New Economics Papers
on Collective Decision-Making
Issue of 2011‒03‒19
nine papers chosen by

  1. The effect of ideology on policy outcomes in proportional representation systems By Francesco de Sinopoli; Leo Ferraris; Giovanna Iannantuoni
  2. Federal Directives, Local Discretion and the Majority Rule By Antoine Loeper
  3. Satisfaction and adaptation in voting behavior: an empirical exploration By Martorana, Marco Ferdinando; Mazza, Isidoro
  4. The War of Information By Gul, Faruk; Pesendorfer, Wolfgang
  5. Electoral Business Cycles in OECD Countries By Canes-Wrone, Brandice; Park, Jee-Kwang
  6. Reverse Electoral Business Cycles and Housing Markets By Canes-Wrone, Brandice; Park, Jee-Kwang
  7. Policy-Specific Information and Informal Agenda Power By Hirsch, Alexander V.; Shotts, Kenneth W.
  8. Using Collaborative Bargaining to Develop Environmental Policy when Information is Private By Christopher Bruce; Jeremy Clark
  9. The Power of Political Voice: Women's Political Representation and Crime in India By Lakshmi Iyer; Anandi Mani; Prachi Mishra; Petia Topalova

  1. By: Francesco de Sinopoli; Leo Ferraris; Giovanna Iannantuoni
    Abstract: In this paper we propose a model in which there are ideological and strate- gic voters who vote under poportional rule. We prove that the behavior of ideological voters matters for the determination of the outcome. We show that a subset of strategic voters partially counteracts the votes of the ideological voters.
    Keywords: Proportional Election, Strategic Voting, Ideological Voting
    JEL: C72 D72
    Date: 2011–03
  2. By: Antoine Loeper
    Abstract: We consider a federation in which citizens determine by federal majority rule a discretionary policy space which partially restricts the sovereignty of member states. Citizens first vote on the size of the discretionary space (the degree of local discretion), and then on its location on the policy space (the federal directive). Finally, each state votes on its respective policy within the discretionary space. This federal mechanism allows voters to express directly their trade-o¤ between flexibility and policy harmonization. We show that at the voting equilibrium, the federal directive is negatively sensitive to the preferences of nonmedian voters. Moreover, the degree of local discretion is too limited and insufficiently sensitive to the magnitude of externalities. Hence, the model shows that inadequate and excessively rigid federal interventions can emerge from a neutral and democratic decision process without agency costs or informational imperfections.
    Keywords: Federalism, Local Discretion, Directive, Partial Decentralization, Majority rule. JEL Classification Numbers: H77, D72
    Date: 2010–12
  3. By: Martorana, Marco Ferdinando; Mazza, Isidoro
    Abstract: Dynamic models of learning and adaptation have provided realistic predictions in terms of voting behavior. This study aims at contributing to their scant empirical verification. We develop a learning algorithm based on bounded rationality estimating the pattern of learning process through a two-stage econometric model. The analysis links voting behavior to past choices and economic satisfaction derived from previous period election and state of the economy. This represents a novelty in the literature on voting that assumes given voter preferences. Results show that persistence is positively affected by the combination of income changes and past behavior and by union membership.
    Keywords: voting; bounded rationality; learning; political accountability
    JEL: C23 D72 C25
    Date: 2010–12–31
  4. By: Gul, Faruk (Princeton University); Pesendorfer, Wolfgang (Princeton University)
    Abstract: We analyze political campaigns between two parties with opposing interests. Parties pay a cost to provide information to a voter who chooses the policy. The information flow is continuous and stops when parties quit. The parties' actions are strategic substitutes: a party with a lower cost provides more but its opponent provides less information. For voters, the parties' actions are complements and raising the low-cost party's cost may be beneficial. Asymmetric information adds a signaling component in the form of a belief-threshold beyond which unfavorable information is offset by the informed party's decision to continue campaigning.
    Date: 2010–09
  5. By: Canes-Wrone, Brandice (Princeton University); Park, Jee-Kwang (Princeton University)
