New Economics Papers
on Collective Decision-Making
Issue of 2012‒04‒10
eleven papers chosen by

  1. Globalization and political trust By Fischer, Justina AV
  2. The Effect of Party Discipline on the Electoral Accountability of Politicians By Nicolas-Guillaume Martineau
  3. Non-economic voting and incumbent strength in Turkey By Hazama, Yasushi
  4. Political Accountability, Electoral Control, and Media Bias By Takanori Adachi; Yoichi Hizen
  5. Delegated Activism and Disclosure By Amil Dasgupta; Konstantinos Zachariadis
  6. Can lobbying encourage abatement? Designing a new policy instrument By Lange, Ian; Polborn, Sarah
  7. Are There Global Norms and Universal Standards of Electoral Integrity and Malpractice? Comparing Public and Expert Perceptions By Norris, Pippa
  8. The Wall Street Walk when Blockholders Compete for Flows By Amil Dasgupta; Giorgia Piacentino
  9. Participatory accountability and collective action : evidence from field experiments in Albanian schools By Barr, Abigail; Packard, Truman; Serra, Danila
  10. The doctrinal paradox, the discursive dilemma, and logical aggregation theory By Mongin, Philippe
  11. Winner-Take-All and Proportional-Prize Contests: Theory and Experimental Results. By Roman M. Sheremeta; William A. Masters; Timothy N. Cason

  1. By: Fischer, Justina AV
    Abstract: This paper postulates that a country’s integration into the world economy may lower citizens’ political trust. I argue that economic globalization constrains government’s choice set of feasible policies, impeding responsiveness to the median voter. Matching individual-level survey data from 1981 to 2007, repeated cross-sections of altogether 260’000 persons from 80 countries, with a measure of a country’s degree of economic globalization for the same time period, I find that there is a trust-lowering impact of globalization; its magnitude, however, depends on whether or not the individual is informed about politics and the economy. Trust-lowering effects of globalization are larger for those who have no interest in politics, are unwilling to indicate their political leaning, or who have low educational levels. Two-stage least squares regressions and a set of country and time fixed effects support a causal interpretation. Obviously, viewing the domestic government as accountable for its policies plays a decisive role for the relation between economic globalization and political trust. Robustness against country’s degree of economic development, past globalization and different time periods is tested.
    Keywords: Political trust; globalization; international trade; openness; FDI; World Values Survey
    JEL: F15 H41 Z13
    Date: 2012–03–30
  2. By: Nicolas-Guillaume Martineau (Département d’économique and GRÉDI, Université de Sherbrooke)
    Abstract: This essay examines the influence of a politician’s party on her accountability to the electorate. It also considers what the conjectured waning of political parties may imply for the effectiveness of elections in disciplining politicians, and for voter welfare. The paper models the election mechanism as a principal-agent relationship between the representative voter (principal) and the politician in office (agent). The party is heterogeneous, composed of factions whose preferences over policy differ. It may coerce the politician by threatening to remove her from the party’s helm following certain policy choices. The main result is that putschist threats, despite being a distortion when the electoral mechanism is functioning well, can be welfare-enhancing in the presence of another distortion on the electoral mechanism. This serves to contribute to a theory of the political second-best.
    Keywords: political agency; factions; accountability; political parties; ideology; voter welfare
    JEL: D72 D6 H10
    Date: 2012–03
  3. By: Hazama, Yasushi
    Abstract: Evidence suggests that incumbent parties find it harder to be re-elected in emerging than in advanced democracies because of more serious economic problems in the former. Yet the pro-Islamic Justice and Development Party (AKP) has ruled Turkey since 2002. Does economic performance sufficiently account for the electoral strength of the AKP government? Reliance on economic performance alone to gain public support makes a government vulnerable to economic fluctuations. This study includes time-series regressions for the period 1950-2011 in Turkey and demonstrates that even among Turkey's long-lasting governments, the AKP has particular electoral strength that cannot be adequately explained by economic performance.
