New Economics Papers
on Collective Decision-Making
Issue of 2011‒04‒16
twelve papers chosen by

  1. Two-Party Competition with Persistent Policies By Jean Guillaume Forand
  2. Redistribution and Reelection under Proportional Representation: The Postwar Italian Chamber of Deputies By Golden, Miriam; Picci, Lucio
  3. Group Identity and Coalition Formation: Experiments in a three?player divide the dollar Game By Tremewan, James
  4. On the number of blocks required to access the coalition structure core By Béal, Sylvain; Rémila, Eric; Solal, Philippe
  5. Whose Opinion Counts? Political Processes and the Implementation Problem By Saran Rene; Tumennasan Norovsambuu
  6. The Europeanisation of Parliaments in Central and Eastern Europe By Petra Guasti
  7. Collectively Ranking Candidates - An Axiomatic Approach - By Werner Güth
  8. Elected Oligarchy and Economic Underdevelopment: The Case of Guyana By Khemraj, Tarron; Hinova, Diana
  9. The restricted core of games on distributive lattices: how to share benefits in a hierarchy By Michel Grabisch; Lijue Xie
  10. Two-agent Nash implementation: A new result By Wu, Haoyang
  11. Quantum and algorithmic Bayesian mechanisms By Wu, Haoyang
  12. The Shapley value for airport and irrigation games By Márkus, Judit; Pintér, Miklós; Radványi, Anna

  1. By: Jean Guillaume Forand (Department of Economics, University of Waterloo)
    Abstract: This paper studies the Markov perfect equilibrium outcomes of a dynamic game of electoral competition between two policy-motivated parties. I model incumbent policy persistence: parties commit to implement a policy for their full tenure in office, and hence in any election only the opposition party renews its platform. In equilibrium, parties alternate in power and policies converge to symmetric alternations about the median voter's ideal policy. Parties' disutility from opponents' policies leads to alterna- tions that display bounded extremism; alternations far from the median are never limits of equilibrium dynamics. Under a natural restriction on strategies, I find that robust long-run outcomes display bounded moderation; alternations close to the median are reached in equilibrium only if policy dynamics start there. I show that these results are robust to voters being forward-looking, the introduction of term limits, costly policy adjustments for incumbents, and office benefits.
    JEL: C73 D72 D78
    Date: 2010–11
  2. By: Golden, Miriam; Picci, Lucio
    Abstract: We study incumbency advantage and the electoral returns to pork and patronage over ten legislative periods from 1948 to 1992 for two political parties — the Christian Democrats (DC) and the Italian Socialist Party (PSI) — in Italy’s lower house of representatives, the Chamber of Deputies. Adapting a regression discontinuity design to Italy’s open-list system of proportional representation, we show that parliament comprised two groups: a small elite, whose members enjoyed an incumbency advantage, and the average deputy, who benefitted from no such incumbency advantage. Elite legislators affiliated with Italy’s two main parties of government received significantly more preference votes when pork and patronage were steered to their districts, although the effect is small. We interpret this to indicate that their incumbency advantage was linked to their ability to claim credit for these allocations. We also show that the two parties won more list votes when districts received more resources and that when districts received more resources, the abilities of these parties to persuade their electors to use preference votes improved. This form of electoral mobilization, in turn, enlarged the number of ministerial positions secured by the district. Our analysis depicts a political environment severely segmented between a small, powerful elite group of deputies and backbenchers.
    Keywords: incumbency effect; distributive politics; patronage; proportional representation; Italy; regression discontinuity
    JEL: C14 H11 H41 H83 H76
    Date: 2011–03–25
  3. By: Tremewan, James
    Abstract: This paper is an experimental study on the effect of group identity on the formation of coalitions and the resulting distribution of resources. After inducing group identity based on preferences over paintings, subjects play symmetric three-player _divide the dollar_ games with a majority rule decision process. The main finding is that where two players are from one group and one from the other, those in the minority earn significantly less than majority players. This is largely a result of a two-way split between majority players occurring more frequently, either because of the increased salience of this outcome, or a shift in social preferences.
