New Economics Papers
on Collective Decision-Making
Issue of 2010‒10‒09
fifteen papers chosen by

  1. A Dynamic Politico-Economic Model of Intergenerational Contracts By Francesco Lancia; Alessia Russo
  2. The Dynamic Voting Patterns of the Bank of England's MPC By Jan Marc Berk; Beata Bierut; Ellen Meade
  3. Strategic Party Formation on a Circle By Peeters Ronald; Saran Rene; Yuksel Ayse Muge
  4. The quality of democracy in the Czech Republic By Zdenka Mansfeldová; Petra Rakušanová Guasti
  5. More than Words: Communication in Intergroup Conflicts By Andreas Leibbrandt; Lauri Sääksvuori
  6. Group Identity and the Moral Hazard Problem: Evidence from the Field By Subhasish Dugar; Quazi Shahriar
  7. Overcoming Ideological Bias in Elections By Vijay Krishna; John Morgan
  8. Sequential Aggregation of Verifiable Information By Volker Hahn
  9. Nicaraguan civil society caught in the pendulum's swing? Shifting roles from service delivery to lobbying and back By Pinyol Puig, Gemma; Molenaers, Nadia; Cepinskas, Linus
  10. On Removing the Condorcet Influence from Pairwise Elections Data By Chandra, Abhijit; Roy, Sunanda
  11. Between an intergovernmental and a polycentric European Union: National parliamentary discourses on democracy in the EU ratification process By Aleksandra Maatsch
  12. Do we agree? Measuring the cohesiveness of preferences By Jorge Alcalde-Unzu; Marc Vorsatz
  13. Group Reciprocity By David Hugh-Jones; Martin A. Leroch
  14. Group Membership, Competition, and Altruistic versus Antisocial Punishment: Evidence from Randomly Assigned Army Groups By Goette, Lorenz; Huffman, David; Meier, Stephan; Sutter, Matthias
  15. Splitting Tournaments By Leuven, Edwin; Oosterbeek, Hessel; van der Klaauw, Bas

  1. By: Francesco Lancia; Alessia Russo
    Abstract: This paper investigates the conditions for the emergence of implicit intergenerational contracts without assuming reputation mechanisms, commitment technology and altruism. We present a tractable dynamic politico-economic model in OLG environment where politicians play Markovian strategies in a probabilistic voting environment, setting multidimensional political agenda. Both backward and forward intergenerational transfers, respectively in the form of pension benefits and higher education investments, are simultaneously considered in an endogenous human capital setting with labor income taxation. On one hand, social security sustains investment in public education; on the other hand investment in education creates a dynamic linkage across periods through both human and physical capital driving the economy toward di¤erent Welfare State Regimes. Embedding a repeated-voting setup of electoral competition, we find that in a dynamic efficient economy both forward and backward intergenerational transfers simultaneously arise. The equilibrium allocation is education efficient, but, due to political overrepresentation of elderly agents, the electoral competition process induces overtaxation compared with a Benevolent Government solution with balanced welfare weights.
    Keywords: aging, Benevolent Government allocation, intergenerational redistribution, Markovian equilibria, repeated voting;
    JEL: C61 D71 E62 H11
    Date: 2010–09
  2. By: Jan Marc Berk; Beata Bierut; Ellen Meade
    Abstract: The literature on the behavior of the Bank of England’s Monetary Policy Committee (MPC) has focused on static voting patterns. We find statistical support for a dynamic pattern using a panel reaction function to analyze MPC votes over the 1997-2008 period. We find that internal and external members do not behave differently in their first year on the MPC. In their third year of tenure, internal members prefer higher policy rates, placing a higher weight on price stability and a lower weight on the output gap than external members.
    Keywords: Central banking; Monetary policy committees; Bank of England; Voting
    JEL: D71 D72 E52 E58
    Date: 2010–09
  3. By: Peeters Ronald; Saran Rene; Yuksel Ayse Muge (METEOR)
    Abstract: We study a spatial model of party formation in which the set of agendas is the unit circle. We characterize the sets of pure-strategy Nash equilibria under the plurality and proportional rules. In both rules, multiple configurations of parties are possible in Nash equilibrium. We refine our predictions using a new notion called “defection-proof” Nash equilibrium. Under the plurality rule, only those Nash equilibria in which either two or three parties exist are defection-proof, whereas multiple parties exist in any defectionproof Nash equilibrium under the proportional rule. These results are mostly consistent with the predictions of Duverger (1954).Keywords: Party Formation; Spatial Model; Plurality Rule; Proportional Rule; Nash Equilibrium; Defection-Proof Nash Equilibrium.
