New Economics Papers
on Collective Decision-Making
Issue of 2013‒03‒16
twenty papers chosen by
Stan C. Weeber, McNeese State University

  1. How Elastic Are Preferences for Redistribution? Evidence from Randomized Survey Experiments By Ilyana Kuziemko; Michael I. Norton; Emmanuel Saez; Stefanie Stantcheva
  2. Consistency and Communication in Committees By Inga Deimen; Felix Ketelaar; Mark T. Le Quement
  3. Authority and Incentives in Organizations By Matthias Kräkel
  4. REPLICATION STUDY: Hoover and Pecorino (Public Choice, 2005) By Stratford Douglas; W. Robert Reed
  5. Direct Democracy and Resource Allocation: Experimental Evidence from Afghanistan By Andrew Beath; Fotini Christia; Ruben Enikolopov
  6. Home-Host Country Distance in Offshore Governance Chocies By Julien Gooris; Carine Peeters
  7. The challenges of EU governance and the quest for long-term growth By Renaud Thillaye
  8. Measuring Power and Satisfaction in Societies with Opinion Leaders By René Van Den Brink; Agnieszka Rusinowska; Frank Steffen
  9. Corporate governance, value and performance of firms: New empirical results on convergence from a large international database By Jackie Krafft; Yiping Qu; Francesco Quatraro; Jacques-Laurent Ravix
  10. Cooperation among local governments to deliver public services : a "structural" bivariate response model with fixed effects and endogenous covariate By Edoardo Di Porto; Vincent Merlin; Sonia Paty
  11. Group Violence, Ethnic Diversity and Citizen Participation: Evidence from Indonesia By Christophe Muller; Marc Vothknecht
  12. Power Sharing and Electoral Equilibrium By Alejandro Saporiti
  13. Immigrant Group Size and Political Mobilization: Evidence from the European Migration By Allison Shertzer
  14. Nation Building By Alberto Alesina; Bryony Reich
  15. The differential role of social networks: Strategies and routes in Brazilian migration to Portugal and the Netherlands By Masja van Meeteren; Sonia Pereira
  16. The Roman Metro Problem:Dynamic Voting and the Limited Power of Commitment By Christian Roessler; Sandro Shelegia; Bruno Strulovici
  17. Rethinking a New Conceptual Relation Between Economic Justice, Democracy, and liberal system: An economic point of vue By Issaoui, Fakhri; El Montasser, Ghassen
  18. Becoming "We" Instead of "I", Identity Management and Incentives in the Workplace By Donze, Jocelyn; Gunnes, Trude
  19. Does Truth Win When Teams Reason Strategically? By Jeanette Brosid-Koch; Timo Heinrich; Christoph Helbach
  20. A Competitive Approach to Leadership in Public Good Games By Centorrino, Samuele; Concina, Laura

  1. By: Ilyana Kuziemko; Michael I. Norton; Emmanuel Saez; Stefanie Stantcheva
    Abstract: This paper analyzes the effects of information about inequality and taxes on preferences for redistribution using randomized online surveys on Amazon Mechanical Turk (mTurk). About 5,000 respondents were randomized into treatments providing interactive information on U.S. income inequality, the link between top income tax rates and economic growth, and the estate tax. We find that the informational treatment has very large effects on whether respondents view inequality as an important problem. By contrast, we find quantitatively small effects of the treatment on views about policy and redistribution: support for taxing the rich increases slightly, support for transfers to the poor does not, especially among those with lower incomes and education. An exception is the estate tax — we find that informing respondents that it affects only the very richest families has an extremely large positive effect on estate tax support, even increasing respondents' willingness to write to their U.S. senator about the issue. We also find that the treatment substantially decreases trust in government, potentially mitigating respondents' willingness to translate concerns about inequality into government action. Methodologically, we explore different strategies to lower attrition in online survey platforms and show our main results are robust across methods. A small follow-up survey one month later reveals that our results persist over time. Finally, we compare mTurk with other survey vendors and provide suggestions to future researchers considering this platform.
    JEL: D63 D72 H2 I3
    Date: 2013–03
  2. By: Inga Deimen; Felix Ketelaar; Mark T. Le Quement
    Abstract: This paper analyzes truthtelling incentives in pre-vote communication in heterogeneous committees. We generalize the classical Condorcet jury model by introducing a new informational structure that captures consistency of information. In contrast to the impossibility result shown by Coughlan (2000) for the classical model, full pooling of information followed by sincere voting is an equilibrium outcome of our model for a large set of parameter values implying the possibility of ex post conflict between committee members. Furthermore, abandonning the assumption of sincere voting, we characterize necessary and sufficient conditions for the implementability of the first best decision rule via truthful equilibria.