    Date: 2010–06
  4. By: Béal, Sylvain; Rémila, Eric; Solal, Philippe
    Abstract: This article shows that, for any transferable utility game in coalitional form with nonempty coalition structure core, the number of steps required to switch from a payoff configuration out of the coalition structure core to a payoff configuration in the coalition structure core is less than or equal to (n*n+4n)/4, where n is the cardinality of the player set. This number considerably improves the upper bound found so far by Koczy and Lauwers (2004).
    Keywords: coalition structure core; excess function; payoff configuration; outsider independent domination.
    JEL: C71
    Date: 2011–03–22
  5. By: Saran Rene; Tumennasan Norovsambuu (METEOR)
    Abstract: The mechanism used in Nash implementation is a form of direct democracy, taking everyone''s opinion into account. We augment this mechanism with a political process that selects the opinions of a subset of the individuals. We study three such processes -- oligarchy, oligarchic democracy and random sampling -- and compare the social choice rules (SCRs) that can be implemented using each of these processes with those that can be Nash implemented. In oligarchy, only the opinions of a fixed subset of the individuals -- the oligarchs -- determine the implemented alternative. We obtain a negative result for oligarchies: there exist Nash implementable SCRs that cannot be implemented by any oligarchy. Oligarchic democracy is a perturbation of oligarchy, in which the opinions of the oligarchs “almost always” determine the implemented alternative but sometimes, everyone''s opinions are considered. In a sharp contrast to the negative result for oligarchies, we show that in economic environments, every Nash implementable SCR can be implemented by an oligarchic democracy in which any three individuals act as oligarchs. In random sampling, opinions of a fixed number of individuals are selected randomly, which then determine the implemented alternative. We show that in economic environments, every Nash implementable SCR can be implemented by randomly sampling opinions of four individuals.
    Keywords: microeconomics ;
    Date: 2011
  6. By: Petra Guasti
    Abstract: The role and functioning of the upper chambers of Central and Eastern European (CEE) parliaments have for a long time been a minor topic on the research agenda of legislative specialists. This paper seeks to fill the gap in existing research by aiming to determine the main effects caused by the process of Europeanisation on the relationships between the upper and lower chambers of parliaments in four CEE countries; the Czech Republic, Poland, Romania and Slovenia. The paper identifies these changes on two levels – the institutional and the individual. The institutional level analysis examines changes in the formal and informal structures of CEE bicameral legislatures and their functioning. The individual level analysis focuses on changes within the recruitment and career patterns of parliamentarians within the expanded multilevel governance system. The aim of the paper is to determine whether the process of Europeanisation and EU accession establishes a common ground for formal and informal cooperation between the chambers (and their respective members) at the national level, or whether this process operates as a further constraint for the successful consolidation of parliaments in Central and Eastern Europe.
    Keywords: Czech Republic; European Parliament; institutionalisation; legislative procedure; MEPs; national parliaments; Poland; political representation; Romania; Slovenia
    Date: 2011–04–15
  7. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group)
    Abstract: Different evaluators typically disagree how to rank different candidates since they care more or less for the various qualities of the candidates. It is assumed that all evaluators submit vector bids assigning a monetary bid for each possible rank order. The rules must specify for all possible vectors of such vector bids the collectively binding rank order of candidates and the "payments" for this bid vector and its implied rank order. Three axioms uniquely define the "procedurally fair" ranking rules. We finally discuss how our approach can be adjusted to situations where one wants to rank only acceptable candidates.
    Keywords: social ranking, fairness, fair game forms, objective equality, mechanism desig,, committee decision making
    JEL: C70 C72 D63 D71
    Date: 2011–04–07
  8. By: Khemraj, Tarron; Hinova, Diana
    Abstract: This study proposes the idea that Guyana’s present government can be categorized as an elected oligarchy. It highlights the existence of several binding constraints (or structural bottlenecks) and demonstrates how these constraints are exacerbated by the elected oligarchy to impair the economic development of the country. Using stylized data on economic trends, the paper illustrates the direct and indirect channels through which the elected oligarchy stifles the private sector and consequently economic progress. As such, the paper presents the elected oligarchy as an alternative channel through which private investments are crowded out by the political strategy of the state.
