New Economics Papers
on Collective Decision-Making
Issue of 2012‒12‒06
thirteen papers chosen by

  1. The Causal Powers of Social Change: the Case of Modern Greek Society By Athanasia Chalari
  2. Modes of Collective Action in Village Economies: Evidence from Natural and Artefactual Field Experiments in a Developing Country By Sawada, Yasuyuki; Kasahara, Ryuji; Aoyagi, Keitaro; Shoji, Masahiro; Ueyama, Mika
  3. Use and Abuse of Authority By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  4. Preventing Abuse by Controlling Shareholders By Damme, E.E.C. van
  5. Asymmetric Nash Bargaining Solutions: A Simple Nash Program By Nejat Anbarci; Ching-jen Sun
  6. A Political Economy Explanation for In-kind Redistribution: The Interplay of Corruption and Democracy By Zohal Hessami; Claudio Thum; Silke Uebelmesser
  7. On the Optimal Size of Committees of Experts By Volker Hahn
  8. Endogenous Leadership: Selection and Influence By Emrah Arbak; Marie-Claire Villeval
  9. Robustness of Intermediate Agreements and Bargaining Solutions By Nejat Anbarci; Ching-jen Sun
  10. Political Economy of Arab Revolutions: analysis and prospects for North-African Countries. By Mouhoud, El Mouhoub
  11. Party cues in elections under multilevel governance: Theory and evidence from US states By Geys, Benny; Vermeir, Jan
  12. Academic faculty governance and recruitment decisions (online first). By Prüfer, J.; Walz, U.
  13. Who emerges from smoke-filled rooms? Political parties and candidate selection By Motz, Nicolas

  1. By: Athanasia Chalari
    Abstract: This article provides an empirical exploration of social change, by assessing subjective experiences and evaluations in relation to social alterations in Modern Greek society. The investigation concerns whether change in everyday life deriving from the Greek crisis also involves an alteration in the ways that Greeks perceive and consider social reality and themselves within it. This article supports the view that social change is related to agency in terms of reflexivity and that Greeks have contributed to social change through the alteration in their ways of thinking and behaving. Participants reported that practices, norms and mentalities inherited by previous generations are no longer helpful. Customs (such as clientelism) and mentalities (such as prioritizing the personal over the collective interest) must now change and be reformed as the new reality demands different ways of thinking and rapid adaptation to a new way of living which has become economically restricted and politically unstable. In this sense, Greeks are becoming reflexive towards the present situation and themselves within it and critical towards the past and future, as they consider what part of the older generation’s established mentalities to retain and what aspects of their way of living will alter.
    Keywords: social change, reflexivity, crisis, recession, Modern Greek society
    Date: 2012–11
  2. By: Sawada, Yasuyuki; Kasahara, Ryuji; Aoyagi, Keitaro; Shoji, Masahiro; Ueyama, Mika
    Abstract: In a canonical model of collective action, individual contribution to collective action is negatively correlated with group size. Empirical evidence on the group size effect has been mixed, partly due to heterogeneities in group activities. In this paper, we first construct a simple general model of collective action with the free-riding problem, altruism, public goods, and positive externalities of social networks. We then empirically test the theoretical implications of group size effect on individual contribution to four different types of collective action, i.e., monetary or nonmonetary contribution to directly or indirectly productive activities. To achieve this, we collect and employ artefactual field experimental data such as public goods and dictator games conducted in southern Sri Lanka under a natural experimental situation where the majority of farmers were relocated to randomly selected communities based on the government lottery. This unique situation enables us to identify the causal effects of community size on collective action. We find that the levels of collective action can be explained by the social preferences of farmers; we show evidence on the free-riding by self-interested households with no land holdings. The pattern of collective action, however, differs significantly by the mode of activities; the collective action which is directly related to production is less likely to suffer from the free rider problem than from indirectly productive activities. Finally, the monetary contribution is less likely to cause the free riding than the non-monetary contribution.
