New Economics Papers
on Collective Decision-Making
Issue of 2012‒06‒13
eight papers chosen by

  1. The Effects of Voting Costs on the Democratic Process and Public Finances By Roland Hodler; Simon Luechinger; Alois Stutzer
  2. (Don’t) Make My Vote Count By Marco Faravelli; Santiago Sanchez-Pages
  3. The timing of sovereign defaults over electoral terms By Nathan Foley-Fisher
  4. Brief note about the dilemmas of public election By Estrada, Fernando
  5. Traditional sufficient conditions for Nash implementation may fail on Internet By Wu, Haoyang
  6. Social diversification, injustices, and Pareto optimality with non-binary preferences By Berdellima, Arian; Naqvi, Nadeem
  7. Foundations of Corporate Governance By Christophe Volonté
  8. Group Membership, Team Preferences, and Expectations (This is a new version of CEEL WP 6-09) By Francesco Guala; Luigi Mittone; Matteo Ploner

  1. By: Roland Hodler; Simon Luechinger; Alois Stutzer (University of Basel)
    Keywords: Fiscal policies, political knowledge, postal voting, special-interest politics, voter turnout, voting costs
    JEL: D72 D78 H00
    Date: 2012
  2. By: Marco Faravelli (School of Economics, The University of Queensland); Santiago Sanchez-Pages
    Abstract: Proponents of proportional electoral rules often argue that majority rule depresses turnout and may lower welfare due to the “tyranny of the majority†problem. The present paper studies the impact of electoral rules on turnout and social welfare. We analyze a model of instrumental voting where citizens have private information over their individual cost of voting and over the alternative they prefer. The electoral rule used to select the winning alternative is a combination of majority rule and proportional rule. Results show that the above arguments against majority rule do not hold in this set up. Social welfare and turnout increase with the weight that the electoral rule gives to majority rule when the electorate is expected to be split, and they are independent of the electoral rule employed when the expected size of the minority group tends to zero. However, more proportional rules can increase turnout within the minority group. This e¤ect is stronger the smaller the minority group. We then conclude that majority rule fosters overall turnout and increases social welfare, whereas proportional rule fosters the participation of minorities.
    Date: 2012
  3. By: Nathan Foley-Fisher
    Abstract: I construct a database that maps the timing of sovereign default decisions into elected politicians' terms of office, that provides an empirical means of investigating political economy theories of sovereign default. I find no robust patterns in the timing of default decisions over terms of office. I also find no evidence in support of the political reputation theory of sovereign debt repayment. Finally, there is some tentative evidence that elected leaders who default are also those more likely to be re-elected. Motivated by anecdotal evidence, I use a stylised model of political leaders with career concerns to demonstrate how this can occur when politicians care about re-election.
    Date: 2012
  4. By: Estrada, Fernando
    Abstract: In this brief comment, the public choice theory aims to distinguish the dilemmas and conflicts in formal and empirical. The hypothesis argues that the reality more complex than the principles of choice of Pareto and Liberalism*. Both the ethics and politics are taking decisions that are not always in line with the requirements of rationality and complete information.
    Keywords: Public choice theory; public election; rational choice; social welfare; economic psychology
    JEL: D70 D71 H41 D82 C72
    Date: 2012
  5. By: Wu, Haoyang
    Abstract: The Maskin's theorem is a fundamental work in the theory of mechanism design. In this paper, we propose that if agents report messages to the designer through channels (\emph{e.g.}, Internet), agents can construct a self-enforcing agreement such that any Pareto-inefficient social choice rule satisfying monotonicity and no-veto will not be Nash implementable when an additional condition is satisfied. The key points are: 1) The agreement is unobservable to the designer, and the designer cannot prevent the agents from constructing such agreement; 2) The agents act non-cooperatively, and the Maskin mechanism remain unchanged from the designer's perspective.
    Keywords: Mechanism design; Nash implementation; Social choice
    JEL: C70
    Date: 2012–06–06
  6. By: Berdellima, Arian; Naqvi, Nadeem
    Abstract: We prove the existence of a Pareto optimal state of a finite society that has socially differentiated persons, each with non-binary personal preferences that quasi-order a finite set of alternatives. Everybody engages in a volitional act of choice by maximization of non-binary preferences. As a consequence of interpersonal interaction among social creatures, the social interaction outcome defined as belonging to a nonempty social maximal set exists, and thus is Pareto optimal. Injustices inflicted by one group of persons upon a socially distinct one, arising from social diversification, are, however, consistent with such a collective outcome. (95 words)
    Keywords: non-binary choice; maximization; Pareto optimality; social identity; justice; discrimination
    JEL: D13 D63 D74 J71 J15 D01 J16
    Date: 2012–06–03
  7. By: Christophe Volonté (University of Basel)
    Keywords: Agency theory, Legal protection, Corporate goverance, Board of directors, Ownership
    JEL: G30 G32 G34 K00
    Date: 2012
  8. By: Francesco Guala; Luigi Mittone; Matteo Ploner
    Abstract: Group membership increases cooperation in social dilemma games, altruistic donation in dictator games, and fair offers in ultimatum games. While the empirical study of group action has grown rapidly over the years, there is little agreement at the theoretical level on exactly why and how group membership changes individual behaviour. According to some theorists, the effect of group framing is channelled primarily via the beliefs of group members, while others identify changes in preference as the key explanatory mechanism. We report an experiment using the minimal group paradigm and a prisoner’s dilemma with multiple actions, in which we manipulate players’ beliefs and show that common knowledge of group affiliation is necessary for group action. We also observe puzzling variations in behaviour when knowledge of group membership is asymmetric, which may be interpreted as cognitive dissonance generated by a normative cue administered in a highly unusual situation.
    Keywords: group identity, team preferences, social dilemmas, experimental economics
    JEL: C72 C92 H41
    Date: 2012

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