    Keywords: microeconomics ;
    Date: 2010
  4. By: Zdenka Mansfeldová; Petra Rakušanová Guasti
    Keywords: benchmarking; Czech Republic; democracy; governance; methodological issues; participation; political science
    Date: 2010–08–15
  5. By: Andreas Leibbrandt (University of Chicago, Department of Economics); Lauri Sääksvuori (Max Planck Institute of Economics, Jena)
    Abstract: Numerous studies suggest that communication may be a universal means to mitigate collective action problems. In this study, we challenge this view and show that the communication structure crucially determines whether communication mitigates or intensifies the problem of collective action. We observe the effect of different communication structures on collective action in the context of finitely repeated intergroup conflict and demonstrate that conflict expenditures are significantly higher if communication is restricted to one's own group as compared to a situation with no communication. However, expenditures are significantly lower if open communication within one's own group and between rivaling groups is allowed. We show that under open communication intergroup conflicts are avoided by groups taking turns in winning the contest. Our results do not only qualify the role of communication for collective action but may also provide insights on how to mitigate the destructive nature of intergroup conflicts.
    Keywords: Communication, Conflict, Experiment, Rent-seeking
    JEL: C72 C91 C92 D72 D74
    Date: 2010–09–27
  6. By: Subhasish Dugar (Department of Economics, University of Calgary); Quazi Shahriar (Department of Economics, San Diego State University)
    Abstract: We examine, experimentally, how real group identities of parties (principal and agent), contemplating to form a partnership while facing a moral hazard problem (as treated in the contract theory), may attenuate the problem and thereby implement the socially desirable efficient outcome. We find that when both parties share the same real group identity, the proportion of play of the efficient outcome is significantly higher than when the parties share two different real group identities. However, when we induce a substantially weaker form of group identity or increase the saliency of the outside-option payoff of the principal, the incidence of play of the efficient outcome diminishes considerably, even when the parties’ identities align perfectly. Our results have important implications for organizational design.
    Date: 2010–09
  7. By: Vijay Krishna; John Morgan
    Date: 2010–09–28
  8. By: Volker Hahn (CER-ETH - Center of Economic Research at ETH Zurich, Switzerland)
    Abstract: We introduce the notion of verifiable information into a model of sequential debate among experts who are motivated by career concerns. We show that self-censorship may hamper the efficiency of information aggregation, as experts withhold evidence contradicting the conventional wisdom. In this case, silence is telling and undermines the prevailing view over time if this view is incorrect. As a result, withholding arguments about the correct state of the world is only a temporary phenomenon, and the probability of the correct state of the world being revealed always converges to one as the group of experts becomes large. For small groups, a simple mechanism the principal can use to improve decisionmaking is to appoint a devil’s advocate.
    Keywords: experts, committees, career concerns, verifiable information, information aggregation
    JEL: D71 D82
    Date: 2010–09
  9. By: Pinyol Puig, Gemma; Molenaers, Nadia; Cepinskas, Linus
    Abstract: Until the end of the 1990s, Nicaragua was marked with social conflict and internal political struggles. From 2000 until 2006 Nicaragua experienced a relatively democratic period, in which the country drafted Poverty Reduction Strategy Papers (PRSPs) with participation of the civil society. In this period, the openness of the political system and the participatory dimension of the PRSPs helped to strengthen civil society and increase policy influencing. As a result a shift took place away from service delivery and towards more lobbying and advocacy. The election of Ortega in 2006 (Sandinista National Liberation Front (FSLN)) as president introduced the shrinking of this democratic space. From that moment onwards, donors encountered difficulties in dealing with the participation conditionality. At the same time, civil society organizations (CSOs) found it difficult to counterbalance the increasing undemocratic tendencies despite their efforts to organize mobilizations. This paper argues that the NAA, which pushes civil society into the watchdog role, is rather troublesome in contexts which are politically closing down. Imposing the single role of watchdog on civil society is ineffective. The NAA should not be treated as a rigid blueprint but, rather, as a guideline for policy implementation dependent on the actual situation in the country of concern.