    Keywords: collective action , social preference , natural and artefactual field experiment , irrigation , South Asia
    Date: 2012–09–03
  3. By: Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
    Abstract: Employment contracts give a principal the authority to decide flexibly which task his agent should execute. However, there is a tradeoff, first pointed out by Simon (1951), between flexibility and employer moral hazard. An employment contract allows the principal to adjust the task quickly to the realization of the state of the world, but he may also abuse this flexibility to exploit the agent. We capture this tradeoff in an experimental design and show that principals exhibit a strong preference for the employment contract. However, selfish principals exploit agents in one-shot interactions, inducing them to resist entering into employment contracts. This resistance to employment contracts vanishes if fairness preferences in combination with reputation opportunities keep principals from abusing their power, leading to the widespread, endogenous formation of efficient long-run employment relations. Our results inform the theory of the firm by showing how behavioral forces shape an important transaction cost of integration – the abuse of authority – and by providing an empirical basis for assessing differences between the Marxian and the Coasian view of the firm, as well as Alchian and Demsetz’s (1972) critique of the Coasian approach.
    Keywords: theory of the firm; transaction cost economics; authority; power abuse; employment relation; fairness; reputation
    JEL: C91 D23 D86 M5
    Date: 2012–11
  4. By: Damme, E.E.C. van (Tilburg University, Tilburg Law and Economics Center)
    Abstract: Abstract: This paper is a comment on Ronald Gilson and Alan Schwarz “Constraints on Private Benefits of Control: Ex Ante Control Mechanisms versus Ex Post Transaction Reviewâ€. Together with that paper it will appear in the Journal of Institutional and Theoretical Economics 169 (1) in 2013, in a special issue devoted to Behavioral Theory of Institutions. I argue that the arguments of Gilson and Schwarz are convincing, but that the underlying assumptions may be stronger than the authors suggest. In particular, the G&S paper adopts a US shareholder perspective on corporate governance and is based on standard rationality assumptions. In this comment, I discuss whether and to what extent the recommendations are relevant in the EU context and whether the paper’s conclusions are robust when insights from behavioral economics are included.
    Keywords: Corporate Governance;Behavioral Economics.
    JEL: G30 G38 K22 D03
    Date: 2012
  5. By: Nejat Anbarci; Ching-jen Sun
    Abstract: This article proposes a simple Nash program. Both our axiomatic characterization and our noncooperative procedure consider each distinct asymmetric and symmetric Nash solution. Our noncooperative procedure is a generalization of the simplest known sequential Nash demand game analyzed by Rubinstein, Safra and Thomson (1992). We then provide the simplest known axiomatic characterization of the class of asymmetric Nash solutions, in which we use only Nash’s crucial Independence of Irrelevant Alternatives axiom and an asymmetric modification of the well-known Midpoint Domination axiom.
    Keywords: Asymmetric Nash bargaining solutions, Nash program, axiomatic characterization, noncooperative foundations, economics of search.
    JEL: C78 D74
    Date: 2012–11–17
  6. By: Zohal Hessami (Department of Economics, University of Konstanz, Germany); Claudio Thum (Center for Economic Studies, University of Munich, Germany); Silke Uebelmesser (Department of Economics, University of Jena, Germany)
    Abstract: This paper identifies a novel political-economy explanation for the observed variation in the cash and in-kind (basic health care, public housing or food stamps) mixture of social transfers. We put forward the hypothesis that the share of in-kind transfers is positively correlated with corruption in democratic countries. The argument is derived in a theoretical model which assumes that it is easier for politicians to appropriate cash transfers than in-kind transfers. Voters in corrupt countries know that cash transfers invite corrupt behavior and therefore they elect parties that opt for in-kind redistributive measures. The empirical analysis for 34 OECD countries over the 1984 – 2007 period provides robust evidence in favor of this hypothesis. Moreover, the positive correlation between the in-kind share of social transfers and perceived corruption is stronger for the “most democratic” OECD countries and in countries with specific institutional characteristics such as free media that further enhance democratic accountability.
    Keywords: In-kind social transfers, redistribution, corruption, democracy, social expenditures
    JEL: D7 H42
    Date: 2012–11–19
  7. By: Volker Hahn (Department of Economics, University of Konstanz, Germany)
    Abstract: What is the optimal size of expert committees? To address this question, I present a model of a committee of experts with career concerns. Each expert may observe an argument about the state of the world but be unsure about the argument's soundness. Experts may remain silent or compete for the opportunity to announce an argument. I show that experts become more reluctant to speak in larger committees. This effect is sufficiently strong to make small groups of experts optimal. At the same time, a small committee may be superior to an individual expert.
    Keywords: experts, committees, career concerns, veriable information, information aggregation.