    Keywords: Communication, Committees, Voting
    JEL: D72 D82 D83
    Date: 2013–02
  3. By: Matthias Kräkel
    Abstract: The paper analyzes how the choice of organizational structure leads to the best compromise between controlling behavior based on authority rights and minimizing costs for implementing high efforts. Concentrated delegation and hierarchical delegation turn out to be never an optimal compromise. If the CEO is more efficient than the division heads (i.e., the CEO's costs from exerting high effort are smaller than those of the division heads), the owner will prefer full delegation to the divisions to replace high incentive pay for motivating the division heads by incentives based on private benefits of control. In that situation, the importance of cooperative behavior between the firm's divisions determines whether decentralization or cross-authority delegation is the optimal form of full delegation. If, however, the division heads are more efficient than the CEO, then centralization or partial delegation can also be optimal.
    Keywords: authority, centralization, contracts, decentralization, moral hazard
    JEL: D21 D23 D86 L22
    Date: 2013–03
  4. By: Stratford Douglas; W. Robert Reed (University of Canterbury)
    Abstract: This paper replicates and analyses a study by Hoover and Pecorino on Federal spending in US states (Hoover and Pecorino, 2005; henceforth H&P). H&P followed on path-breaking research by Atlas et al. (1995) in which evidence was claimed in favour of the “small state effect;” namely, that since every state is represented by two Senators, small states have a disproportionate influence relative to their population size. H&P extended previous research by hypothesizing that if a small state effect existed, it should be most evident in Federal spending for (i) grants and (ii) procurement compared to other categories of Federal spending. They test this hypothesis using panel data of Federal spending in US states from 1983-1999. While we are able to closely replicate H&P’s original findings, we argue that that research suffers from several specification problems. When these are corrected, the evidence is mixed, with a substantial number of contradictory results.
    Keywords: Small state effect; Representation; US Senate; Replication study
    JEL: H1 H5 C1
    Date: 2013–02–24
  5. By: Andrew Beath (Office of the Chief Economist for East Asia and the Pacific, World Bank); Fotini Christia (Department of Political Science, Massachusetts Institute of Technology); Ruben Enikolopov (Institute for Advanced Study and New Economic School)
    Abstract: Direct democracy is designed to better align policy outcomes with citizen preferences. Using a randomized field experiment in 250 villages across Afghanistan, we compare outcomes of the selection of village-level development projects through secret-ballot referenda and through consultation meetings. We find that elites exert more influence over resource allocation decisions in consultation meetings as compared with referenda. Referenda also improve public satisfaction. The results indicate that the use of direct democracy in public resource allocation mitigates elite capture and results in more legitimate outcomes than those produced by less representative consultative processes.
    Date: 2013–01
  6. By: Julien Gooris; Carine Peeters
    Abstract: This paper studies the effect of home-host country distance on the choice ofgovernance mode in service offshoring. Using a Transaction Cost Economicsapproach, we explore the comparative costs of the hierarchical and contractualmodels to show that different dimensions of distance (geographic, cultural andinstitutional), because they generate different types of uncertainties, impactoffshore governance choices in different ways. Empirical results confirm that, onthe one hand, firms are more likely to respond to internal uncertainties resultingfrom geographic and cultural distance by leveraging the internal controls andcollaboration mechanisms of a captive offshore service center. On the other hand,they tend to respond to external uncertainties resulting from institutional distanceby limiting their foreign commitment and leveraging the resources and localexperience of third party service providers. Finally, we find that the temporaldistance component (time zone difference) of geographical dispersion betweenonshore and offshore countries plays a dominant role over the spatial distancecomponent.
    Keywords: offshoring; home-host country distance; governance mode; global value chains; transaction cost economics; logistic regression
    Date: 2013–02
  7. By: Renaud Thillaye
    Abstract: The research paper assesses the opportunities and challenges raised by the post-crisis EU governance system with regard to the transition of European economies towards a new growth model balancing economic performance with social cohesion and environmental responsibility. It begins with questioning the term of ‘governance’ and with a hint at the 'multi-level governance' literature available in EU studies. This section suggests that the EU's nature is one of multiple and innovative policymaking methods. Any assessment of the EU's added value must investigate the actual policy direction and the effectiveness of a complex EU governance architecture, by looking in particular at how EMU coordination frameworks interacts with Community-based policies. The paper focuses then on the goals, the processes and the financial instruments underpinning the Europe 2020 Strategy, bearing in mind the limits encountered by the Lisbon Strategy during the last decade. It finds that the Strategy, albeit carefully balanced, does not avoid the risk of a 'capability-expectations' gap. Implementation would gain, on the one side, from more consistent legal and financial instruments at EU level, and from a more supportive macroeconomic environment in the euro area on the other. The third section examines the way in which Europe 2020 cohabits with other frameworks of coordination within the European Semester, such as the reformed Stability and Growth Pact, and the new Macroeconomic Imbalance Procedure. Potential clashes between diverging objectives and their legal bases are identified and tested against the views of practitioners (8 interviews were conducted in parallel to the research) and throughout a case-study based on how the Semester has so far impacted on three countries: Finland, France and Italy. The European Commission's Annual Growth Surveys for 2011, 2012 and 2013 are also analysed. This research reveals a prioritisation of fiscal consolidation and short-term, market-based adjustment policies over the longer-term objectives pursued by the Europe 2020 Strategy. The collective outcome of these policies, and the impact of national reforms on the whole EU, tend to be overlooked as well. Nevertheless, there is substantial room for manoeuvre and dialogue between the Commission and individual countries. The paper concludes that ways should be found to shield Europe 2020 objectives from overwhelming stability considerations in the Euro Area, and contains some suggestions for further innovations of governance in that respect. A greater differentiation between countries according to their position might be necessary. The conclusion also argues that it fells to national governments, parliaments and parties to seize the opportunity of the European Semester to frame challenges differently and to push for alternative solutions.
