nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2013‒01‒19
sixteen papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. The geometry of voting power : weighted voting and hyper-­ellipsoids By Nicolas Houy; William S. Zwicker
  2. What Does "Intending to Vote" Mean? By Rogers, Todd; Aida, Masa
  3. The Dynamic Effects of Information on Political Corruption: Theory and Evidence from Puerto Rico By Gustavo J. Bobonis; Luis R. Cámara Fuertes; Rainer Schwabe
  4. Decentralization as Unbundling of Public Goods Provision - New Effects of Decentralization on Efficiency and Electoral Control By Antonio Farfan-Vallespin
  5. Harsanyi's aggregation theorem with incomplete preferences By Eric Danan; Thibault Gajdos; Jean-Marc Tallon
  6. You Can’t Put Old Wine in New Bottles: The Effect of Newcomers on Coordination in Groups By Roman M. Sheremeta; Matthew W. McCarter
  7. The Political Cost of Reforms By Gino Gancia; Alessandra Bonfiglioli
  8. Information in Hierarchies By Kouroche Vafaï
  9. Democracy's shortcomings in anti-corruption By Tine Søreide
  10. International Environmental Agreements, Fiscal Federalism, and Constitutional Design By Wolfgang Buchholz; Alexander Haupt; Wolfgang Peters
  11. Legislative Organization and Ideal-Point Bias By Krehbiel, Keith; Peskowitz, Zachary
  12. Three-Player Trust Game with Insider Communication By Roman M. Sheremeta; Jingjing Zhang
  13. Optimal investment and the ambiguous aggregation of expert opinions By Stergios Athanassoglou; Valentina Bosetti; Gauthier de Maere d'Aertryckey
  14. Fairness That Money Can Buy - Procedural Egalitarianism in Practice By Werner Güth; Hartmut Kliemt
  15. Supervision in Firms By Kouroche Vafaï
  16. Climate Change Negotiations from an Industry Perspective By Paula Bennati

  1. By: Nicolas Houy (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); William S. Zwicker (Union College - Union College)
    Abstract: In cases where legislators represent districts that vary in population, the design of fair legislative voting rules requires an understanding of how the number of votes cast by a legislator is related to a measure of her influence over collective decisions. We provide three new characterizations of weighted voting, each based on the intuition that winning coalitions should be close to one another. The locally minimal and tightly packed characterizations use a weighted Hamming metric. Ellipsoidal separability employs the Euclidean metric : a separating hyperellipsoid contains all winning coalitions, and omits losing ones. The ellipsoid's proportions, and the Hamming weights, reflect the ratio of voting weight to influence, measured as Penrose-Banzhaf voting power. In particular, the spherically separable rules are those for which voting powers can serve as voting weights.
    Keywords: weighted voting ; voting power ; simple games ; ellipsoidal separability
    Date: 2013–01–11
  2. By: Rogers, Todd (Harvard University); Aida, Masa (Greenberg Quinlan Rosner Research)
    Abstract: How accurate are responses to questions about intentions to vote in an upcoming election? Questions of this type are studied in a range of work in political science to understand the effects of other factors on political engagement, as well as in public opinion research. We analyze six phone surveys conducted over two elections which include pre-election vote intention and postelection vote validation (N=24,303). As expected, many who report intending to vote actually do not vote (13% and 54% for the two elections). More surprisingly, high rates people who predicted they would not vote actually do vote (56% and 39%). For both forms of inaccurate self-prediction, respondents were much more accurate when predicting that they would behave consistently with their past behavior than when predicting that they would behave inconsistently with their past behavior. We discuss implications for political science research, behavioral prediction, election administration, and public opinion.
    Date: 2012–11
  3. By: Gustavo J. Bobonis; Luis R. Cámara Fuertes; Rainer Schwabe
    Abstract: Does the disclosure of information about corrupt activities induce a sustained reduction in corruption? We use longitudinal data on audits of municipal governments in Puerto Rico to answer this question. We find that corruption is lower in municipalities audited before an election. However, these municipalities do not exhibit decreased levels of corruption in subsequent audits. Mayors in municipalities audited preceding the previous election have higher re-election rates, suggesting that audits enable voters to select more competent politicians. We present a political agency model that rationalizes the observed short-term and dynamic effects of information on corruption and re-election rates. We conclude that audit programs must be timely, sustained, and long-term commitments in order to be effective.
    Keywords: Corruption, information, political agency.
