nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2012‒11‒17
thirteen papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. A theory of political entrenchment By Saint-Paul, Gilles; Ticchi, Davide; Vindigni, Andrea
  2. An Inquiry into the Use of Illegal Electoral Practices and Effects of Political Violence By Roxana Gutiérrez-Romero
  3. Too close to call: Growth and the cost of ruling in US presidential elections, with an application to the 2012 election By Kurrild-Klitgaard, Peter
  4. How An Agenda Setter Induces Legislators to Adopt Policies They Oppose By Matthias Dahm; Amihai Glazer
  5. Public-Private Mix of Health Expenditure: A Political Economy Approach and A Quantitative Exercise By Shuyun May Li, Solmaz Moslehi, Siew Ling Yew
  6. Turkish Voter Response to Government Incompetence and Corruption Related to the 1999 Earthquakes By Ali T. Akarca; Aysit Tansel
  7. Are Ballot Initiative Outcomes Influenced by the Campaigns of Independent Groups? A Precinct-Randomized Field Experiment By Rogers, Todd; Middleton, Joel A.
  8. Redefinition of the Greek electoral districts through the application of a region-building algorithm By Photis, Yorgos N.
  9. Who are the Voluntary Leaders? Experimental Evidence from a Sequential Contribution Game By Raphaële Préget; Phu Nguyen-Van; Marc Willinger
  12. Herding Among Bureaucrats By Branko Boskovic, David P.Byrne, Arvind Magesan
  13. Gaming the Boston School Choice Mechanism in Beijing By He, Yinghua

  1. By: Saint-Paul, Gilles; Ticchi, Davide; Vindigni, Andrea
    Abstract: We develop a theory of endogenous political entrenchment in a simple two-party dynamic model of income redistribution with probabilistic voting. A partially self-interested left-wing party may implement (entrenchment) policies reducing the income of its own constituency, the lower class, in order to consolidate its future political power. Such policies increase the net gain that low-skill agents obtain from income redistribution, which only the Left (but not the Right) can credibly commit to provide, and therefore may help offsetting a potential future aggregate ideological shock averse to the left-wing party. We demonstrate that political entrenchment by the Left occurs only if incumbency rents are sufficiently high and that low-skill citizens may vote for this party even though they rationally expect the adoption of these policies. We also discuss the case where the left-wing party may have the incentive to ex-ante commit to not pursue entrenchment policies once in power. Finally, we show that, in a more general framework, the entrenchment policies can be implemented also by the right-wing party. The comparative statics analyzes the effects of state capacity, a positive bias of voters for one party and income inequality on the incentives of the incumbent party to pursue entrenchment policies. The importance of our theory for constitutionally legislated term limits is also discussed. The theory sheds light on why left-wing parties or politicians often support liberal immigration policies of unskilled workers, are sometime in favor of free trade with less developed economies and of globalization more generally, or fail to reform plainly "dysfunctional" public educational systems damaging the lower classes.
    Keywords: Political entrenchment; constituencies; inequality; inefficient redistribution; checks and balances; political rents; state fiscal capacity.
    JEL: D72 P16
    Date: 2012–11
  2. By: Roxana Gutiérrez-Romero
    Abstract: This article investigates whether vote-buying and the instigation of violence in the disputed 2007 Kenyan elections were strategically motivated, and whether those affected by electoral violence changed their views towards ethno-politics and the use of violence. To answer these questions, a panel survey conducted before and after the elections is combined with external indicators of electoral violence. We find that political parties targeted vote-buying towards specific groups to weaken the support of their political rivals and to mobilize their own supporters. Furthermore, parties instigated violence strategically in areas where they were less likely to win. Although the victims of violence would prefer that parties are no longer allowed to organize in ethnic or religious lines, they are more likely to identify in ethnic terms, support the use of violence and avoid relying on the police to resolve disputes. The overall findings suggest an increased risk of electoral-violence reoccurring.
