New Economics Papers
on Collective Decision-Making
Issue of 2012‒12‒22
twelve papers chosen by

  1. Divided Majority and Information Aggregation: Theory and Experiment By Bouton, Laurent; Castanheira, Micael; Llorente-Saguer, Aniol
  2. Conditional Cash Transfers, Political Participation, and Voting Behavior By Javier E. Baez; Adriana Camacho; Emily Conover; Román A. Zárate
  3. Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets By Casella, Alessandra; Turban, Sébastien
  4. The Efficacy and Efforts of Interest Groups in Post Elections Policy Formation By Epstein, Gil S.; Mealem, Yosef; Nitzan, Shmuel
  5. A Poll Tax by any Other Name: The Political Economy of Disenfranchisement By Daniel B. Jones; Werner Troesken; Randall Walsh
  6. A Voting Architecture for the Governance of Free-Driver Externalities, with Application to Geoengineering By Martin Weitzman
  7. Political competition and the (in)effectiveness of redistribution in a federation By Ikuho Kochi & Raúl Alberto Ponce Rodríguez
  8. The Lure of Authority: Motivation and Incentive Effects of Power By Fehr, Ernst; Herz, Holger; Wilkening, Tom
  9. Harsanyi's aggregation theorem with incomplete preferences. By Eric Danan; Thilbault Gajdos; Jean-Marc Tallon
  10. ants and voters maximum entropy prediction and agent based models with recruitment. By Barde, Sylvain
  11. Use and Abuse of Authority By Bartling, Björn; Fehr, Ernst; Schmidt, Klaus M.
  12. Information in Hierarchies. By Kouroche Vafaï