    Keywords: Internal politics, Elections, Political parties, Economic conditions, Turkey, Economic voting
    JEL: D72
    Date: 2012–03
  4. By: Takanori Adachi (School of Economics, Nagoya University); Yoichi Hizen (Graduate School of Economics and Business Administration, Hokkaido Univeristy)
    Abstract: Are anti-establishment mass media really useful in preventing politicians from behaving dishonestly? This paper proposes a voting model for analyzing how differences in the direction of media bias affect politicians' behavior. In particular, the probability of corruption by an incumbent is higher (than that in the case of no media bias) if and only if the mass media have some degree of "anti-incumbent" bias (i.e., information favorable to the incumbent is converted into unfavorable news about him or her with a positive probability), provided that the incumbent is less likely to be opportunistic than a challenger. This result holds irrespective of the degree of "pro-incumbent" bias (i.e., information unfavorable to the incumbent is converted into impressive news about him or her with a positive probability). We also show that media bias never increases voter welfare. Our results thus suggest that society should make an effort to eliminate media bias per se rather than promote antagonistic media.
    Keywords: Political Accountability, Retrospective Voting, Media Bias, Voter Welfare
    JEL: D72 H11
    Date: 2012–03
  5. By: Amil Dasgupta; Konstantinos Zachariadis
    Abstract: Mutual funds hold large blocks of shares in many major corporations. Practitioners and regulators alike have been concerned that mutual funds use their proxy votes in a promanagement manner in order to garner lucrative pensions administration contracts, thus hindering shareholder value. Such concerns led the SEC to mandate the disclosure of mutual fund proxy votes starting in 2003. We present a simple model of mutual fund proxy voting in the presence of potential business ties. Our model generates clean predictions on how funds would vote both prior and subsequent to mandatory disclosure. We provide theoretical foundation for the limited activism of mutual funds and demonstrate that mandatory disclosure is not a panacea. We also show that the strategic interaction between multiple mutual fund blockholders of comparable size can generate counterintuitive non-monotone relationships with relevant empirical implications.
    Date: 2011–07
  6. By: Lange, Ian; Polborn, Sarah
    Abstract: Taking a political economy perspective this paper proposes an alternative carbon abatement policy instrument with significant cant advantages over existing policy instruments. The key feature of the proposed carbon securities is that they entitle their owners to a fi xed proportion of ex ante unknown total emis-sions. The total level of carbon emissions is set by the political process after the carbon securities have been sold. A key benefit of the proposed carbon security is that it creates a group of stakeholders, whose interest is for a smaller level of emissions and which competes with industries that consume signifi cant amounts of carbon-based energy. The advantages over existing policy tools include an equilibrium carbon price closer to the level preferred by voters and a more predictable environmental policy in the presence of either climate or political uncertainty. (JEL: D72, Q54, Q58)
    Keywords: climate policy; Lobbying
    Date: 2012–03
  7. By: Norris, Pippa (Harvard University)
    Abstract: When international observers criticize the quality of elections, do these expert evaluations reflect 'Western/American' values? Or are there universal global norms of electoral integrity and malpractice which are shared by ordinary people living in diverse cultures? To consider these issues, Part I of this paper unpacks the core concept of electoral integrity. Part II introduces a new battery of nine items carried for the first time in the 6th wave of the World Values Survey (WVS) 2010-12. This battery is designed to gauge perceptions of common types of electoral integrity and malpractice. Part III describes the results of the survey. Part IV then compares mass perceptions in each country against five summary indices based on expert evaluations. The conclusion summarizes the main findings and considers their implications.
    Date: 2012–03
  8. By: Amil Dasgupta; Giorgia Piacentino
    Abstract: Publicly traded corporations are a¤ected by a core agency problem: managers pay the full cost of e¤ort in running the corporations but shareholders enjoy most of the bene?ts. When ownership is dispersed individual shareholders have little incentive to monitor managers and little ability to in?uence them. Holders of equity blocks (?blockholders?) are a natural solu- tion to this problem. Because they own many shares they have both the incentive to monitor and the ability to in?uence management. Several well-known papers (e.g. Grossman and Hart (1980), Shleifer and Vishny (1986), Admati, P?eiderer, and Zechner (1994) and Kahn and Winton (1998)) have shown that blockholders can increase ?rm value through monitoring and activism. Activism can take the form of bringing forth shareholder proposals, proxy voting against management, informal negotiations with management, jawboning etc. These activities are collectively referred to as the use of ?voice?by blockholders.