    Keywords: Political competition; electoral violence; vote-buying; election fraud; ethnic identity; Kenya
    Date: 2012
  3. By: Kurrild-Klitgaard, Peter
    Abstract: The note briefly outlines a new model for the explanation of US presidential elections, founded on (a) recent economic growth and (b) a measure of what may be called “’the cost of ruling”. The former is based in changes in real disposable income for the period following a mid-term election, while the latter combines factors of incumbency and terms-in-office. The model is applied to data from the US presidential elections 1932-2008 and has considerable explanatory power for the variation in the incumbent party’s candidate’s share of the two-party vote (R2=0.74). The model is controlled against a number of other frequent explanations and is found to be quite robust. When augmented with approval ratings for incumbent presidents, the explanatory power increases to 83 pct. and only incorrectly calls one of the last 15 US presidential elections. Applied to the 2012 election as a forecasting model the prediction is that President Obama will win 49,6 pct. of the two-party vote.
    Keywords: Economic voting; US presidential elections
    JEL: D72
    Date: 2012–11–01
  4. By: Matthias Dahm (Department d'Economia and CREIP, Universitat Rovira i Virgili, Reus, Spain); Amihai Glazer (Department of Economics, University of California, Irvine, CA 92697 USA)
    Abstract: This paper addresses the puzzle of why redistributive legislation, which benefits a small minority, may pass with overwhelming majorities. It models a legislature in which the same agenda setter serves for two periods, showing how he can exploit a legislature (completely) in the first period by promising future benefits to legislators who support him. In equilibrium, a large majority of legislators vote for the first-period proposal because they thereby maintain the chance of belonging to the minimum winning coalition in the future. Legislators may therefore approve policies by large majorities, or even unanimously, that benefit few, or even none, of them. The results are robust; but institutional arrangements (such as entitlements) can reduce the agenda setter's power by reducing his discretion to reward and punish legislators, and rules (such as sequential voting) can increase individual legislators' incentives to resist exploitation.
    Date: 2012–11
  5. By: Shuyun May Li, Solmaz Moslehi, Siew Ling Yew
    Abstract: This paper constructs a simple overlapping generations model to examine how the choice of public and private health expenditure is affected by preferences and economic factors under majority voting. In the model,agents with heterogeneous income decide how much to consume, save, and invest in private health care, and vote for the income tax to be used to finance public health. Agents survival probabilities are endogenously determined by a CES composite of public and private health expenditure. For the two special cases that public and private health are complements or perfect substitutes, we show that the voting equilibrium is unique and locally stable. For the general case, we calibrate the model to Canadian data to conduct a quantitative analysis.Our results suggest that the public-private mix of health expenditure is quite sensitive to the degree of substitutability between private and public health and the relative e¤ectiveness of public and private health. Using a sample of advanced democratic countries, we further infer these two parameters and construct the shares of public health in total health expenditure for each country, and find that the predicted values match the data quite well.
    Keywords: Public-private mix, Health expenditure, Majority voting, Overlapping generations model
    JEL: D7 H51 I1
    Date: 2012
  6. By: Ali T. Akarca (Department of Economics, University of Illinois at Chicago); Aysit Tansel (Department of Economics, METU)
    Abstract: The two major earthquakes which struck northwestern Turkey in 1999,caused enormous amounts of death and destruction, and exposed rampant government corruption involving construction and zoning code violations, as a factor magnifying the disaster. The opposition parties and one of the incumbent parties which participated in previous national governments and held power in current and past municipal administrations were responsible for that. The other two incumbent parties came to power only a short time before the earthquakes and controlled almost none of the local administrations in the disaster zone. They on the other hand, were responsible for the incompetence shown in providing relief, for involvement in corruption related to those efforts, and for failing to prosecute the businessmen who constructed the shoddy buildings and the corrupt officials who permitted them.How voters responded to these in the 2002 parliamentary elections is investigated, using crossprovincial data, controlling for other social, political and economic factors. The fact that different groups of parties were responsible for different types of corruption and mismanagement provided us with a unique data to differentiate between voter responses to corruption and incompetence, and to corruption which has occurred before and after the earthquakes. Our results show that voters punished all of the political parties which participated in governments during the previous decade. The party in charge of the ministry responsible for disaster relief, and parties that controlled more of the city administrations in the quake zone were blamed more. The newly formed Justice and Development Party (AKP) was the main beneficiary of the votes lost by these parties. Our results corroborate the view in the corruption literature that voters react drastically only when the corruption is massive, the information on it highly-credible and well-publicized, involves large number of political parties, not accompanied by competent governance, and a non-corrupt alternative is available.