    Date: 2010
  10. By: Chandra, Abhijit; Roy, Sunanda
    Date: 2010–09–28
  11. By: Aleksandra Maatsch
    Abstract: The paper analyses national parliamentary plenary debates on the Constitutional and the Lisbon Treaty in the six European states; Germany, France, Great Britain, Poland, Hungary and the Czech Republic. The comparative qualitative and quantitative discourse analysis of the plenary debates presents the patterns of support and rejection of the Treaties in the analysed states. The findings of the paper confirm the existing thesis that the left-right and TAN-GAL dimensions explain support for the Treaties. However, the paper also demonstrates that in this case the opposition moved towards the political centre represented by the mainstream conservative and Christian-democratic parties that until now counted among supporters of the European integration. The second factor identified in this paper as accounting for support or rejection of the Treaties was membership in the government: governing parties, also the conservative ones, were more likely to overcome internal opposition in order to ratify the Treaty. Regarding democracy models, the opponents of the Treaties were in favour of the polycentric European Union, whilst the opponents favoured the intergovernmental model. The federal model of the European Union was present in the parliamentary debates, however, it received only negative evaluations. The cosmopolitan model was entirely absent in the discussions.
    Keywords: Constitution for Europe; democracy; national parliaments
    Date: 2010–09–15
  12. By: Jorge Alcalde-Unzu; Marc Vorsatz
    Abstract: In this paper, we suggest new ways of how to measure the similarity of preferences in a group of individuals. For simplicity, we refer to this as the cohesiveness (of preferences). We propose axioms a cohesiveness measure should satisfy and show that these properties fully characterize a family of measures. According to it, the similarities between each pair of objects in a preference profile -calculated as the proportion margin by which one objects wins against the other in a pairwise comparison- are aggregated by a weighted mean. The weight of each pair of objects depends on their importance at the social level
    Date: 2010–09
  13. By: David Hugh-Jones (Max Planck Institute of Economics, Jena); Martin A. Leroch (University of Hamburg)
    Abstract: People exhibit group reciprocity when they retaliate, not against the person who harmed them, but against somebody else in that person's group. Group reciprocity may be a key motivation behind intergroup conflict. We investigated group reciprocity in a laboratory experiment. After a group identity manipulation, subjects played a Prisoner's Dilemma with others from different groups. Subjects then allocated money between themselves and others, learning the group of the others. Subjects who knew that their partner in the Prisoner's Dilemma had defected became relatively less generous to people from the partner's group, compared to a third group. We use our experiment to develop hypotheses about group reciprocity and its correlates.
    Keywords: reciprocity, groups, conflict
    JEL: D74 C92
    Date: 2010–09–27
  14. By: Goette, Lorenz (University of Lausanne); Huffman, David (Swarthmore College); Meier, Stephan (Columbia University); Sutter, Matthias (University of Innsbruck)
    Abstract: We investigate how group boundaries, and the economic environment surrounding groups, affect altruistic cooperation and punishment behavior. Our study uses experiments conducted with 525 officers in the Swiss Army, and exploits random assignment to platoons. We find that, without competition between groups, individuals are more prone to cooperate altruistically in a prisoner's dilemma game with in-group as opposed to out-group members. They also use a costly punishment option to selectively harm those who defect, encouraging a norm of cooperation towards the group. Adding competition between groups causes even stronger in-group cooperation, but also a qualitative change in punishment: punishment becomes antisocial, harming cooperative and defecting out-group members alike. These findings support recent evolutionary models and have important organizational implications.
    Keywords: group membership, competition, punishment, army, experiment
    JEL: C72 C91 C93
    Date: 2010–09
  15. By: Leuven, Edwin (CREST (ENSAE)); Oosterbeek, Hessel (University of Amsterdam); van der Klaauw, Bas (VU University Amsterdam)
    Abstract: In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.
    Keywords: self-selection, tournament, heterogeneous agents, social planner
    JEL: D02
    Date: 2010–09

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