New Economics Papers
on Collective Decision-Making
Issue of 2010‒03‒06
six papers chosen by

  1. Social information and bandwagon behaviour in voting: an economic experiment By Ivo Bischoff; Henrik Egbert
  3. An enabling mechanism for the creation, adjustment, and dissolution of states and governmental units By Hausken, Kjell; Knutsen, John F.
  4. Is Specialization Desirable in Committee Decision Making? By Ruth Ben-Yashar; Winston Koh; Shmuel Nitzan
  5. Compensations in the Shapley value and the compensation solutions for graph games By Béal, Sylvain; Rémila, Eric; Solal, Philippe
  6. The Political Economy of Indirect Control By Gerard Padró i Miquel; Pierre Yared

  1. By: Ivo Bischoff (University of Kassel, Nora-Platiel-Straße 4, D-34109 Kassel); Henrik Egbert (University of Gießen, Licher Straße 66, D-35394 Gießen)
    Abstract: We present an economic experiment on the impact of social information on voter behaviour and find strong support for bandwagon behaviour in voting decisions. In total, 418 subjects participated in the experiment. Bandwagon behaviour is found among both male and female subjects.
    Keywords: C90, D72
    Date: 2010
  2. By: Maria De Paola; Vincenzo Scoppa (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: In this paper, using data from Italian local level governments for the years 1985- 2008, we investigate whether political competition affects the quality of elected politicians, as measured by using some ex-ante characteristics such as educational level and type of job held. We handle endogeneity problems through an instrumental variable approach using a variable which takes into account whether the previous legislature survived until the end of its legislative term as an instrument for political competition. Early termination increases political competition, without directly affecting the quality of candidates. Two Stage Least Square estimates support the assumption that political competition positively affects politician quality. Results are robust to different measures of political competition and to different specifications of the model.
    Keywords: Political Competition, Politicians, Political Selection
    JEL: D72 D78 J45
    Date: 2010–02
  3. By: Hausken, Kjell; Knutsen, John F.
    Abstract: The article proposes an enabling mechanism for the creation, adjustment and dissolution of governmental units, giving autonomy to each individual as in a direct democracy. The mechanism is designed such that Pareto optimality is possible, in contrast to earlier models which make various assumptions such as majority voting. Individuals are taken seriously acknowledging that they are best equipped to find their own solutions. The emphasis is on the practical approach of how individuals discover and implement their subjective preferences and how this discovery and implementation process can be facilitated and corresponding costs lowered. Governmental units are subjected to some of the same market forces as business firms. This brings the interaction between governmental units closer to a market structure, and serves to eliminate or reduce many of the coercive elements of government. --
    Keywords: Territorial units,individual liberty,individual decision making,individual welfare,competitive markets,public choice,governmental units,endogenous determination of borders,constitutional economics,political economy
    JEL: H4 H5 H11
    Date: 2010
  4. By: Ruth Ben-Yashar (Department of Economics, Bar Ilan University); Winston Koh (Singapore Management University); Shmuel Nitzan (Department of Economics, Bar Ilan University)
    Abstract: Committee decision making is examined in this study focusing on the role assigned to the committee members. In particular, we are concerned about the comparison between committee performance under specialization and non-specialization of the decision makers.
    Keywords: framing, project selection, public policy, collective decision making, committee, uncertain dichotomous choice, specialization, simple majority rule
    JEL: D81 D71
    Date: 2009–06
  5. By: Béal, Sylvain; Rémila, Eric; Solal, Philippe
    Abstract: We consider an alternative expression of the Shapley value that reveals a system of compensations: each player receives an equal share of the worth of each coalition he belongs to, and has to compensate an equal share of the worth of any coalition he does not belong to. We give an interpretation in terms of formation of the grand coalition according to an ordering of the players and define the corresponding compensation vector. Then, we generalize this idea to cooperative games with a communication graph. Firstly, we consider cooperative games with a forest (cycle-free graph). We extend the compensation vector by considering all rooted spanning trees of the forest (see Demange 2004) instead of orderings of the players. The associated allocation rule, called the compensation solution, is characterized by component efficiency and relative fairness. The latter axiom takes into account the relative position of a player with respect to his component. Secondly, we consider cooperative games with arbitrary graphs and construct rooted spanning trees by using the classical algorithms DFS and BFS. If the graph is complete, we show that the compensation solutions associated with DFS and BFS coincide with the Shapley value and the equal surplus division respectively.
    Keywords: Shapley value ; compensations ; relative fairness ; compensation solution ; DFS ; BFS ; equal surplus division
    JEL: C71
    Date: 2010–02–24
  6. By: Gerard Padró i Miquel; Pierre Yared
    Abstract: This paper characterizes the efficient sequential equilibrium when a government uses indirect control to exert its authority. We develop a dynamic principal-agent model in which a principal (a government) delegates the prevention of a disturbance—such as riots, protests, terrorism, crime, or tax evasion—to an agent who has an advantage in accomplishing this task. Our setting is a standard dynamic principal-agent model with two additional features. First, the principal is allowed to exert direct control by intervening with an endogenously determined intensity of force which is costly to both players. Second, the principal suffers from limited commitment. Using recursive methods, we derive a fully analytical characterization of the likelihood, intensity, and duration of intervention. The first main insight from our model is that repeated and costly interventions are a feature of the efficient equilibrium. This is because they serve as a punishment to induce the agent into desired behavior. The second main insight is a detailed analysis of a fundamental tradeoff between the intensity and duration of intervention which is driven by the principal’s inability to commit. Finally, we derive sharp predictions regarding the impact of various factors on likelihood, intensity, and duration of intervention. We discuss these results in the context of some historical episodes.
    JEL: D02 D82 H1
    Date: 2010–02

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