New Economics Papers
on Collective Decision-Making
Issue of 2012‒02‒20
eleven papers chosen by

  1. One Person, Many Votes: Divided Majority and Information Aggregation By Micael Castanheira De Moura; Laurent Bouton
  2. Voting as a Signaling Device By R. Emre Aytimur; Aristotelis Boukouras; Robert Schwager
  3. Adaptive voting: an empirical analysis of participation and choice By Martorana, Marco F.; Mazza, Isidoro
  4. Signalling, Incumbency Advantage, and Optimal Reelection Thresholds By Francesco Caselli; Thomas E. Cunningham; Massimo Morelli; Inés Moreno de Barreda
  5. Coalition formation: the role of procedure and policy flexibility By Eligius Hendrix; Annelies De Ridder; Agnieszka Rusinowska; Elena Saiz
  6. Voting Rights, Share Concentration, and Leverage at Nineteenth-Century US Banks By Howard Bodenhorn
  7. When is it Optimal to Delegate: The Theory of Fast-track Authority By Levent Celik; Bilgehan Karabay; John McLaren
  8. A model of influence with a continuum of actions By Michel Grabisch; Agnieszka Rusinowska
  9. Do Political Institutions Affect the Choice of the U.S. Cross-Listing Venue? By Jean-Claude Cosset; Charles Martineau; Anis Samet
  10. A Simple Model of the Commercial Lobbying Industry By Groll, Thomas; Ellis, Christopher J.
  11. Aggregation of multiple prior opinions. By Crès, Hervé; Gilboa, Itzhak; Vieille, Nicolas