    Keywords: Turkey, Natural disaster, Earthquake, Corruption, Government performance, Elections, Voter Behavior, Party preference
    JEL: D72 D73
    Date: 2012–01
  7. By: Rogers, Todd (Harvard University); Middleton, Joel A. (NYU)
    Abstract: Ballot initiatives are consequential and common, with total spending on initiative campaigns in the US rivaling that of Presidential campaigns. Observational studies using regression approaches on observational data have alternately found that initiative campaign spending cannot affect initiative outcomes, can increase the number of votes rejecting (but not approving) initiatives, or can affect outcomes in either direction. We report the first well-powered precinct-randomized field experiment to evaluate an initiative advocacy campaign. We find that campaigns can influence both rejection and approval of initiatives by changing how citizens vote, as opposed to by influencing turnout or ballot completion. Our experiment (involving around 18% of Oregon households in 2008) studied a statewide mail program conducted by a Political Action Committee. Results further suggest that two initiatives would have passed if not for the advocacy campaign to reject them. We discuss implications for theories about direct democracy, campaign finance, and campaign effects.
    Date: 2012–11
  8. By: Photis, Yorgos N.
    Abstract: The main purpose of this paper is the formulation of a methodological approach for the definition of homogenous spatial clusters, taking into account both geographical and descriptive characteristics. The proposed methodology, is substantiated by SPiRAL (SPatial Integration and Redistricting ALgorithm), a constrained-based spatial clustering algorithm, whose successive steps focus on the analysis of the characteristics of the areas being integrated, the designation of the spatial clusters and the validity of a joining criterion. We applied the methodological approach and used SPiRAL to solve a realistic electoral redistricting problem. Namely, the redefinition of the electoral districts of the Prefecture of Lakonia in Greece. The results demonstrate an improved layout of the study area’s electoral map as far as the problem’s criteria and constraints are concerned (adjacency, population and size), justifying in this respect the perspectives and potential of our approach in the analysis and confrontation of similar problems.
    Keywords: Spatial clustering; GIS; constraint-based algorithm; electoral districts; Greece
    JEL: R53 O2 D72
    Date: 2012–10
  9. By: Raphaële Préget; Phu Nguyen-Van; Marc Willinger
    Abstract: We show that the preference to act as a leader rather than as a follower is related to subjects’ behavioral type. We rely on the methodology proposed by Fischbacher et al. (2001) and Fischbacher and Gächter (2010) in order to identify subjects’ behavioral types. We then link the likelihood to act as a leader in a repeated public goods game to the elicited behavioral types. The leader in a group is defined as the subject who voluntarily decides in the first place about his contribution. The leader’s contribution is then reported publicly to the remaining group members who are requested to take their contribution decisions simultaneously. Our main findings are that leaders emerge in almost all rounds and that conditional cooperators are more likely to act as leaders compared to free riders. We also find that voluntary leaders, irrespective of their behavioral type, contribute more than the followers. However leadership does not prevent the decay that is commonly observed in linear public goods experiments.
