New Economics Papers
on Collective Decision-Making
Issue of 2012‒09‒03
ten papers chosen by

  1. The Dark Side of the Vote: Biased Voters, Social Information, and Information Aggregation Through Majority Voting By Morton, Rebecca; Piovesan, Marco; Tyran, Jean-Robert
  2. Competition, Cooperation, and Collective Choice By Markussen, Thomas; Reuben, Ernesto; Tyran, Jean-Robert
  3. Does Immigration Into Their Neighborhoods Incline Voters Toward the Extreme Right? The Case of the Freedom Party of Austria By Halla, Martin; Wagner, Alexander F; Zweimüller, Josef
  4. Premise-Based versus Outcome-Based Information Aggregation By Geoffroy de Clippel; Kfir Eliaz
  5. Channeling the final Say in Politics By Hans Gersbach; Oriol Tejada
  6. Transaction Costs can Encourage Coasean Bargaining By Robson, Alex
  7. Why follow the leader ? collective action, credible commitment and conflict By Keefer, Philip
  8. Behavioral Implementation By Geoffroy de Clippel
  9. On extensions of the core and the anticore of transferable utility games By Derks Jean; Peters Hans; Sudhölter Peter
  10. Communication Policy Reform, Interest Groups, and Legislative Capture By Bruce Owen