    JEL: D72 H41 K42 O17
    Date: 2012–12
  4. By: Antonio Farfan-Vallespin (Department of International Economic Policy, University of Freiburg)
    Abstract: This paper proposes a new perspective for studying decentralization by considering it as the unbundling of public goods provision. We define centralization as the bundled pro- vision of public goods from different tiers (national, sub-national or local) by one single provider held accountable by the voters via elections. We define decentralization as the unbundled provision of public goods of different tiers by a different provider for each tier, each of them accountable to the voters via elections. This novel perspective allows us to identify two new effects of decentralization. The first effect provides an efficiency advantage to centralization because the central provider can reallocate resources among the different tiers of public goods after shocks to the prices of these public goods occur. The second effect shows that unbundling the provision of public goods increases electoral control. Finally, we compare both effects and find that centralization will dominate over decentralization when public goods prices are more volatile and the option of transfer- ring resources among tiers of public goods acts as an insurance device. Decentralization dominates when the environment is more stable and voters can monitor the providers of public goods more tightly.
    Keywords: decentralization, centralization, public goods, electoral control
    JEL: D74 K4
    Date: 2012–11
  5. By: Eric Danan (THEMA - THéorie Economique, Modélisation et Applications - université de Cergy-Pontoise); Thibault Gajdos (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR7316); Jean-Marc Tallon (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    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
    Date: 2012–12
  6. By: Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Matthew W. McCarter (Argyros School of Business and Economics, Chapman University)
    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
  7. By: Gino Gancia (CREI and UPF); Alessandra Bonfiglioli (Institute for Economic Analysis)
    Abstract: This paper formalizes in a fully-rational model the popular idea that politicians perceive an electoral cost in adopting costly reforms with future benefits and reconciles it with the evidence that reformist governments are not punished by voters. To do so, it proposes a model of elections where political ability is ex-ante unknown and investment in reforms is unobservable. On the one hand, elections improve accountability and allow to keep well-performing incumbents. On the other, politicians make too little reforms in an attempt to signal high ability and increase their reappointment probability. Although in a rational expectation equilibrium voters cannot be fooled and hence reelection does not depend on reforms, the strategy of underinvesting in reforms is nonetheless sustained by out-of-equilibrium beliefs. Contrary to the conventional wisdom, uncertainty makes reforms more politically viable and may, under some conditions, increase social welfare. The model is then used to study how political rewards can be set so as to maximize social welfare and the desirability of imposing a one-term limit to governments. The predictions of this theory are consistent with a number of empirical regularities on the determinants of reforms and reelection. They are also consistent with a new stylized fact documented in this paper: economic uncertainty is associated to more reforms in a panel of 20 OECD countries.
    Date: 2012
  8. By: Kouroche Vafaï (Université Paris Descartes - Sorbonne Paris Cité - IUT, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    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
    Date: 2012–12
  9. By: Tine Søreide
    Abstract: Citizens of countries with a corrupt political leadership are trapped in a situation, typically characterized by increasing income differences, human rights violations, dysfunctional democracy, limited press freedom, weak access to basic services, such as health and utilities, and it is difficult for them to move to another country to get a better life.  Despite Arab Spring experiences, confronting a government with monopoly on power within its jurisdiction often fall short, and citizens’ success in their efforts to replace an illegitimate government relies on some form of international support. This paper reviews some of the reasons why we see shortcomings in this support. The international anti-corruption initiatives far too often fail to reach the political elite. New laws that could have made it difficult to hide stolen money abroad are not enforced. Pro-democracy initiatives are important, yet not efficient enough for getting rid of corrupt politicians. International pressure for legal reform does not bring change unless the laws are enforced. ‘Other governments’ often fail the citizens in these countries. Instead, they keep a good dialogue with the incumbent in order to improve their chances to get access to resources, secure profitable contracts for ‘their’ firms, or because of military strategies. Narrow interests and competition between countries distort the process towards a world free from political corruption. 
    Date: 2012
  10. By: Wolfgang Buchholz (Department of Economics, University of Regensburg); Alexander Haupt (School of Management (Plymouth Business School)); Wolfgang Peters (Faculty of Business Administration and Economics, European University Viadrina, Frankfurt (Oder))
    Abstract: In this paper, we analyse how the prospect of international negotiations over transboundary pollution shapes intra-country transfer schemes when the governments of the countries' polluting regions are in charge of environmental policy and negotiations. Federal governments can implement compensation payments between domestic regions and matching grants prior to the international negotiations between the polluting regions. The subgame-perfect transfer schemes fail to fully internalise the environmental externality, leading to an inefficient international environmental agreement. As the international spillover increases, the intra-country compensation rates increase, while the matching rates decline, distorting the incentives for the regional governments in opposing directions. We also show that decentralisation of environmental decision making can arise endogenously.
