New Economics Papers
on Collective Decision-Making
Issue of 2011‒11‒21
ten papers chosen by

  1. Voting Chances Instead of Voting Weights By Paolo Di Giannatale, Francesco Passarelli
  2. "Euclidean Revealed Preferences: Testing the Spatial Voting Model" By Marc Henry; Ismael Mourifié
  3. Two-round elections, one-round determinants? Evidence from the French municipal elections By Cassette, Aurélie; Farvaque, Etienne; Héricourt, Jérôme
  4. Determinants of Electoral Outcomes: A simple Test of Meltzer and Richard's Hypothesis By Benoît Le Maux, University of Rennes 1, CREM-CNRS; Federica Minardy, Piemonte Orientale University; Charlotte Magalhaes, University of Rennes 1
  5. Risky Political Changes: Rational Choice vs Prospect Theory By Francesco Passarelli
  6. Consensus and democracy in Indonesia : Musyawarah-Mufakat revisited By Kawamura, Koichi
  7. Dissent voting behavior of central bankers: what do we really know? By Horvath, Roman; Rusnak, Marek; Smidkova, Katerina; Zapal, Jan
  8. A model of influence based on aggregation functions By Michel Grabisch; Agnieszka Rusinowska
  9. The total survey error paradigm and pre-election polls: the case of the 2006 Italian general elections By Fumagalli, Laura; Sala, Emanuela
  10. Corporate Control with Cross-Ownership By Marc Levy; Ariane Szafarz