    Keywords: Private sector crowding out; Elected oligarchy
    JEL: P40 O10 O54 B50 P48
    Date: 2011–03
  9. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Lijue Xie (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: Finding a solution concept is one of the central problems in cooperative game theory, and the notion of core is the most popular solution concept since it is based on some rationality condition. In many real situations, not all possible coalitions can form, so that classical TU-games cannot be used. An interesting case is when possible coalitions are defined through a partial ordering of the players (or hierarchy). Then feasible coalitions correspond to teams of players, that is, one or several players with all their subordinates. In these situations, the core in its usual formulation may be unbounded, making its use difficult in practice. We propose a new notion of core, called the restricted core, which imposes efficiency of the allocation at each level of the hierarchy, is always bounded, and answers the problem of sharing benefits in a hierarchy. We show that the core we defined has properties very close to the classical case, with respect to marginal vectors, the Weber set, and balancedness.
    Keywords: cooperative game, feasible coalition, core, hierarchy
    Date: 2011
  10. By: Wu, Haoyang
    Abstract: [Moore and Repullo, \emph{Econometrica} \textbf{58} (1990) 1083-1099] and [Dutta and Sen, \emph{Rev. Econom. Stud.} \textbf{58} (1991) 121-128] are two fundamental papers on two-agent Nash implementation. Both of them are based on Maskin's classic paper [Maskin, \emph{Rev. Econom. Stud.} \textbf{66} (1999) 23-38]. A recent work [Wu,, \emph{Inter. J. Quantum Information}, 2010 (accepted)] shows that when an additional condition is satisfied, the Maskin's theorem will no longer hold by using a quantum mechanism. Furthermore, this result holds in the macro world by using an algorithmic mechanism. In this paper, we will investigate two-agent Nash implementation by virtue of the algorithmic mechanism. The main result is: The sufficient and necessary conditions for Nash implementation with two agents shall be amended, not only in the quantum world, but also in the macro world.
    Keywords: Quantum game theory; Mechanism design; Nash implementation.
    JEL: D71
    Date: 2011–04–05
  11. By: Wu, Haoyang
    Abstract: Bayesian implementation concerns decision making problems when agents have incomplete information. This paper proposes that the traditional sufficient conditions for Bayesian implementation shall be amended by virtue of a quantum Bayesian mechanism. Furthermore, by using an algorithmic Bayesian mechanism, this amendment holds in the macro world too.
    Keywords: Bayesian implementation; Quantum game theory; Mechanism design
    JEL: D71
    Date: 2011–04–05
  12. By: Márkus, Judit; Pintér, Miklós; Radványi, Anna
    Abstract: In this paper cost sharing problems are considered. We focus on problems given by rooted trees, we call these problems cost-tree problems, and on the induced transferable utility cooperative games, called irrigation games. A formal notion of irrigation games is introduced, and the characterization of the class of these games is provided. The well-known class of airport games Littlechild and Thompson (1977) is a subclass of irrigation games. The Shapley value Shapley (1953) is probably the most popular solution concept for transferable utility cooperative games. Dubey (1982) and Moulin and Shenker (1992) show respectively, that Shapley's Shapley (1953) and Young (1985)'s axiomatizations of the Shapley value are valid on the class of airport games. In this paper we show that Dubey (1982)'s and Moulin and Shenker (1992)'s results can be proved by applying Shapley (1953)'s and Young (1985)'s proofs, that is those results are direct consequences of Shapley (1953)'s and Young (1985)'s results. Furthermore, we extend Dubey (1982)'s and Moulin and Shenker (1992)'s results to the class of irrigation games, that is we provide two characterizations of the Shapley value for cost sharing problems given by rooted trees. We also note that for irrigation games the Shapley value is always stable, that is it is always in the core Gillies (1959).
    Keywords: TU games; Shapley value; Axiomatization; Cost Sharing
    JEL: C71
    Date: 2011

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