    Keywords: Fiscal federalism, transboundary pollution, international environmental agreement, constitutional design, matching grants
    JEL: H77 F51 Q58 H41
    Date: 2012–03
  11. By: Krehbiel, Keith (Stanford University); Peskowitz, Zachary (OH State University)
    Abstract: Four pure types of legislative organization are characterized as data generating processes for commonly used measures of preferences or, in the spatial vernacular, ideal points. The types of legislative organization are differentiated by their partisan versus nonpartisan nature of agenda formation, and by whether the amendment process is open or closed. For each organization, roll call voting data are Monte-Carlo generated and used as input for four different ideal point measures: standard percent-correct interest group ratings (IGRs), linear factor analysis scores (LFAs), W-NOMINATE ratings (NOMs), and Markov chain Monte Carlo measures (MCMCs). Three questions motivate and are addressed the analysis. Do estimated ideal points differ significantly across forms of legislative organization? Are some ideal point estimates consistently more accurate than others? Are there patterns of substantively relevant, persistent bias in ideal point estimates? The answers are all affirmative.
    Date: 2012–11
  12. By: Roman M. Sheremeta (Argyros School of Business and Economics, Chapman University); Jingjing Zhang (University of Zurich)
    Abstract: We examine behavior in a three-player trust game in which the first player may invest in the second and the second may invest in the third. Any amount sent from one player to the next is tripled. The third player decides the final allocation among three players. The baseline treatment with no communication shows that the first and second players send significant amounts and the third player reciprocates. Allowing insider communication between the second and the third players increases cooperation between these two. Interestingly, there is an external effect of insider communication: the first player who is outside communication sends 54% more and receives 289% more than in the baseline treatment. As a result, insider communication increases efficiency from 44% to 68%.
    Keywords: three-player trust games, experiments, reciprocity, communication
    JEL: C72 C91 D72
    Date: 2013
  13. By: Stergios Athanassoglou; Valentina Bosetti; Gauthier de Maere d'Aertryckey
    Abstract: How should a decision-maker assess the potential of an investment when a group of experts provides strongly divergent estimates on its expected payoff? To address this question, we propose and analyze a variant of the well-studied -maxmin model in decision theory. In our framework, and consistent to the paper's empirical focus on R&D investment, experts' subjective probability distributions are allowed to be action-dependent. In addition, the decision maker constrains the sets of priors to be considered in accordance with ethical considerations and/or operational protocols. Using tools from convex and conic optimization, we are able to establish a number of analytical results including a closed-form expression of our model's value function, a thorough investigation of its differentiability properties, and necessary conditions for optimal investment. We apply our framework to original data from a recent expert elicitation survey on solar technology. The analysis suggests that more aggressive investment in solar technology R&D is likely to yield significant dividends even, or rather especially, after taking ambiguity into account. Keywords: expert aggregation; ambiguity; -maxmin; second-order cone programming; renewable energy R&D
    Date: 2012
  14. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena); Hartmut Kliemt
    Abstract: We suggest that procedures of monetarized bidding can facilitate co-operation in Elinor Ostrom type common(s) projects without crowding out communitarian faculties of "self-governance". Axioms securing procedurally egalitarian bidding on the basis of declared monetary evaluations are introduced. They guarantee that all realized changes of a status quo are in an "objective" (pecuniary) sense equally advantageous for all members of the community. Some empirical evidence that procedurally fair bidding can promote communitarian co-operation rather than crowding it out, is presented. The practical scope and limits of procedural egalitarianism need further empirical exploration, though.
    Keywords: Fair Procedures, Egalitarian Mechanisms, Unanimity, Constitutional Political Economy, Non-State Communities, Governing the Commons, Crowding out
    JEL: H4 H61 D62 D63 D71
    Date: 2013–01–09
  15. By: Kouroche Vafaï (Université Paris Descartes - Sorbonne Paris Cité - IUT, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne)
    Abstract: To control, evaluate, and motivate their agents, firms employ supervisors. As shown by empirical investigations, biased evaluation by supervisors linked to collusion is a persistent feature of firms. This paper studies how deceptive supervision affects agency relationships. We consider a three-level firm where a supervisor is in charge of producing a verifiable report on an agent's output. Depending on the output he has observed, the supervisor may either collude with the agent or with the principal, and make an uniformative report. We show that the proliferation of collusive activities in firms : modifies the configuration of the optimal preventive policy, may increase the expected cost of preventing each type collusion, is beneficial to the supervisor and detrimental to the agent, and is not always harmful.
    Keywords: Firm; group decision; control; biased supervision
    Date: 2012–12
  16. By: Paula Bennati (Climate Change Senior Advisor in the Environment and Sustainability Department of the Confederação Nacional da Indústria (CNI? Brazilian Confederation of Industry))
    Abstract: The negotiations within the United Nations Framework Convention on Climate Change (UNFCCC) have had an increasing impact on domestic policies in developing countries, especially the largest emitters among them, such as India, China, South Africa and Brazil (member countries of the so-called BASIC group). (?)
    Keywords: Climate Change Negotiations from an Industry Perspective
    Date: 2012–05

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