    Abstract: Studies of OECD countries have generally failed to detect real economic expansions in the pre-election period, casting doubt on the existence of opportunistic political business cycles. We develop a theory that predicts a substantial portion of the economy experiences a real decline in the pre-election period. Specifically, the political uncertainty created by elections induces private actors to postpone investments with high costs of reversal. The resulting declines, referred to as reverse electoral business cycles, are larger the more competitive the electoral race and the greater the polarization between major parties. We test these predictions using quarterly data on private fixed investment in ten OECD countries between 1975 and 2006. The results suggest that reverse electoral business cycles exist, and as expected, depend on electoral competitiveness and partisan polarization. Moreover, simply by removing private fixed investment from gross domestic product (GDP), we uncover robust evidence of opportunistic cycles.
    Date: 2010–09
  6. By: Canes-Wrone, Brandice (Princeton University); Park, Jee-Kwang (Princeton University)
    Abstract: We argue that the political uncertainty generated by elections encourages private actors to delay investments that entail high costs of reversal, creating a pre-election decline in economic activity entitled a "reverse electoral business cycle." This incentive for delay becomes greater as policy differences between parties/candidates increase. Using new survey and observational data from the United States, we test these arguments. The individual-level analysis assesses whether respondents' perceptions of presidential candidates' policy differences increased the likelihood of postponing certain actions and purchases. For one of these items, housing, we collected observational data to examine whether electoral cycles indeed induce a pre-election decline in economic activity. The findings support the predictions and cannot be explained by existing theories of political business cycles.
    Date: 2010–09
  7. By: Hirsch, Alexander V. (Princeton University); Shotts, Kenneth W. (Stanford University)
    Abstract: In Gilligan and Krehbiel's models of procedural choice in legislatures, a committee exerts costly effort to acquire private information about an unknown state of the world. Subsequent work on expertise, delegation, and lobbying has largely followed this approach. In contrast, we develop a model of information as policy valence. We use our model to analyze a procedural choice game, focusing on the effect of transferability, i.e., the extent to which information acquired to implement one policy option can be used to implement a different policy option. We find that when information is transferable, as in Gilligan and Krehbiel's models, closed rules can induce committee specialization. However, when information is policy-space's, open rules are actually superior for inducing specialization. The reason for this surprising result is that a committee lacking formal agenda power has a greater incentive to exercise informal agenda power by exerting costly effort to generate high-valence legislation.
    Date: 2010–08
  8. By: Christopher Bruce; Jeremy Clark
    Abstract: In many cases governments invite interest groups to use collaborative bargaining to resolve environmental conflicts. If the parties fail to reach agreement, the government threatens to impose a backstop policy. Bargaining models have predicted that any agreements will be influenced, variously, by self-interest, equity, or entitlement (to the status quo). Although most such models assume that the parties are well informed about one another’s utility functions, this assumption conflicts with the reality of negotiations over environmental policy. We develop a laboratory experiment to investigate the impact of private information. Subjects who bargain under this constraint are almost as likely to reach (approximately efficient) agreements as those bargaining under full information. We also find that equity plays a less important role, and entitlement a more important role, under private information than under full information. There is only limited evidence to suggest that parties are drawn to the Nash bargain.
    JEL: C92 D74 H44 Q58
    Date: 2011–03–11
  9. By: Lakshmi Iyer (Harvard Business School, Business, Government and the International Economy Unit); Anandi Mani (University of Warwick); Prachi Mishra (Research Department, IMF); Petia Topalova (Research Department, IMF)
    Abstract: Using state-level variation in the timing of political reforms, we find that an increase in female representation in local government induces a large and significant rise in documented crimes against women in India. Our evidence suggests that this increase is good news, as it is driven primarily by greater reporting rather than greater incidence of such crimes. In contrast, we find no increase in crimes against men or gender-neutral crimes. We also examine the effectiveness of alternative forms of political representation: Large scale membership of women in local councils affects crime against them more than their presence in higher-level leadership positions.
    Keywords: crime, women's empowerment, minority representation, voice
    JEL: J12 J15 J16 P16
    Date: 2011–03

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