New Economics Papers
on Collective Decision-Making
Issue of 2010‒04‒04
four papers chosen by

  1. European Monetary Policy and the ECB Rotation Model – Voting Power of the Core versus the Periphery By Ansgar Belke; Barbara von Schnurbein
  2. Fiscal Centralization and the Political Process By Facundo Albornoz; Antonio Cabrales
  3. Quantum mechanism helps agents combat Pareto-inefficient social choice rules By Wu, Haoyang
  4. A panel study on the relationship between corruption and government size By Go, Kotera; Okada, Keisuke; Samreth, Sovannroeun

  1. By: Ansgar Belke; Barbara von Schnurbein
    Abstract: We analyze the ECB Governing Council’s voting procedures. The literature has by now discussed numerous aspects of the rotation model but does not account for many institutional aspects of the voting procedure of the GC. Using the randomization scheme based on the multilinear extension (MLE) of games, we try to close three of these gaps. First, we integrate specifi c preferences of national central bank presidents, i.e. their desired interest rates. Second, we address the agenda-setting power of the ECB president. Third, we do not simulate an average of the decisions but look at every relevant point in time separately.
    Keywords: Euro area; European Central Bank; monetary policy; rotation; voting rights
    JEL: D72 D78 E58
    Date: 2010–03
  2. By: Facundo Albornoz; Antonio Cabrales
    Abstract: We study the dynamic support for fiscal decentralisation in a political agency model from the perspective of a region. We show that corruption opportunities are lower under centralization at each period of time. However, centralization makes more difficult for citizens to detect corrupt incumbents. Thus, corruption is easier under centralization for low levels of political competition. We show that the relative advantage of centralization depends negatively on the quality of the local political class, but it is greater if the center and the region are subject to similar government productivity shocks. When we endogenize the quality of local politicians, we establish a positive link between the development of the private sector and the support for decentralization. Since political support to centralization evolves over time, driven either by economic/political development or by exogenous changes in preferences over public good consumption, it is possible that voters are (rationally) discontent about it. Also, preferences of voters and the politicians about centralization can diverge when political competition competition is weak.
    Keywords: decentralization, centralization, political agency, quality of politicians, corruption
    JEL: H11 D72 D73 P16
    Date: 2010–03
  3. By: Wu, Haoyang
    Abstract: Quantum strategies have been successfully applied in game theory for years. However, as a reverse problem of game theory, the theory of mechanism design is ignored by physicists. In this paper, we generalize the classical theory of mechanism design to a quantum domain and obtain two results: 1) We find that the mechanism in the proof of Maskin's sufficiency theorem is built on the Prisoners' Dilemma. 2) By virtue of a quantum mechanism, agents who satisfy a certain condition can combat Pareto-inefficient social choice rules instead of being restricted by the traditional mechanism design theory.
    Keywords: Quantum games; Mechanism design; Implementation theory; Nash implementation; Maskin monotonicity
    JEL: D71 C72
    Date: 2010–02–18
  4. By: Go, Kotera; Okada, Keisuke; Samreth, Sovannroeun
    Abstract: Using panel data from 1996 to 2005, this paper shows that the effect of government size on corruption is positive at a low level of democracy, but it is negative at a high level. This finding could fill the gaps in previous studies whose findings on the relationship between corruption and government size are controversial.
    Keywords: Corruption; Government size; Democracy; Panel data
    JEL: D73 H11 C23
    Date: 2010–02

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.