New Economics Papers
on Collective Decision-Making
Issue of 2013‒01‒12
eleven papers chosen by

  1. Diffusion and Spatial Equilibrium of a Social Norm: Voting Participation in the United States, 1920-2008 By Coleman, Stephen
  2. Incumbency Effects in Germany: Federal and Mayoral Elections By Sieger, Philip
  3. Voting with Your Feet: Political Competition and Internal Migration in the United States By Liu, Wai-Man; Ngo, Phong
  4. Why Do Voters Dismantle Checks and Balances? By Ragnar Torvik; Daron Acemoglu; James A. Robinson
  5. Elections, Political Competition and Bank Failure By Liu, Wai-Man; Ngo, Phong
  6. Political Uncertainty and Accounting Conservatism: Evidence from the U.S. Presidential Election Cycle By Dai, Lili; Ngo, Phong T. H.
  7. Growth-Friendly Dictatorships By Giacomo De Luca; Anastasia Litina; Petros G. Sekeris
  8. Group Identity and Leading-by-Example By Michalis Drouvelis; Daniele Nosenzo
  9. You Can’t Put Old Wine in New Bottles: The Effect of Newcomers on Coordination in Groups By McCarter, Matthew; Sheremeta, Roman
  10. Home Voters, House Prices, and the Political Economy of Zoning By Dascher, Kristof
  11. Partial Public Ownership and Managerial Incentives By Jovanovic, Dragan