  1. By: Bouton, Laurent; Castanheira, Micael; Llorente-Saguer, Aniol
    Abstract: This paper both theoretically and experimentally studies the properties of plurality and approval voting when the majority is divided as a result of information imperfections. The minority backs a third alternative, which the majority views as strictly inferior. The majority thus faces two problems: aggregating information and coordinating to defeat the minority candidate. Two types of equilibria coexist under plurality: either voters aggregate information, but this requires splitting their votes, or they coordinate but cannot aggregate information. With approval voting, expected welfare is strictly higher, because some voters multiple vote to achieve both goals at once. In the laboratory, we observe both types of equilibrium under plurality. Which one is selected depends on the size of the minority. Approval voting vastly outperforms plurality. Finally, subject behavior suggests the need to study asymmetric equilibria.
    Keywords: Approval Voting; Experiments; Multicandidate Elections; Plurality
    JEL: C72 C92 D70 P16
    Date: 2012–11
  2. By: Javier E. Baez; Adriana Camacho; Emily Conover; Román A. Zárate
    Abstract: This paper estimates the effect of enrollment in a large scale anti-poverty program in Colombia, Familias en Acción (FA), on intent to vote, turnout and electoral choice. For identification we use discontinuities in program eligibility and variation in program enrollment across voting booths. We find that FA has a positive effect on political participation in the 2010 presidential elections by increasing the probability that program beneficiaries register to vote and cast a ballot, particularly among women. Regarding voter's choice, we find that program participants expressed a stronger preference for the official party that implemented and expanded the program. These results are also more evident among women. Overall, the findings show that voters respond to targeted transfers and that these transfers can foster support for incumbents, thus making the case for designing political and legislative mechanisms that avoid successful anti-poverty schemes from being captured by political patronage.
    Date: 2012–09–19
  3. By: Casella, Alessandra; Turban, Sébastien
    Abstract: We study the competitive equilibrium of a market for votes where voters can trade votes for a numeraire before making a decision via majority rule. The choice is binary and the number of supporters of either alternative is known. We identify a sufficient condition guaranteeing the existence of an ex ante equilibrium. In equilibrium, only the most intense voter on each side demands votes and each demand enough votes to alone control a majority. The probability of a minority victory is independent of the size of the minority and converges to one half, for any minority size, when the electorate is arbitrarily large. In a large electorate, the numerical advantage of the majority becomes irrelevant: democracy is undone by the market.
    Keywords: majority voting; minority; vote buying; vote trading; voting
    JEL: C62 C72 D70 D72 P16
    Date: 2012–12
  4. By: Epstein, Gil S. (Bar-Ilan University); Mealem, Yosef (Netanya Academic College); Nitzan, Shmuel (Bar-Ilan University)
    Abstract: This paper presents a new model of interest groups and policy formation in the legislature. In our setting, the already given party ideological predispositions and power distribution determine the expected policy outcome. Our analysis applies to the case of un-enforced or enforced party discipline as well as to two-party and multi-party (proportional representation) electoral systems. The interest groups' objective is to influence the outcome in their favor by engaging in a contest that determines the final decision in the legislature. Our first result clarifies how the success of an interest group hinges on the dominance of its ideologically closer party and, in general, the coalition/opposition blocks of parties under un-enforced party or coalition/opposition discipline. Such dominance is defined in terms of ideological inclination weighted by power. Our second result clarifies how the success of an interest group hinges on the dominance of its ideology in the ruling coalition (party) in a majoritarian system with enforced coalition (party) discipline. We then clarify under what condition an interest group prefers to direct its lobbying efforts to two parties or the two coalition and opposition blocks of parties under un-enforced discipline rather than to the members of the ruling coalition (party) under enforced discipline. The lobbying efforts under un-enforced and enforced party discipline are also compared. Finally, we clarify the effect of ideological predispositions and power on the efforts of the interest groups.
    Keywords: policy formation, political parties, ideological predispositions, electoral power, post-elections lobbying, enforced party discipline
    JEL: D70 D72 D74 D78
    Date: 2012–11
  5. By: Daniel B. Jones; Werner Troesken; Randall Walsh
    Abstract: In this paper, we examine the political economy of voting rights in the American South. We begin by measuring the impact of both formal laws and informal modes of voter suppression on African-American political participation. In contrast to prior research, we find evidence that both formal and informal modes of voter suppression were important and mutually reinforcing. Part of our analysis includes explicitly identifying the magnitude and causal effects of lynching on black voter participation. We then turn to analyzing to the relatively unexplored question of how disenfranchisement–and the accompanying shifts in political power–affected policy outcomes, congressional voting, and partisan control of state and federal legislatures.
    JEL: H0 J15 N11
    Date: 2012–12
  6. By: Martin Weitzman
    Abstract: Climate change is a global "free rider" problem because significant abatement of greenhouse gases is an expensive public good requiring international cooperation to apportion compliance among states. But it is also a global "free driver" problem because geoengineering the stratosphere with reflective particles to block incoming solar radiation is so cheap that it could essentially be undertaken unilaterally by one state perceiving itself to be in peril. This paper develops the main features of a "free driver" externality in a simple model based on the asymmetric consequences of type-I and type-II errors. I propose a social-choice decision architecture based on the solution concept of a supermajority voting rule and derive its basic properties. In the model this supermajority voting rule attains the socially optimal cooperative solution, which is a new theoretical result around which the paper is built.
    JEL: Q5 Q54
    Date: 2012–12
  7. By: Ikuho Kochi & Raúl Alberto Ponce Rodríguez (Universidad Autónoma de Ciudad Juárez)
    Abstract: We analyze political and economic conditions in which the effectiveness of public redistribution might be low in a federation. In our economy, the central government redistributes income while local governments provide a pro poor local public good. If local public spending falls as a response to the ex-post tax-transfer distribution of income engineered by the policy of the central government then public redistribution might be ineffective in redistributing welfare. In this paper we address this issue. Our main findings are: first, if the party of some local government represents a coalition of voters with labor earning abilities below the average earning ability of the economy and the aggregate net transfer from the redistributive program is negative for residents in the locality then local public spending falls in this district as a response to the redistributive policy of the central government. Second, if local governments of all districts are controlled by parties representing voters with sufficiently high marginal utilities of income and labor earning abilities below the nationwide average labor earning ability then public redistribution induces all local governments to reduce local public spending.
    Keywords: Redistributive effects, state and local governments, fiscal policy and behavior of agents, elections
    JEL: H23 H76 H3 D72
    Date: 2012–07–01
  8. By: Fehr, Ernst (University of Zurich); Herz, Holger (University of Zurich); Wilkening, Tom (University of Melbourne)
    Abstract: Authority and power permeate political, social, and economic life, but empirical knowledge about the motivational origins and consequences of authority is limited. We study the motivation and incentive effects of authority experimentally in an authority-delegation game. Individuals often retain authority even when its delegation is in their material interest – suggesting that authority has non-pecuniary consequences for utility. Authority also leads to over-provision of effort by the controlling parties, while a large percentage of subordinates under-provide effort despite pecuniary incentives to the contrary. Authority thus has important motivational consequences that exacerbate the inefficiencies arising from suboptimal delegation choices.
    Keywords: organizational behavior, incentives, experiments and contracts
    JEL: C92 D83 D23
    Date: 2012–11
  9. By: Eric Danan (THEMA - Université de Cergy-Pontoise); Thilbault Gajdos (GREQAM - UNiversité d'Aix-Marseille); Jean-Marc Tallon (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We provide a generalization of Harsanyi (1995)'s aggregation theorem to the case of incomplete preferences at the individual and social level. Individuals and society have possibly incomplete expected utility preferences that are represented by sets of expected utility functions. Under Pareto indifference, social preferences are represented through a set of aggregation rules that are utilitarian in a generalized sense. Strengthening Pareto indifference to Pareto preference provides a refinement of the representation.
    Keywords: Incomplete preferences, aggregation, expected multi-utility, utilitarianism.
    JEL: D71 D81
    Date: 2012–12
  10. By: Barde, Sylvain (Sciences Po)
    Abstract: Maximum entropy predictions are made for the Kirman ant model as well as the Abrams-Strogatz model of language competition, also known as the voter model. In both cases the maximum entropy methodology provides good predictions of the limiting distribution of states, as was already the case for the Schelling model of segregation. An additional contribution, the analysis of the models reveals the key role played by relative entropy and the model in controlling the time horizon of the prediction.
    Keywords: information entropy;; agent based models;; voters models;
    Date: 2012–10
  11. 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: 2012–12
  12. By: Kouroche Vafaï (Université Paris Descartes - Sorbonne Cité et Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We determine the optimal policy to cope with information concealment in a hierarchy where a principal relies on a supervisor to obtain verifiable information about an agent's output. Depending on the information he has obtained, the informed supervisor may either collude with the agent or with the principal and conceal information. The principal has the choice of four policies to cope with information concealment : it can prevent both types of information concealment, allow both of them, or prevent one of them and allow the other one. We characterize the incentive contracts in this environment and show that it is not optimal to allow information concealment, that is, the optimal policy of a hierarchy exposed to multiple types of information concealment is to prevent them all.
    Keywords: Hierarchy, information concealment.
    JEL: D20 D73 L20 M50
    Date: 2012–12

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