuating between violent and peaceful behavior in order to further their own careers is jeopardizing both peace and democracy. The author hypothesizes that both political parties and rebel movements are failing to adequately represent (ethnoregional) interests, but that parties are suffering more in the course of the enduring war and the peace process. Patterns of elite behavior are presented as the main explanation for the resulting crisis of representation, with international actors’ preference for inclusionary power-sharing deals seen as the main aggravating factor.
    Keywords: Central African Republic, peace process, political parties, rebel movements,representation
    Date: 2009–12
  10. By: Gerald Eisenkopf
    Abstract: Mediation is a popular process to manage conflicts, but there is little systematic insight into its mechanisms. This paper discusses the results from an experiment in which a mediator can induce two conflict parties to behave cooperatively. If the mediator recommends cooperative behavior and threatens to punish deviations, she achieves the efficient solution. Similar results even obtain if the mediator is biased towards one party or has no incentive to prevent the conflict. Communication between the mediator and the conflict parties increases cooperation, even if punishment is impossible. However, when cooperation fails, communication without punishment leads to particularly low payouts for the ‘losing’ party.
    Keywords: Mediation, Conflict Prevention, Experiment, Communication, Punishment
    Date: 2009
  11. By: Hill, Brian
    Abstract: Indeterminate preferences have long been a tricky subject for choice theory. One reason for which preferences may be less than fully determinate is the lack of confidence in one’s preferences. In this paper, a representation of confidence in preferences is proposed. It is used to develop an account of the role which confidence which rests on the following intuition: the more important the decision to be taken, the more confidence is required in the preferences needed to take it. An axiomatisation of this choice rule is proposed. This theory provides a natural account of when an agent should defer a decision; namely, when the importance of the decision exceeds his confidence in the relevant preferences. Possible applications of the notion of confidence in preferences to social choice are briefly explored.
    Keywords: Incomplete preference; Revealed preference; Confidence in preferences; Deferral of decisions; Importance of decisions; Social choice
    JEL: D01 D71
    Date: 2009–10–01

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