  1. By: Coleman, Stephen
    Abstract: Social conformity can spread social norms and behaviors through a society. This research examines such a process geographically and over time for voting, which is strongly influenced by the norm that citizens should vote. A mathematical model for the spread of voting participation under the influence of social conformity is developed based on the diffusion equation, and predictions are tested with spatial analysis of state-level voter turnout in American presidential elections from 1920 to 2008. Results show that voter turnout has converged to a stable equilibrium in its geographical distribution across the states—but it is an equilibrium that results in persistent differences at the state level. Turnout increases about one percentage point with each degree of latitude.
    Keywords: social norm; voter turnout; social conformity; spatial model; equilibrium; diffusion
    JEL: C02 D72 Z13 C21
    Date: 2012–12–31
  2. By: Sieger, Philip
    Abstract: In this paper incumbency effects in Federal Elections and Mayoral Elections in Germany are estimated using a quasi-experimental design which allows for causal inference under a set of rather mild assumptions. Relying on nonparametric and parametric estimation procedures and exploiting a recently developed bandwidth selection criteria, incumbency effects for the two major parties in Germany cause an increase in vote share of 1.4%-1.7% in Federal Elections. Analyzing Mayoral Elections, the causal effect of incumbency is about ten times larger with an increase in vote share of 14%-17%. Both results are robust with respect to the inclusion of further covariates. These huge differences might possibly be explained by the differences in visibility and popularity of mayors compared to candidates in Federal Elections. --
    JEL: C14 C21 D72
    Date: 2012
  3. By: Liu, Wai-Man; Ngo, Phong
    Abstract: Do people "vote with their feet" due to a lack of political competition? We formalize the theory of political competition and migration to show that increasing political competition lowers political rent leading to net in-migration. Our empirical application using US data supports this prediction. We …find that an increase in political competition - in the order of magnitude observed in US Southern states during the post-war period - leads to an increase in net migration of approximately 36 individuals per 1000 population. In comparison, birth rates over the last century ranged between 70 and 150 births per 1000 population.
    Keywords: political competition; internal migration; welfare; Voting Rights Act
    JEL: H70 J61 N92 D72
    Date: 2012–10–16
  4. By: Ragnar Torvik (Department of Economics, Norwegian University of Science and Technology); Daron Acemoglu; James A. Robinson
    Abstract: Voters often dismantle constitutional checks and balances on the executive. If such checks and balances limit presidential abuses of power and rents, why do voters support their removal? We argue that by reducing politician rents, checks and balances also make it cheaper to bribe or infuence politicians through non-electoral means. In weakly-institutionalized polities where such non-electoral infuences, particularly by the better organized elite, are a major concern, voters may prefer a political system without checks and balances as a way of insulating politicians from these induences. When they do so, they are effectively accepting a certain amount of politician (presidential) rents in return for redistribution. We show that checks and balances are less likely to emerge when the elite is better organized and is more likely to be able to infuence or bribe politicians, and when inequality and potential taxes are high (which makes redistribution more valuable to the majority). We also provide case study evidence from Bolivia, Ecuador and Venezuela and econometric evidence on voter attitudes from a Latin American survey consistent with the model.
    Keywords: corruption, checks and balances, political economy, redistribution, separation of powers, taxes
    JEL: O17 P48
    Date: 2013–01–04
  5. By: Liu, Wai-Man; Ngo, Phong
    Abstract: We model and predict that politicians have incentives to delay bank failure in election years and that this incentive is exacerbated if the election is close. Our empirical application using the US data supports these predictions. At the bank level, we show that bank failure in an election year is four times less likely to occur if the election was among the most competitive (top quartile). At the state level, bank failure is about 1.8 times less likely to occur in an election year. A three point swing in the competitiveness of the election increases this election year bias to 2.2.
    Keywords: bank failure; elections; political competition
    JEL: D73 D72 G28 G21
    Date: 2012–10–16
  6. By: Dai, Lili; Ngo, Phong T. H.
    Abstract: We document a positive association between political uncertainty and accounting conservatism. In the year prior to a U.S. presidential election, on average, accounting conservatism increases by nearly 20 percent. This election year effect is stronger when the election is closer, when the incumbent president is not seeking re-election, and when the incumbent party is Democrat. In the post-election year, conservatism is lower relative to the non-election period when the incumbent party wins, but remains higher under an opposition party victory. Moreover, the election year effect varies across industries and companies, and remains unchanged under different empirical specifications. For example, the impact of an election is greater for politically sensitive industries and for companies with less anti-takeover provisions, and is robust when we control for the business cycle. Collectively, we show the political process is important in determining accounting choices through the uncertainty channel.
    Keywords: accounting conservatism; political uncertainty; election cycle
    JEL: M41 G38 G34 D72
    Date: 2013–01–04
  7. By: Giacomo De Luca (University of York, United Kingdom); Anastasia Litina (CREA, University of Luxembourg); Petros G. Sekeris (FNRS and CRED, University of Namur, Belgium)
    Abstract: In this paper we show that in highly unequal societies, different societal groups may support a rent-seeking dicator serving their interests better than the median voter in a democratic regime. Importantly, it is the stakes of dictator in the economy, in the form of capital ownership, that drives the support of individuals. In particular, in highly societies ruled by a capital-rich dictator endowed with the power to tax and appropriate at will, the elites support dictatorial policies that generate higher growth rates than the ones obtained under democracy. Such support arises despite the total absence of checks and balances on the dictator.
    Date: 2012
  8. By: Michalis Drouvelis (Department of Economics, University of Birmingham); Daniele Nosenzo (School of Economics, University of Nottingham)
    Abstract: We study the interplay between leading-by-example and group identity in a public goods game experiment. A common identity between the leader and her followers is beneficial for cooperation: average contributions are more than 30% higher than in a treatment where no identity was induced. In two further treatments we study the effects of heterogeneous identities. We find no effect on cooperation when only part of the followers share the leader’s identity, or when followers share a common identity that differs from that of the leader. We conclude that group identity is an effective but fragile instrument to promote cooperation.
    Keywords: leading-by-example,leadership, public goods, voluntary contributions,cooperation,identity,experiment
    Date: 2012–05
  9. By: McCarter, Matthew; Sheremeta, Roman
    Abstract: A common finding in social sciences is that member change hinders group functioning and performance. However, questions remain as to why member change negatively affects group performance and what are some ways to alleviate the negative effects of member change on performance? To answer these questions we conduct an experiment in which we investigate the effect of newcomers on a group’s ability to coordinate efficiently. Participants play a coordination game in a four-person group for the first part of the experiment, and then two members of the group are replaced with new participants, and the newly formed group plays the game for the second part of the experiment. Our results show that the arrival of newcomers decreases trust among group members and this decrease in trust negatively affects group performance. Knowing the performance history of the arriving newcomers mitigates the negative effect of their arrival, but only when newcomers also know the oldtimers performance history. Surprisingly, in groups that performed poorly prior to the newcomers’ arrival, the distrust generated by newcomers is mainly between oldtimers about each other rather than about the newcomers.
    Keywords: coordination; group performance; oldtimers; newcomers; trust; experiments
    JEL: C72 C91
    Date: 2013–01–02
  10. By: Dascher, Kristof
    Abstract: One explanation of the recent real estate bubble might point to homeowners' artificially restricting housing supply. While empirical work has not found unequivocal evidence in support of this hypothesis, homeowners may well be restricting supply nonetheless, and without this restriction manifesting itself in a simple -- or even partial -- positive correlation between homeownership and rent. Three points emphasized in this paper's model cloud the relationship between homeownership and rent observed in the data. First, rent rises diffuse across cities. Second, homeowners may only wish to impose restrictions to supply if tenants are not few. And third, homeowners may negotiate supply restrictions in neighboring tenant-dominated cities, giving rise to homeowner-tenant coalitions in non-obvious ways. -- The paper's empirical part tests the model against a data set that combines micro data on homeowners and rents with information on East Germany's large scale demolition, with this demolition interpreted as one striking instance of zoning. --
    JEL: R31 H73 D72
    Date: 2012
  11. By: Jovanovic, Dragan
    Abstract: We analyze the impact of partial public ownership (PPO) on managerial incentives. A novelty of the paper is that it explicitly considers competition in the product market. We find that PPO negatively affects managerial incentives when all firms are partially owned by the government. When partially public firms compete with private firms, the effects on managerial incentives crucially depend on the degree of competitive pressure. Thereby, PPO induces either partially public firms or their private competitors to offer stronger managerial incentives. This result is essentially confirmed even if the government's primary concern is consumer protection rather than social welfare. --
    JEL: D82 H32 L13
    Date: 2012

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