    JEL: D71 D82
    Date: 2012–11–19
  8. By: Emrah Arbak (CEPS - Centre for European Policy Studies - Centre for European Policy Studies); Marie-Claire Villeval (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: In social dilemmas, leading a team by making heroic efforts may prove costly, especially when the followers are not adequately motivated to make similar sacrifices. Attempting to shed light on what drives people to lead, we devise a two-stage public good experiment with endogenous timing. We show that leading by making generous contributions is widespread and relatively persistent. At least three motives explain this behavior. Some use leadership strategically to distill personal gains, with the expectation that others will respond by being at least as generous. Others are more altruistic, volunteering to lead even though this may come at a personal cost. Yet for another fraction of volunteers, a concern for maintaining a positive social image appears to be responsible. We also find that voluntary leaders are not necessarily more influential than randomly-chosen leaders.
    Keywords: leadership, endogenous selection, influence, voluntary contribution, experiment
    Date: 2012
  9. By: Nejat Anbarci; Ching-jen Sun
    Abstract: Most real-life bargaining is resolved gradually. During this process parties reach intermediate agreements. These intermediate agreements serve as disagreement points in subsequent rounds. We identify robustness criteria which are satisfied by three prominent bargaining solutions, the Nash, Proportional (and as a special case to the Egalitarian solution) and Discrete Raiffa solutions. We show that the .robustness of intermediate agreements. plus additional well-known and plausible axioms, provide novel axiomatizations of the above-mentioned solutions. Hence, we provide a unified frame-work for comparing these solutions’ bargaining theories.
    Keywords: Nash’s bargaining problem, robustness, intermediate agreements, the Discrete Raiffa solution, the Nash solution, Proportional solutions.
    JEL: C78 D74
    Date: 2012–11–16
  10. By: Mouhoud, El Mouhoub
    Abstract: Des similitudes expliquent la diffusion du processus révolutionnaire arabe : une polarisation sectorielle des économies, une gestion rentière des ressources, des taux d’emplois faibles et des taux d’expatriation de qualifiés anormalement élevés. Enfin, un même pacte externe avec les puissances occidentales et interne entre les élites. Ces pactes ont implosé. Cet article propose de nouvelles directions pour ces économies, combinant intégration régionale et stratégie de rattrapage par les services.
    Abstract: Several similarities explain the spread of the Arab revolutionary process : the polarization of economies to limited sectors, a rentier-based management of resources, very low employment rates and extremely high rates of skilled migration. Finally, a similar external pact with the Western powers, and an inner pact between elites that have both imploded. This article suggests new directions for these economies that would combine regional integration and a catch-up strategy via service activities.
    Keywords: Economie politique; Moyen-Orient et Afrique du Nord; révolutions arabes; chômage; éducation supérieure; corruption; pacte interne et externe; political economy; Middle East and North Africa; unemployment; tertiary education; internal and international pact;
    JEL: O15 O55 P52 P59
    Date: 2012
  11. By: Geys, Benny; Vermeir, Jan
    Abstract: In federal countries, competence for policy matters is often shared between various levels of government. As only overall outcomes are observed, this might blur accountability by decreasing voters' ability to infer information about the performance of their leaders. In this article, we analyse how party cues (i.e., politicians' party membership acting as a cue towards their characteristics) affect voters' incomplete information about politicians in a federal setting. We first of all show that party cues allow indirect inference regarding politicians using observed policy outcomes, alleviating the accountability problem. Empirical evidence from US presidential election results across all 50 US states over the period 1972-2008 provides support for this proposition. Yet, while the availability of party cues in a federal setting increases the national incumbents' effort in some cases, it may reduce effort particularly when the regional incumbent if of a different party. --
    Keywords: federalism,accountability,multilevel governance,party cues
    JEL: D72 H30 H77
    Date: 2012
  12. By: Prüfer, J. (Tilburg University); Walz, U.
    Date: 2012
  13. By: Motz, Nicolas
    Abstract: This paper presents a model of candidate selection through political parties where politicians differ in terms of their quality and their favored policies. The central assumption is that political parties are better informed about their potential candidates than voters are. In addition, parties pursue political goals that differ from the interest of the median voter. Questions of interest include whether voters can gain information about candidates by observing the parties choice and to what extent parties select the candidates preferred by the median voter. The results depend crucially on how competitive the race is. Under strong competition, nominating a politically more extreme politician is a signal of high quality. Sufficient competition also induces parties to act in the interest of the median voter most of the time. Nevertheless, in most cases the median voter would be better off if parties shared his political preferences.
    Keywords: Political parties; electoral competition; valence; candidate selection; primaries
    JEL: D72
    Date: 2012–11

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