    Date: 2012–11
  10. By: Marilda Sotomayor
    Abstract: In the one-sided Assignment game any two agents can form a partnership. If this is done, the partners undertake some joint activity, which produces a gain that is split between them. We approach this model by focusing on simple outcomes - feasible and individually rational outcomes where only unmatched agents can block. We prove that this blocking can be done in such a way that the payoffs from the trades done are not changed as players reach the core. The core is non-empty iff every simple and unstable outcome can be extended to a simple outcome by a sequence of adjustments in which, at each step, payoffs are preserved for agents already matched and increased only for those newly matching. Hence, starting from the simple outcome where everybody stands alone, we can gradually increase cooperation by making Pareto improvements (and still staying within simple outcomes), until we reach the core, or until the payoff cannot be simple anymore. That is, increase in payoffs is only available through non-optimal cooperation of some agents. In addition, the total sum of these payoffs is the same at any core outcome. The gains in insight with this approach allows a necessary and sufficient condition for the non-emptiness of the core to be identified. Several properties of the core outcomes of economic interest are proved.
    Keywords: matching, assignment game, core, Pareto optimal simple outcome
    JEL: C78 D78
    Date: 2012–11–05
  11. By: Peter Friedrich; Kadri Ukrainski
    Abstract: Quangos and public entrepreneurship are closely related. The economic theory of quangos allows us to develop a quango theory and highlight the effects of public entrepreneurship. By considering principal agent relations we show how public entrepreneurship of government and quango influence each other in the framework of vertical competition. Also horizontal competition between a quango and other quangos as well as to private enterprises influences the political entrepreneurship. Reference is made to a duopoly model for a competing quango of version 2. Considering the measurement of success of political entrepreneurship, we find that when it is related to increasing output the output development of the quangos may be used as measure of public entrepreneurship success which is relatively high in case of output maximising management. With other types of management the success turns out lower. If the political success is measured by effects of quango on third parties additional difficulties arise. A model of voters reactions on quango production within a model of public sector shows measurement of public political and public quango entrepreneurship and the budgets which result from these entrepreneurships. As there is no satisfying effect measurement models for quangos, which are empirically verified. Moreover, no social welfare function or a general social indicator function is available. Also social success in the sense of welfare maximisation by benefit-cost measurement through willingness to pay measurement is not applicable. Therefore, the success should be measured at the quango level by application of output oriented criteria. Examples from Germany and Estonia show chances and limits of public entrepreneurship within and through quangos.
    Keywords: Quango, public office, public enterprise, vertical competition, horizontal competition, entrepreneurship, public management, success measurement
    JEL: L32 L33 D73 H83
    Date: 2012
  12. By: Branko Boskovic, David P.Byrne, Arvind Magesan
    Abstract: The herding of expert opinions is often rationalized as the outcome of social learning. However,experts are typically individuals with career concerns. As a result, herding can also arise from the fear of opposing consensus opinion and the potential career consequences of being wrong. We empirically test for social learning and career concerns using novel data on bureaucrats' expert opinions over whether to publicly provide health insurance for pharmaceuticals. We and robust evidence that career concerns are an important source of herd behavior in these policy choices. Our findings have implications for the delegation of policy-making to experts.
    Keywords: D80, H77, I18
    Date: 2012
  13. By: He, Yinghua
    Abstract: The Boston mechanism is criticized for its poor incentive and welfare performance compared to the Gale-Shapley deferred-acceptance mechanism (DA). Using school choice data from Beijing, I investigate parents’ behavior under the Boston mechanism, taking into account parents’ possible mistakes when they strategize. Evidence shows that parents are overcautious as they play "safe" strategies too often. Wealthier/more educated parents are less overcautious and perform slightly better because they have better outside options while not being any more adept at strategizing. Parents who are always truth-telling experience a utility gain in switching from the Boston mechanism to the DA, equivalent to a 7.1% decrease in the distance to a school. Among them, 44.2% are better off under the DA, while 35.5% are worse off.
    Date: 2012–05

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