New Economics Papers
on Collective Decision-Making
Issue of 2013‒01‒26
thirteen papers chosen by

  1. A Non-Proposition-Wise Variant of Majority Voting for Aggregating Judgments By García-Bermejo, Juan Carlos
  2. The lure of authority: Motivation and incentive effects of power By Ernst Fehr; Holger Herz; Tom Wilkening
  3. Mathematical structures of simple voting games By Machover, Moshé; Terrington, Simon
  4. A Social Choice Approach to Primary Resource Management: The rubber tree Case in Africa By Moussa Diaby; Hélène Ferrer; Fabrice Valognes
  5. Domestic Politics and the Formation of International Environmental Agreements By Simon Dietz; Carmen Marchiori; Alessandro Tavoni
  6. Monetary policy decisions – comparing theory and “inside” information from MPC members By Mikael Apel; Carl Andreas Claussen; Petra Gerlach-Kristen; Petra Lennartsdotter; Øistein Røisland
  7. Who Gains from Information Asymmetry? By Gil S. Epstein; Yosef Mealem
  8. Theocracy is just another Form of Dictatorship: Theory and Evidence from the Papal Regimes By Fabio Padovano; Ronald Wintrobe
  9. Use and abuse of authority: A behavioral foundation of the employment relation By Björn Bartling; Ernst Fehr; Klaus M. Schmidt
  10. Federalism with Bicameralism By Lisa Grazzini; Alessandro Petretto
  11. The Perverse Incentive of Knowing the Truth By Garcia-Martinez, Jose A.
  12. Games With General Coalitional Structure By Selcuk, O.; Talman, A.J.J.
  13. A non-cooperative approach to the ordinal Shapley rule By Vidal-Puga, Juan