  1. By: Paolo Di Giannatale, Francesco Passarelli
    Abstract: We study political distortions that emerge in situations where agents' political power is disproportionate with respect to their economic power. We provide a precise definition which adopts the same measure unit, the Shapley value, to evaluate both the economic and the political power. We show that usual weighted majority voting cannot prevent political distortions from emerging in a huge mass of situations. We propose an alternative voting method based on random assignments of voting rights. Agents are given chances to vote instead of weights. If chances are computed according to a specific formula, no political distortion occurs. As an application, we analyze the rotation voting system recently adopted by the European Central Bank. We find that this system yields an enormous amount of political distortion. Then we compute the voting chances that should be assigned to countries in order to eliminate it.
    Keywords: Voting power, Economic power, Political distortions, Voting rules, Weighted votes, Shapley value, Shapley Shubik index, European Central Bank
    JEL: C71 D71 D72
    Date: 2011–11
  2. By: Marc Henry (Département de Sciences Economiques, Universite de Montléal); Ismael Mourifié (Département de Sciences Economiques, Universite de Montléal)
    Abstract: In the spatial model of voting, voters choose the candidate closest to them in the ideological space. Recent work by (Degan and Merlo 2009) shows that it is falsi¯able on the basis of individual voting data in multiple elections. We show how to tackle the fact that the model only partially identi¯es the distribution of vot- ing pro¯les and we give a formal revealed preference test of the spatial voting model in 3 national elections in the US, and strongly reject the spatial model in all cases. We also construct con¯dence regions for partially identi¯ed voter characteristics in an augmented model with unobserved valence dimension, and identify the amount of voter heterogeneity necessary to reconcile the data with spatial preferences.
    Date: 2011–10
  3. By: Cassette, Aurélie; Farvaque, Etienne; Héricourt, Jérôme
    Abstract: Using a new database of French municipalities that covers 821 towns and 2 elections (2001 and 2008), we examine how the budget structure, degree of electoral competition and the economic context affect the share of votes for the incumbent. We assess the specicities created by the two-round process under French electoral rule (a dual ballot under plurality rule). We show that in the first round of the electoral process, spending on equipment can influence the voter, and that electoral competition has a strong impact on the incumbent's score. In the second round, the incumbent's vote is affected more by national considerations and local budget variables have no effect. We show that the dynamics between the first and the second rounds are intense. The results suggest that the determinants of each round in a two-round electoral process are different.
    Keywords: Economic voting; Local elections; Plurality rule; Visible expenditures
    JEL: H72 D72 H76
    Date: 2011–11–09
  4. By: Benoît Le Maux, University of Rennes 1, CREM-CNRS; Federica Minardy, Piemonte Orientale University; Charlotte Magalhaes, University of Rennes 1
    Abstract: The present study aims to test Meltzer and Richard’s (1981) hypothesis that lower-income individuals vote for candidates who favor higher taxes and more redistribution. Assuming that left-wing parties advocate a general increase in taxation, we estimate a vote function for the French Cantonal elections. We show clear-cut evidence that an increasing proportion of voters receiving social assistance raises the number of votes in favor of left-wing parties. This result highlights the importance of including redistribution aspects when estimating a vote function.
    Keywords: Vote Function, Local Government, Redistribution, Party ideology
    JEL: D72 H20
    Date: 2011–11
  5. By: Francesco Passarelli
    Abstract: This paper describes policy alternatives as lotteries, and studies how policy preferences are distorted by the cognitive anomalies postulated by Prospect Theory. Loss aversion induces a status quo bias. However, due to the reflection effect, the bias is asymmetric: too moderate attitudes toward a good reform or a good candidate, and too low severity toward bad politics. The reflection effect also determines low loyalty in partisan voting and weak concerns about partisan issues. Preferences about nonpartisan issues are independent of wealth because people use the status quo as a reference point. Ambitious platforms have more chances to pass than incremental and detailed changes because people are risk seeking in the realm of losses. In general, according to Prospect Theory the policy conflict within the society is smoother than under full rationality. Moreover, a pure majority system yields either prolonged conservatism or a radical abandonment of the status quo.
    Keywords: prospect theory, behavioral economics, voting behavior, behavioral political economy
    JEL: C9 D72 D81 H1
    Date: 2011–11
  6. By: Kawamura, Koichi
    Abstract: This paper analyzes customary practices of consensus decision making, called musyawarah-mufakat, as a basis of democratic stability in Indonesia. Musyawarah and mufakat (deliberation and consensus) are a traditional decision-making rule in Indonesia which has often been observed in village meetings. This paper argues that this traditional decision-making rule is still employed even in a modernized and democratized Indonesia, not only at rural assemblies but in the national parliament as well. Furthermore, this consensus way of decision making provides an institutional basis for democratic stability by giving every parliamentary player, whether big or small, an equal opportunity to express his/her interests. On the other hand, this system of musyawarahâ€mufakat decreases political efficiency in the sense that it takes a long time to deliberate drafted laws in the parliament.
    Keywords: Indonesia, Internal politics, Democracy, Political culture, Legislature
    Date: 2011–09
  7. By: Horvath, Roman; Rusnak, Marek; Smidkova, Katerina; Zapal, Jan
    Abstract: Abstract We examine the determinants of the dissent in central bank boards’ voting records about monetary policy rates in the Czech Republic, Hungary, Sweden, the U.K. and the U.S. In contrast to previous studies, we consider about 25 different macroeconomic, financial, institutional, psychological or preference-related factors jointly and deal formally with the attendant model uncertainty using Bayesian model averaging. We find that the rate of dissent is between 5% and 20% in these central banks. Our results suggest that most regressors, including those capturing the effect of inflation and output, are not robust determinants of voting dissent. The difference in central bankers’ preferences is likely to drive the dissent in the U.S. Fed and the Bank of England. For the Czech and Hungarian central banks, average dissent tends to be larger when policy rates are changed. Some evidence is also found that food price volatility tends to increase the voting dissent in the U.S. Fed and in Riksbank.
    Keywords: monetary policy; voting record; dissent
    JEL: E58 E52
    Date: 2011–11–11
  8. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: The paper concerns a dynamic model of influence in which agents have to make a yes-no decision. Each agent has an initial opinion, which he may change during different phases of interaction, due to mutual influence among agents. The influence mechanism is assumed to be stochastic and to follow a Markov chain. In the paper, we investigate a model of influence based on aggregation functions. Each agent modifies his opinion independently of the others, by aggregating the current opinion of all agents, possibly including himself. We provide a general analysis of convergence in the aggregation model and give more practical conditions based on influential players. We show that the process of influence converges always to one of the two consensus states, and there may exist other terminal classes, which are either cyclic or union of Boolean lattices. We give sufficient conditions for avoiding these additional terminal classes, based on properties of the graph of influence and influential players. We also introduce the notion of influential coalition and show that it can fully describe terminal classes. Some important families of aggregation functions are discussed.
    Keywords: Influence, aggregation function, convergence, terminal class, influential coalition, social network.
    Date: 2011–10
  9. By: Fumagalli, Laura; Sala, Emanuela
    Abstract: Pre-election polls sometimes fail to reach the purpose for which they are carried out: to provide accurate predictions of electoral out-comes. By looking at the 2006 Italian General Elections, this paper aims to assess the role that different factors play in determining the accuracy of the pre-election polls. We find strong evidence that the quality of the sampling frame and non-respondents may contribute to biasing the polls results. This paper also aims to show how to over-come some of the limitations of the survey data by using statistical matching techniques and weighing procedures.
    Date: 2011–11–09
  10. By: Marc Levy; Ariane Szafarz
    Abstract: Cross-ownership breaks the traditional rule of one-sided corporate control. Using a novel approach based on stochastic voting processes, this paper proposes a general method to determine control stakes in the presence of cross-ownership. It offers a generalization of the Banzhaf index, which allows coping with cross-ownership-inclusive ownership graphs. The original feature of this approach is its absolute sequentiality. We also operationalize this new approach by building an algorithm, which determines the shareholders’ respective control powers in any corporate structure. From a governance viewpoint, we emphasize that cross-ownership may act as a powerful device for shareholders’ expropriation. To make this point, we revisit the leading example of the German Allianz Group.
    Keywords: ownership and control; cross-ownership; tunneling; Banzhaf index; Allianz group
    JEL: G32 G34 C71 D72 D74
    Date: 2011–11

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