New Economics Papers
on Collective Decision-Making
Issue of 2010‒10‒23
ten papers chosen by

  1. Invalid Ballots and Electoral Competition By Gani Aldashev; Giovanni Mastrobuoni
  2. Political and Public Acceptability of Congestion Pricing: Ideology and Self Interest By Harsman, Bjorn; Quigley, John M.
  3. Prospects after the Voting Reform of the Lisbon Treaty By Laszlo A. Koczy
  4. Are We Taxing Ourselves? How Deliberation and Experience Shape Voting on Taxes By Rupert Sausgruber; Jean-Robert Tyran
  5. What Do Outside Experts Bring To A Committee? Evidence From The Bank of England By Stephen Eliot Hansen; Michael McMahon
  6. Separation of Powers or Ideology? What Determines the Tax Level? Theory and Evidence from the US States. By Leandro M. de Magalhães; Lucas Ferrero
  7. Elections and the structure of taxation in developing countries By Hélène EHRHART
  8. Secessionism and Minority Protection in an Uncertain World By Vincent Anesi
  9. Sending information to interactive receivers playing a generalized prisoners' dilemma By Kfir Eliaz; Roberto Serrano
  10. The Political Economy of Intergenerational Risk Sharing By Hollanders, D.A.

  1. By: Gani Aldashev; Giovanni Mastrobuoni
    Abstract: We study how the closeness of electoral race affect the number of invalid ballots under the traditional paper-ballot voting technology. Using a large dataset from the Italian parliamentary elections in 1994-2001, we find a strong positive correlation between the closeness of electoral race and the fraction of invalid ballots. This correlation is not driven by voters' behavior, the biased actions of election officers, or the strategic pressure by parties. The theory that garners most support is that of unbiased election officers that increase their effort in response to higher (expected) closeness of electoral race, so as to reduce the likelihood of incorrectly adjudicating the victory. We also find large North-South differences in the patterns of invalid ballots: (i) electoral districts and municipalities in Southern Italian regions have a substantially higher level of invalid ballots, and (ii) the correlation between the closeness of electoral race and the fraction of invalid ballots is absent in the South. Social capital and organized crime explain these differences: once these two features are accounted for, the districts and municipalities in the South behave similarly to those in the North.
    Keywords: invalid ballots; electoral competition; social capital; voting technology; Italian parliamentary elections
    JEL: D72 D73 D81 Z10
    Date: 2010
  2. By: Harsman, Bjorn; Quigley, John M.
    Abstract: Studies of the “stated preferences†of households generally report public and political opposition by urban commuters to congestion pricing. It is thought that this opposition inhibits or precludes tolls and pricing systems that would enhance efficiency in the use of scarce roadways. This paper analyzes the only case in which road pricing was decided by a citizen referendum on the basis of experience with a specific pricing system. The city of Stockholm introduced a toll system for seven months in 2006, after which citizens voted on its permanent adoption. We match precinct voting records to citizen commute times and costs by traffic zone, and we analyze patterns of voting in response to economic and political incentives. We document political and ideological incentives for citizen choice, but we also find that the pattern of time savings and incremental costs exerts a powerful influence on voting behavior. In this instance, at least, citizen voters behave as if they value commute time highly. When they have experienced first-hand the out-of-pocket costs and time-savings of a specific pricing scheme, they are prepared to adopt freely policies which reduce congestion on urban motorways.
    Date: 2010–08–01
  3. By: Laszlo A. Koczy (Institute of Economics - Hungarian Academy of Sciences)
    Abstract: The European Union used to make decisions by unanimity or near unanimity. After a series of extensions, with 27 member states the present decision making mechanisms have become very slow and assigned power to the members in an arbitrary way. The new decision rules accepted as part of the Lisbon Treaty did not only make decision making far easier, but streamlined the process by removing the most controversial element: the voting weights. The new system relies entirely on population data. We look at the immediate impact of the reform as well as the long term effects of the dfferent demographic trends in the 27 member states. We find that the Lisbon rules benefit the largest member states, while medium sized countries, especially Central Eastern European countries suffer the biggest losses.
    Keywords: European Union, Council of Ministers, qualified majority voting, Banzhaf index, Shapley-Shubik index, a priori voting power, demographics
    JEL: C71 D72
    Date: 2010–09
  4. By: Rupert Sausgruber; Jean-Robert Tyran
    Abstract: We let consumers vote on tax regimes in experimental markets. We test if taxes on sellers are more popular than taxes on consumers, i.e. on voters themselves, even if taxes on sellers are inefficiently high. Taxes on sellers are more popular if voters underestimate the extent of tax shifting in the market. We show that inexperienced voters are prone to such a tax-shifting bias, that experience is an effective de-biasing mechanism, but that pre-vote deliberation about tax regimes makes initially held opinions more extreme rather than correct. Our results suggest that voting on taxes is prone to bias and that easy-to-interpret facts are needed to de-bias voters.
    JEL: C92 H22 D72
    Date: 2010–10
  5. By: Stephen Eliot Hansen; Michael McMahon