    Date: 2011–10
  9. By: Barr, Abigail; Packard, Truman; Serra, Danila
    Abstract: There is general agreement that the existence of participatory institutions is a necessary condition for accountability, especially where top-down institutions are malfunctioning or missing. In education, the evidence on the effectiveness of participatory accountability is mixed. This paper argues that participation is a social dilemma and therefore depends, at least partly, on individuals'propensity to cooperate with others for the common good. This being the case, the mixed evidence could be owing to society-level heterogeneities in individuals'willingness and ability to overcome collective action problems. The authors investigate whether individuals'propensity to cooperate plays a role in parents'decisions to participate in both a school accountability system -- a"short route"to accountability -- and parliamentary elections -- a"long route"to accountability -- by combining survey data on 1,800 individuals'participation decisions with measures of their willingness to contribute to a public good in the context of a very simple, clearly defined laboratory experiment. They conduct a study in a new democracy, Albania, involving parents of children enrolled in primary schools. The findings confirm that, both across individuals within communities and across communities, the decision to hold teachers and school directors accountable directly through participation at the school level, and indirectly through political participation correlates with cooperativeness in a simple public goods game.
    Keywords: Parliamentary Government,Education For All,Tertiary Education,Primary Education,Governance Indicators
    Date: 2012–04–01
  10. By: Mongin, Philippe
    Abstract: Judgment aggregation theory, or rather, as we conceive of it here, logical aggregation theory generalizes social choice theory by having the aggregation rule bear on judgments of all kinds instead of merely preference judgments. It derives from Kornhauser and Sager’s doctrinal paradox and List and Pettit’s discursive dilemma, two problems that we distinguish emphatically here. The current theory has developed from the discursive dilemma, rather than the doctrinal paradox, and the final objective of the paper is to give the latter its own theoretical development along the line of recent work by Dietrich and Mongin. However, the paper also aims at reviewing logical aggregation theory as such, and it covers impossibility theorems by Dietrich, Dietrich and List, Dokow and Holzman, List and Pettit, Mongin, Nehring and Puppe, Pauly and van Hees, providing a uniform logical framework in which they can be compared with each other. The review goes through three historical stages: the initial paradox and dilemma, the scattered early results on the independence axiom, and the so-called canonical theorem, a collective achievement that provided the theory with its specific method of analysis. The paper goes some way towards philosophical logic, first by briefly connecting the modern philosophy of judgment, and second by thoroughly discussing and axiomatizing the "general logic" built in this framework.
    Keywords: Judgment Aggregation; Logical Aggregation; Doctrinal Paradox; Judgment Aggregation; Logical Aggregation; Doctrinal Paradox; Discursive Dilemma; General Logic; Premiss-Based vs Conclusion-Based Approach; Social Choice Theory; Impossibility Theorems
    JEL: D71 D70 D79
    Date: 2012
  11. By: Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); William A. Masters (Department of Food and Nutrition Policy, Tufts University); Timothy N. Cason (Department of Economics, Krannert School of Management, Purdue University)
    Abstract: This study provides a unified theoretical and experimental framework in which to compare three canonical types of competition: winner-take-all contests won by the best performer, winner-take-all lotteries where probability of success is proportional to performance, and proportional-prize contests in which rewards are shared in proportion to performance. We introduce random noise to reflect imperfect information, and collect independent measures of risk aversion, other-regarding preferences, and the utility of winning a contest. The main finding is that efforts are consistently higher with winner-take-all contests. The lottery contests have the same Nash equilibrium as proportional prizes, but induce contestants to choose higher efforts and receive lower, more unequal payoffs. This result may explain why contest designers who seek only to elicit effort offer lump-sum prizes, even though contestants would be better off with proportional rewards.
    Keywords: contests, rent-seeking, lotteries, incentives in experiments, risk aversion
    JEL: C72 D72 D74 J33
    Date: 2012

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