  1. By: Micael Castanheira De Moura; Laurent Bouton
    Abstract: This paper shows that information imperfections and common values can solve coordination problems in multicandidate elections. We analyze an election in which (i) the majority is divided between two alternatives and (ii) the minority backs a third alternative, which the majority views as strictly inferior. Standard analyses assume voters have a fixed preference ordering over candidates. Coordination problems cannot be overcome in such a case, and it is possible that inferior candidates win. In our setup the majority is also divided as a result of information imperfections. The majority thus faces two problems: aggregating information and coordinating to defeat the minority candidate. We show that when the common value component is strong enough, approval voting produces full information and coordination equivalence: the equilibrium is unique and solves both problems. Thus, the need for information aggregation helps resolve the majority's coordination problem under approval voting. This is not the case under standard electoral systems.
    JEL: C72 D72 D82 D81
    Date: 2012–01–10
  2. By: R. Emre Aytimur (Georg-August-University Göttingen); Aristotelis Boukouras (Georg-August-University Göttingen); Robert Schwager (Georg-August-University Göttingen)
    Abstract: In this paper, citizens vote in order to influence the election outcome and in order to signal their unobserved characteristics to others. The model is one of rational voting and generates the following predictions: (i) The paradox of not voting does not arise, because the benefit of voting does not vanish with population size. (ii) Turnout in elections is positively related to the size of the local community and the importance of social interactions. (iii) Voting may exhibit bandwagon effects and small changes in the electoral incentives may generate large changes in turnout due to signaling effects. (iv) Signaling incentives increase the sensitivity of turnout to voting incentives in communities with low opportunity cost of social interaction, while the opposite is true for communities with high cost of social interaction. Therefore, the model predicts less volatile turnout for the latter type of communities.
    Keywords: electoral incentives; signaling; voting
    JEL: C70 D72 D80
    Date: 2012–01–26
  3. By: Martorana, Marco F.; 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 empirical verification by investigating voting behavior in terms of participation as well as choice. We test through panel data methods an outcome-based learning mechanism based on the following assumptions: (a) people expect that the party they do not support will be unable to bring economic improvements; (b) they receive a feedback whose impact depends on the consistency between their last voting behavior and personal economic improvements (or worsening) from the last election; (c) they tend to discard choices associated to an inconsistent feedback. Results show that feedbacks of this sort affect persistence of voting behavior, interpreted as participation and voting choice. Age and trade union affiliation reinforce this adaptive behavior. The analysis also investigates the intensity of the learning feedback, differentiating between a strong inconsistent feedback, which leads to a vote switch in favor of the opponent party, and a weak inconsistent feedback, which induces just abstention rather than a vote switch.
    Keywords: voting; bounded rationality; learning; political accountability
    JEL: D03 C23 D72 C25
    Date: 2012–01–23
  4. By: Francesco Caselli; Thomas E. Cunningham; Massimo Morelli; Inés Moreno de Barreda
    Abstract: Much literature on political behavior treats politicians as motivated by reelection, choosing actions to signal their types to voters. We identify two novel implications of models in which signalling incentives are important. First, because incumbents only care about clearing a reelection hurdle, signals will tend to cluster just above the threshold needed for reelection. This generates a skew distribution of signals leading to an incumbency advantage in the probability of election. Second, voters can exploit the signalling behavior of politicians by precommitting to a higher threshold for signals received. Raising the threshold discourages signalling effort by low quality politicians but encourages effort by high quality politicians, thus increasing the separation of signals and improving the selection function of an election. This precommitment has a simple institutional interpretation as a supermajority rule, requiring that incumbents exceed some fraction of votes greater than 50% to be reelected.
    JEL: D72 D78 D82
    Date: 2012–02
  5. By: Eligius Hendrix (Wageningen University, Logistics, Decision and Information Sciences - wageningen University); Annelies De Ridder (Nijmegen School of Management - Radboud university of Nijmegen); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Elena Saiz (Nijmegen School of Management - Radboud university of Nijmegen)
    Abstract: A spatial model of coalition formation is used together with data from Dutch elections and theoretical instances to study different procedures of coalition formation. The model shows that procedure plays an important role in reaching a coalition agreement and that political parties do not necessarily benefit from being a first-mover. Moreover, it is shown that a decrease in a party's flexibility can be (dis)advantageous in coalition negotiations. Furthermore, certain power sharing tactics appear not always to lead to an agreement that is in a party's advantage. The main message put forward is that the procedure of forming a coalition plays a more important role than is usually acknowledged in literature and practice.
    Date: 2012
  6. By: Howard Bodenhorn
    Abstract: Studies of corporate governance are concerned with two features of modern shareholding: diffuse ownership and the resulting separation of ownership and control, which potentially leads to managerial self-dealing; and, majority shareholding, which potentially mitigates some managerial self-dealing but opens the door for the expropriation of minority shareholders. This paper provides a study of the second issue for nineteenth-century US corporations. It investigates two related questions. First, did voting rules that limited the control rights of large shareholders encourage diffuse ownership? It did. Second, did diffuse ownership systematically alter bank risk taking? It did. Banks with less concentrated ownership followed policies that reduced liquidity and bankruptcy risk.
    JEL: G21 G3 N2
    Date: 2012–02
  7. By: Levent Celik; Bilgehan Karabay; John McLaren
    Abstract: With fast-track authority (FTA), the US Congress delegates trade-policy authority to the President by committing not to amend a trade agreement. We suggest an interpretation in which Congress uses FTA to forestall destructive competition between its members for protectionist rents. We show that FTA is never granted if an industry is operating in the majority of districts. Second, the more equally distributed are the industries across districts and the more similar are the industries' sizes, the more likely it is that FTA is granted. This is true since competition over rents is most punishing when bargaining power is symmetrically distributed, and in that case the ex ante expected welfare of each district is lower without FTA. Third, if existing levels of protection are very different across industries, even if FTA is granted, it may not lead to free trade because a majority of industries may prefer the status quo to free trade.
    JEL: C72 C78 D72 F13
    Date: 2012–02
  8. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: We generalize a two-action (yes-no) model of influence to a framework in which every player has a continuum of actions, among which he has to choose one. We assume the set of actions to be an interval. Each player has an inclination to choose one of the actions. Due to influence among players, the final decision of a player, i.e., his choice of one action, may be different from his original inclination. In particular, a coalition of players with the same inclination may influence another player with different inclination, and as a result of this influence, the decision of the player is closer to the inclination of the influencing coalition than his inclination was. We introduce a measure of such a positive influence of a coalition on a player. Several unanimous influence functions in this generalized framework are considered. Also the set of fixed points under a given influence function is analyzed. Furthermore, we study linear influence functions and discuss their convergence. For a linear unanimous function, we find necessary and sufficient conditions for the existence of the positive influence of a coalition on a player, and we calculate the value of the influence index. We also introduce a measure of a negative influence of a coalition on a player.
    Date: 2011
  9. By: Jean-Claude Cosset; Charles Martineau; Anis Samet
    Abstract: We study the impact of political institutions on foreign firms’ choice of their U.S. cross-listing venue. Using two measures of political institutions (an index of political rights and a political constraint index) and controlling for various firm-level and country-level characteristics, we show that foreign firms from countries with weak political institutions are more likely to cross-list in the U.S. via the over-the-counter market and less likely to opt for an exchange-listed program (i.e., New York, Nasdaq, and AMEX).
    Keywords: Cross-listing, Political institutions, Legal institutions
    JEL: G15 G32 G34 G38 P48
    Date: 2012
  10. By: Groll, Thomas; Ellis, Christopher J.
    Abstract: In this paper we present a model of the behavior of commercial lobbying firms (such as the so-called K-Street lobbyists of Washington, D.C.). In contrast to classical special interest groups, commercial lobbying firms represent a variety of clients and are not directly affected by policy outcomes. They are hired by citizens, or groups of citizens, to advocate on their behalf to policymakers. In our analysis we address two basic questions; why do commercial lobbying firms exist, and what are the implications of their existence for social welfare? We answer the first part of this question by proposing that commercial lobbying firms possess a verification technology that allows them to improve the quality of information concerning the social desirability of policy proposals. This gives policymakers the incentive to allocate their scarce time to lobbying firms. Essentially it is this access to policymakers that lobbying firms sell to their clients. To address the question of social welfare we construct a simple general equilibrium model that includes commercial lobbying firms, and compare the equilibrium obtained under market provision of lobbying services to the first best optimum. We find that the market level of lobbying services can be socially either too large or too small, and characterize when each will be the case.
    Keywords: Lobbying; Influence Activities; Information Acquisition; Financial Contributions; Commercial Lobbying Firms; Political Participation
    JEL: D72 D82
    Date: 2012–01
  11. By: Crès, Hervé (Département d'économie); Gilboa, Itzhak; Vieille, Nicolas
    Abstract: Experts are asked to provide their advice in a situation of uncertainty. They adopt the decision maker’s utility function, but each has a potentially different set of prior probabilities, and so does the decision maker. The decision maker and the experts maximize the minimal expected utility with respect to their sets of priors. We show that a natural Pareto condition is equivalent to the existence of a set Λ of probability vectors over the experts, interpreted as possible allocations of weights to the experts, such that (i) the decision maker’s set of priors is precisely all the weighted-averages of priors, where an expert’s prior is taken from her set and the weight vector is taken from Λ; (ii) the decision maker’s valuation of an act is the minimal weighted valuation, over all weight vectors in Λ, of the experts’ valuations.
    Keywords: Aggregation of opinions, Ambiguity, Multiple priors;
    JEL: D7 D8
    Date: 2011

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