  1. By: Morton, Rebecca; Piovesan, Marco; Tyran, Jean-Robert
    Abstract: We experimentally investigate information aggregation through majority voting when some voters are biased. In such situations, majority voting can have a “dark side”, i.e. result in groups making choices inferior to those made by individuals acting alone. We develop a model to predict how two types of social information shape efficiency in the presence of biased voters and we test these predictions using a novel experimental design. In line with predictions, we find that information on the popularity of policy choices is beneficial when a minority of voters is biased, but harmful when a majority is biased. In theory, information on the success of policy choices elsewhere de-biases voters and alleviates the inefficiency. In the experiment, providing social information on success is ineffective. While voters with higher cognitive abilities are more likely to be de-biased by such information, most voters do not seem to interpret such information rationally.
    Keywords: biased voters; information aggregation; majority voting
    JEL: C92 D02 D03 D7
    Date: 2012–08
  2. By: Markussen, Thomas; Reuben, Ernesto; Tyran, Jean-Robert
    Abstract: The ability of groups to implement efficiency-enhancing institutions is emerging as a central theme of research in economics. This paper explores voting on a scheme of intergroup competition which facilitates cooperation in a social dilemma situation. Experimental results show that the competitive scheme fosters cooperation. Competition is popular but the electoral outcome depends strongly on specific voting rules of institutional choice. If the majority decides, competition is almost always adopted. If likely losers from competition have veto power, it is often not, and substantial gains in efficiency are foregone.
    Keywords: public goods; competition; tournament; cooperation; voting
    JEL: D72 H41 J33
    Date: 2012–08
  3. By: Halla, Martin; Wagner, Alexander F; Zweimüller, Josef
    Abstract: This paper explores one potentially important channel through which immigration may drive support for extreme-right-wing parties: the presence of immigrants in the voters' neighborhoods. We study the case of the Freedom Party of Austria (FPÖ). Under the leadership of Jörg Haider, this party increased its share of votes from less than 5 percent in the early 1980s to 27 percent by the year 1999. Using past regional settlement patterns as a source of exogenous variation, we find a significantly positive effect on FPÖ votes of the residential proximity of immigrants and citizens, explaining roughly a quarter of the cross-community variance in those votes. It is the proximity of low- and medium-skilled immigrants that drives this result; high-skilled immigrants have no (or even a negative) effect on FPÖ votes.
    Keywords: immigration; political economy; voting
    JEL: J61 P16
    Date: 2012–08
  4. By: Geoffroy de Clippel; Kfir Eliaz
    Abstract: A group of rational individuals with common interest need to select one of two outcomes. The optimal decision depends on whether certain premises or pieces of evidence are established as being true, and each member receives a noisy signal of the truth value of the relevant premises. Should the group reach a decision by voting whether each premise is true or false, or should they simply vote on the outcome? We show that for any nite number of individuals, the premise-based voting rule is more efficient in aggregating information than the outcome-based rule. However, generically, the gain from using the premise-based over the outcome-based rule can only be marginal when numerous individuals express independent opinions. Indeed, the outcome-based game is almost always asymptotically efficient.
    Keywords: #
    Date: 2012
  5. By: Hans Gersbach (ETH Zurich, Switzerland); Oriol Tejada (ETH Zurich, Switzerland)
    Abstract: We examine how the final say in a sequence of proposals for local public project provision, financing, and redistribution can be channeled towards socially desirable outcomes, thereby breaking the dictatorial power of the last agenda-setter. Individuals are heterogeneous with some citizens benefiting from the public project (winners) and the rest losing (losers) relative to per-capita costs. Our main insight is that a simple ban on subsidies for the proposal-makers can achieve the purpose whenever the first proposal-maker is a winner and the second proposal-maker is a loser. Such a ban induces project winners to make efficient public project proposals that are however coupled with socially undesirable subsidy schemes. The best possible amendment for project losers is then to match the project proposal and to eliminate all subsidies. We further show that two-round proposal-making constitutes the minimal form of political competition yielding first-best outcomes and that restrictions on tax schemes are socially desirable.
    Keywords: Voters & Elections; Game Theory ; Social Choice & Welfare
    JEL: Q38 F12 H20 H70
    Date: 2012–08
  6. By: Robson, Alex
    Abstract: When there are three parties, it is well known that the Coase Theorem may not hold even when there are no transaction costs, due to the emptiness of the core of the corresponding cooperative game [Aivazian and Callen (1981)]. We show that the standard Coasean bargaining game involving three parties is strategically equivalent to an asymmetric three player majority game. Hence, when there are three parties, the Coase Theorem fails if and only if the core of the corresponding three player majority game is empty. We use this equivalence result to derive all instances in which the Coase Theorem will and will not hold with three parties, and show that the Coase Theorem will actually hold most (over 80 per cent) of the time. We also demonstrate, in contrast to Aivazian and Callen (2003), that it is always possible to find a set of transaction costs which, when introduced into a frictionless bargaining situation, will cause an empty core to become non-empty. In other words, with suitably designed transaction costs, it is possible for the Coase Theorem to hold in cases where, in the absence of those transaction costs, it would fail to hold. When there are three parties, rather than hindering agreements, transaction costs can encourage Coasean bargaining.
    Keywords: Coase Theorem; externalities; transaction costs; cooperative games
    JEL: D23 D62 C78 C71 K00
    Date: 2012–08
  7. By: Keefer, Philip
    Abstract: Most analyses of conflict assume that conflicting groups act in a unitary fashion. This assumption is often violated: to reduce their risk of replacement, group leaders prevent both group members and soldiers from acting collectively, making it difficult for leaders to make credible commitments to them. Lifting the assumption that groups are unitary shifts the analysis of a wide range of conflict issues. The effects of income shocks and rents on conflict risk become contingent on collective action. Leader decisions regarding collective action explain the forcible recruitment of child soldiers and predation on civilians: leaders who prefer to limit military organization are more likely to pursue these tactics. Leader decisions regarding collective action also introduce an unexplored mechanism by which state capacity is created and a specific reason to regard state capacity as endogenous to conflict risk. This focus, finally, suggests that interventions to reduce conflict risk, such as safety net payments or service delivery, are likely to be most difficult to deliver precisely where leaders are most reluctant to allow collective action and where, therefore, conflict risk is highest.
    Keywords: Post Conflict Reconstruction,Peace&Peacekeeping,Armed Conflict,Labor Policies,International Terrorism&Counterterrorism
    Date: 2012–08–01
  8. By: Geoffroy de Clippel
    Abstract: Implementation theory assumes that participants’ choices are rational,in the sense of being derived from the maximization of a contextindependent preference. The paper investigates implementation under complete information when the mechanism designer is aware that individuals suffer from cognitive biases that lead to violations of IIA, or cannot exclude the possibility of such “irrational” behavior.
    Keywords: #
    Date: 2012
  9. By: Derks Jean; Peters Hans; Sudhölter Peter (METEOR)
    Abstract: We consider several related set extensions of the core and the anticore of games with transferableutility. An efficient allocation is undominated if it cannot be improved, in a specific way, bysidepayments changing the allocation or the game. The set of all such allocations is called theundominated set, and we show that it consists of finitely many polytopes with a core-likestructure. One of these polytopes is the L1-center, consisting of all efficient allocations thatminimize the sum of the absolute values of the excesses. Theexcess Pareto optimal set contains the allocations that are Pareto optimal in the set obtained byordering the sums of the absolute values of the excesses of coalitions and the absolute values ofthe excesses of their complements. The L1-center is contained in the excess Pareto optimal set,which in turn is contained in the undominated set. For three-person games all these sets coincide.These three sets also coincide with the core for balanced games and with the anticore forantibalanced games. We study properties of these sets and provide characterizations in terms ofbalanced collections of coalitions. We also propose a single-valued selection from the excessPareto optimal set, the min-prenucleolus, which is defined as the prenucleolus ofthe minimum of a game and its dual.
    Keywords: microeconomics ;
    Date: 2012
  10. By: Bruce Owen (Stanford University)
    Abstract: There are varied models of regulatory agency behavior. Economists have recently emphasized the incentive-incompatibility of agencies “captured” by regulated entities and a legislature concerned with welfare maximization. This conflict is characterized as a principal-agent problem to which the legislature responds in various ways, including the imposition of administrative procedure laws, oversight committees, and other attempts to control the regulatory bureaucracies. I argue that the principal-agent incentive compatibility model of regulatory capture is naïve. Regulatory agencies are, in general, eager to please or at least appease their congressional oversight and budget committees. It is the committees themselves, and especially their chairs, who capture and are captured by regulated entities, with the objective of funding expensive election campaigns in return for access to a seat at the regulatory policy negotiating table. The existence of the regulatory state and the details of regulatory policy reflect this systemic bias in the political system, which Lawrence Lessig has recently tagged “Type 2” (lawful) corruption.
    Keywords: regulation, administrative agency, administrative law, capture theory, political economy, agency behavior, communications policy, Federal Communications Commission (FCC)
    JEL: K23 L38
    Date: 2012–01

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