    Abstract: We test whether outside experts have information not available to insiders by using the voting record of the Bank of England's Monetary Policy Committee. Members with more private information should vote more often against conventional wisdom, which we measure as the average belief of market economists about future interest rates. We find evidence that external members indeed have information not available to internals, but also use a quasi-natural experiment to show they may exaggerate their expertise to obtain reappointment. This implies that an optimal committee, even outside monetary policy, should potentially include outsiders, but needs to manage career concerns.
    Keywords: Expert Behavior, Committees, Monetary Policy.
    JEL: D70 E52
    Date: 2010–10
  6. By: Leandro M. de Magalhães; Lucas Ferrero
    Abstract: We find the surprising result that the tax level is negatively correlated with the size of the Democratic majority in the interval in which the Democrats hold between 50 and 66% of the seats in the state Legislatures. This negative relationship suggests the failure of a simple ideological model that had found some support in the literature, that the main determinant of the tax level is the extent of partisan control over the Legislature. We compare this model with an alternative: a separation-of-powers model in which ideology plays no role in determining the tax level. The driving force of our model is the overlap between the supporters of the Governor and the supporters of the legislative majority. The tax level at first rises and then decreases as the size of the ruling majority increases above 50% of the seats, whether the legislative majority is of the same party as the Governor or from the opposition. This non-monotonic relationship is observed in the data and explained by our model.
    Keywords: Separation of powers, divided government, line-item veto, tax level, semiparametric.
    JEL: H00 H11 H20 H30 H71
    Date: 2010–10
  7. By: Hélène EHRHART (Centre d'Etudes et de Recherches sur le Développement International)
    Abstract: This paper goes beyond traditional political budget cycles studies by considering the impact of the election calendar on the composition of tax revenue (direct taxes versus indirect taxes) rather than on the global level. We develop a theoretical model, based on Drazen and Eslava (2010) to predict how the taxation structure will be modif ied during election years. Using a panel of 56 developing countries over 1980-2006, our study reveals clear patterns of electorally timed interventions. We found robust evidence that indirect taxes decreases are the preferred vehicle for incumbents in de veloping countries to increase their popularity just before elections. On average, they are falling of 2.6 percent in an election year while the direct taxes remain unchanged. These manipulations constitute reversals in the developing countries' tax reforms aim- ing at broaden tax bases and increase tax mobilization and point at the importance of both good fiscal institutions and fiscal discipline.
    Keywords: Political budget cycles, Tax structure, developing countries
    JEL: O10 E62 D72
    Date: 2010
  8. By: Vincent Anesi (University of Nottingham)
    Abstract: With the changing economic circumstances confronting their countries, regionally concentrated minorities have been facing a strategic problem, important aspects of which can be stylized as a situation in which a minority leader is uncertain about the costs of secession for her community. This paper shows that this uncertainty is a central cause of secession, using a model which incorporates both policies to appease secessionist aspirations and informational asymmetries. In a situation of asymmetric information, in which the policy-maker is better informed about the consequences of separation than the minority leader, signaling incentives make secession the unique equilibrium outcome, whether mutually advantageous compromises exist or not. We also show that the ruling majority may seek to maintain political unity by pre-committing to minority protection rules which prevent bluffing by the informed policy-maker. Additionally, the model generates comparative statics results on the question of which states are most likely to adopt constitutional rules protecting the minorities living within their borders.
    Keywords: Constitutional commitment, secession, signaling, regional redistribution
    JEL: D74 D82 H77
    Date: 2010–08
  9. By: Kfir Eliaz (Brown University); Roberto Serrano (Brown University and IMDEA Social Sciences Institute)
    Abstract: Consider the problem of information disclosure for a planner who faces two agents interacting in a state-dependent multi-action prisoners' dilemma. We find conditions under which the planner can make use of his superior information by disclosing some of it to the agents, and conditions under which such information leakage is not possible. Although the problem is entirely symmetric, the planner's only way to reveal part of the information is based on creating asymmetries between the two agents by giving them different pieces of information. We also find conditions under which such partially informative equilibria are the planner's best equilibria.
    Keywords: Information disclosure; generalized prisoners' dilemma; uninformative equilibria; partially or fully informative equilibria
    JEL: C72 D82 D83
    Date: 2010–10–12
  10. By: Hollanders, D.A. (Tilburg University, Center for Economic Research)
    Abstract: This paper analyses the political constraints of intergenerational risk sharing. The …rst result is that the political process generally does not lead to ex ante optimal insurance. The second result is that in a second best political setting PAYG still contributes to intergenerational risk sharing. The third result is that aging in- creases the discrepancy between …rst-best and second-best transfers. The source of the ine¢ ciency is that politicians redistribute to larger and easier swayed cohorts. Ex post redistribution to lower incomes still leads to an outcome that from an ex ante point of view is preferable to a situation without intergenerational transfers.
    Keywords: risk sharing;aging;political economy
    JEL: D72 E61 H21 H55
    Date: 2010

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.