  1. By: García-Bermejo, Juan Carlos (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: Majority voting is commonly used in aggregating judgments. The literature to date on judgment aggregation (JA) has focused primarily on proposition-wise majority voting (PMV). Given a set of issues on which a group is trying to make collective judgments, PMV aggregates individual judgments issue by issue, and satisfies a salient property of JA rules—independence. This paper introduces a variant of majority voting called holistic majority voting (HMV). This new variant also meets the condition of independence. However, instead of aggregating judgments issue by issue, it aggregates individual judgments en bloc. A salient and straightforward feature of HMV is that it guarantees the logical consistency of the propositions expressing collective judgments, provided that the individual points of view are consistent. This feature contrasts with the known inability of PMV to guarantee the consistency of the collective outcome. Analogously, while PMV may present a set of judgments that have been rejected by everyone in the group as collectively accepted, the collective judgments returned by HMV have been accepted by a majority of individuals in the group and, therefore, rejected by a minority of them at most. In addition, HMV satisfies a large set of appealing properties, as PMV also does. However, HMV may not return any complete proposition expressing the judgments of the group on all the issues at stake, even in cases where PMV does. Moreover, demanding completeness from HMV leads to impossibility results similar to the known impossibilities on PMV and on proposition-wise JA rules in general.
    Keywords: judgment aggregation; judgment aggregation correspondences; proposition-wise majority voting; holistic majority voting
    JEL: D70 D71
    Date: 2013–01
  2. By: Ernst Fehr; Holger Herz; Tom Wilkening
    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
  3. By: Machover, Moshé; Terrington, Simon
    Abstract: We address simple voting games (SVGs) as mathematical objects in their own right, and study structures made up of these objects, rather than focusing on SVGs primarily as co-operative games. To this end it is convenient to employ the conceptual framework and language of category theory. This enables us to uncover the underlying unity of the basic operations involving SVGs.
    Keywords: Simple games; Lattice of simple games; Category
    JEL: D7 C71
    Date: 2013–01–11
  4. By: Moussa Diaby (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France); Hélène Ferrer (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France); Fabrice Valognes (University of Caen Basse-Normandie - CREM UMR CNRS 6211, France)
    Abstract: We consider in the present paper an original approach to a decision making problem related to the management of a primary resource, namely the rubber tree. By using the social choice theory through the approval voting, we show that it is possible to improve the return of the crop. Hence, by selecting the best varieties to be plant with respect to some environmental constraints, we demonstrate that approval voting can be easily used (opposed to classical operation research methods) by the african rubber tree planters in order to get a plantation at peak performance.
    Keywords: Natural Resource Management, Rubber Tree, Social Choice, Group Decision Making
    Date: 2013–01
  5. By: Simon Dietz (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, Department of Geography and Environment, London School of Economics and Political Science); Carmen Marchiori (Department of Geography and Environment, London School of Economics and Political Science); Alessandro Tavoni (Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science)
    Abstract: The theory of international environmental agreements overwhelmingly assumes that governments engage as unitary agents. Each government makes choices based on benefits and costs that are simple national aggregates, and similarly on a single set of national-level motivations, together drawing a strong analogy with the behaviour of an individual or firm in other strategic contexts. In reality, however, various domestic special interests shape environmental policy, including how national governments cooperate on cross-border issues. Therefore in this paper we introduce to a classic model of international environmental cooperation the phenomenon of domestic political competition, whereby lobby groups seek to influence policy by offering to fund political campaigning. We use the model to establish some general conditions for the effects of lobbying on the stringency of policy and the size of coalitions cooperating to provide an environmental good. Using specific functional forms, we obtain a range of further results, including circumstances in which the omission of lobbying results in environmental protection being underestimated.
    Keywords: Game Theory, International Environmental Agreements, Lobbying, Special-Interest Groups, Strategic Cooperation
    JEL: C7 H41 K33 Q2 Q54
    Date: 2012–10
  6. By: Mikael Apel; Carl Andreas Claussen; Petra Gerlach-Kristen; Petra Lennartsdotter; Øistein Røisland (Norges Bank (Central Bank of Norway))
    Abstract: How do monetary policy committee (MPC) members form their views about the appropriate interest rate? To what extent do they change their minds during the deliberations in the interest rate meeting? How important is the Chairman? The theoretical literature makes assumptions about these issues. We have asked actual MPC members in Sweden and Norway. This paper reports the results from this unique survey and discusses how well existing theories on monetary policy by committee capture the reality.
    Keywords: Monetary Policy Committee, Sveriges Riksbank, Norges Bank, Decision Making, Questionnaire Study.
    JEL: D71 E52 E58
    Date: 2013–01–16
  7. By: Gil S. Epstein (Bar-Ilan University); Yosef Mealem
    Abstract: This article considers an asymmetric contest with incomplete information. There are two types of players: informed and uninformed. Each player has a different ability to translate effort into performance in terms of the contest success function. While one player's type is known to both players, the other is private information and known only to the player himself. We compare the Bayesian Nash equilibrium outcome of a one-sided private information contest to the Nash equilibrium with no private information, in which both players know the type of the other player. We show conditions under which uncertainty increases the investment of the uninformed player and the rent dissipation of the contest, while decreasing the expected net payoff of the informed player. In addition, we consider conditions under which the informed player – before knowing his own type – prefers that the uninformed player knows his type. Moreover, we show conditions for the existence/non-existence of equilibrium in a two-stage contest in which the informed player declares his type (or does not declare) in the first stage and in the second stage the two players play according to the information available to them.
    Keywords: Asymmetric contests, rent seeking, incomplete information
    JEL: D72 C72
    Date: 2013–01
  8. By: Fabio Padovano (Condorcet Center for Political Economy, University of Rennes 1 and CREM-CNRS UMR 6211, France - DIPES, Università Roma Tre, Italy); Ronald Wintrobe (University of Western Ontario, USA)
    Abstract: This paper tests the explanatory and predictive power of a theory of dictatorship (e.g., Wintrobe 1998, 2007) when applied to the case of theocracy and in particular to the history of the temporal power of the Popes. We consider the behaviour of the Catholic theocracy in the Papal States, as this was a very long lasting theocracy, exposed to many historical shocks that reveal information about the incentives and constraints that characterize it. We use this information to test the explanatory power of the theory of dictatorship, showing that never in the history of the temporal power of the Church have the four categories of dictatorship that the theory foresees (tinpot, tyrant, totalitarian and conceivably timocrat) proven inadequate. Theocracy is just like any other form of dictatorship. Furthermore, we test some of the predictions of the theory of dictatorship about the durability of, and the source of opposition to the various regimes on data about the Papacy. The results appear to support the theory.
    Keywords: Matching, Dictatorship, Theocracy, Papacy
    JEL: Z12 N83 D79
    Date: 2012–12
  9. By: Björn Bartling; Ernst Fehr; Klaus M. Schmidt
    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
  10. By: Lisa Grazzini (DISEI, Università degli studi di Firenze); Alessandro Petretto (DISEI, Università degli studi di Firenze)
    Abstract: We analyse horizontal and vertical fiscal externalities in a federal country with a bicameral national system. We show under which conditions, at equilibrium, the two chambers agree or disagree on the choice of a national tax rate.
    Keywords: Fiscal federalism, Median voter, Bicameralism.
    JEL: H71 H77
    Date: 2013
  11. By: Garcia-Martinez, Jose A.
    Abstract: We show that the observation by a principal of the effectiveness of an expert‘s action could induce the expert to lie, damaging the principal. A career-minded expert receives a private-informative signal about the real state of the world, and then he takes an action that can match or not the real state. If a principal observes the consequences of this expert’s action, i.e., if the action matches or not the real state, this expert could disregard his valuable information damaging the principal: the expert plays the opposite action to that recommended by his signal and consequently decreases the probability of matching the real state. However, this expert could play the "recommended" action with positive probability if consequences are not observed. The previous literature has found that "transparency of consequence" can only improves the incentives of the expert to reveal his valuable information. The paradoxical behavior we have found can appear when the expert needs to signal with one action two different kinds of information, and there is a particular "trade-off" in the way of signaling; this "trade-off" can be affected in an unexpected way by the observation of the expert’s action consequences. In this paper, we present a simple model to capture this idea, and characterize the range of the parameters where that occurs.
    Keywords: Transparency; Principal-Agent; Reputation
    JEL: D82 C72
    Date: 2013–01–15
  12. By: Selcuk, O.; Talman, A.J.J. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper introduces a new solution concept for cooperative games with general coalitional structure in which only certain sets of players, including the set of all players, are able to form feasible coalitions. The solution concept takes into account the marginal contribution of players. This marginal contribution can be a joint contribution of several players and is equally divided among those players. Any set system representing a coalitional structure induces a collection of coalitional trees, whose nodes may consist of subsets of players. As solution we take the average of the marginal contribution vectors that correspond to all coalitional trees. The solution is ecient and several other properties are studied and some special cases are considered.
    Keywords: TU game;cooperation structure;marginal contribution;set system;Shapley value
    JEL: C71
    Date: 2013
  13. By: Vidal-Puga, Juan
    Abstract: In bargaining problems, a rule satisfies ordinal invariance if it does not depend on order-preserving transformations of the agents' utilities. In this paper, a simple non-cooperative game for three agents, based on bilateral offers, is presented. The ordinal Shapley rule arises in subgame perfect equilibrium as the agents have more time to reach an agreement.
    Keywords: ordinal bargaining; ordinal Shapley rule
    JEL: C78 C72
    Date: 2013–01–14

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