    Keywords: Economic strategy; EU integration; European economic policy; European governance; European Monetary Union; Good governance; Institutional reforms
    JEL: E02
    Date: 2013–02
  8. By: René Van Den Brink (Department of Econometrics and Tinbergen Institute - VU University); Agnieszka Rusinowska (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); Frank Steffen (University of Liverpool Management School (ULMS) - University of Liverpool Management School)
    Abstract: Opinion leaders are actors who have some power over their followers as they are able to influence their followers' choice of action in certain instances. In van den Brink et al. (2011) we proposed a two-action model for societies with opinion leaders. We introduced a power and a satisfaction score and studied some common properties. In this paper we strengthen two of these properties and present two further properties, which allows us to axiomatize both scores for the case that followers require unanimous action inclinations of their opinion leaders to follow them independently from their own action inclinations.
    Keywords: Collective choice ; follower ; opinion leader ; power ; satisfaction ; axiomatization
    Date: 2013
  9. By: Jackie Krafft (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Yiping Qu (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Jacques-Laurent Ravix (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: This paper aims to revisit the link between corporate governance, value, and firm performance by focusing on convergence, understood as the way that non-US firms are adopting US best practice in terms of corporate governance, and the implications of this adoption. We examine theoretical questions related to conventional models (agency theory, transaction cost economics, new property rights theory),which tend to suggest rational adoption of best practice, and contributions that alternatively consider country- and firm-level differences as possible barriers to convergence. We contribute to the empirical literature by using a large international database to show how non-US firms' adoption of US best practice is having an impact on performance.
    Keywords: Corporate governance; governance metrics, ratings, rankings and scoring; firm value; firm performance
    Date: 2013–02–09
  10. By: Edoardo Di Porto (EQUIPPE - ECONOMIE QUANTITATIVE, INTEGRATION, POLITIQUES PUBLIQUES ET ECONOMETRIE - Université Lille I - Sciences et technologies); Vincent Merlin (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Sonia Paty (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: Cooperation among local governments has been encouraged to enable the aggregation of resources and improved public sector efficiency. However, if cooperation through the joint delivery of local public services is likely to be welfare enhancing for the agglomeration, but will lead to losses for one of the parties, it is unlikely that the losing municipality will cooperate. Using a unique panel dataset of 30,000 French municipalities for 1995-2003, we estimate the relationship between cooperation decision and the fiscal revenues raised to provide local public goods. We employ a new econometric strategy based on Lee (1978), developing a non linear method controlling for fixed effect, endogenous covariates and cluster standard error. We find evidence that a positive difference between the expected fiscal revenues of a cooperating locality and the actual revenues realized by an isolated locality significantly increases the probability of joining an inter-municipal community.
    Keywords: inter-municipal cooperation; fiscal revenues; bivariate response variable; panel data; endogeneity
    Date: 2013–02–12
  11. By: Christophe Muller (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Marc Vothknecht (DIW Berlin - German Institute for Economic Research)
    Abstract: We study the impact of violent conflict on social capital, as measured by citizen participation in community groups, defined by four activity types: governance, social service, infrastructure development and risk-sharing. Combining household panel data from Indonesia with conflict event information, we find an overall decrease in citizen contributions in districts affected by group violence in the early post-Suharto transition period. However, participation in communities with a high degree of ethnic polarization is less affected, and is even stimulated for local governance and risk-sharing activities. Moreover, individual engagement appears to depend on the involvement of other members from the same ethnic group, which points toward building of intra-ethnic social networks in the presence of violence. Finally, our results show the danger of generalization when dealing with citizen participation in community activities. We find a large variety of responses depending on the activity and its economic and social functions. We also find large observed and unobserved individual heterogeneities of the effect of violence on participation. Once an appropriate nomenclature of activities is used and controls for heterogeneity are applied, we find that the ethnic and social configuration of society is central in understanding citizen participation.
    Keywords: Violent Conflict; Citizen Participation; Local Public Goods
    Date: 2013–02
  12. By: Alejandro Saporiti
    Date: 2013
  13. By: Allison Shertzer
    Abstract: The United States absorbed nearly 22 million immigrants from Europe between 1880 and 1915. How did these immigrants, largely from undemocratic European states, become integrated into the American political system? This paper uses a newly assembled dataset of urban populations in the United States prior to World War I to investigate the decision of newly arrived immigrants to mobilize politically, focusing on the citizenship choice of foreign-born individuals in city wards. I find that immigrants were more likely to become politically active as their ethnic group’s share of the electorate grew, particularly in wards where the Democratic Party likely needed the vote of new immigrants to win elections.
    JEL: D72 J15 N31
    Date: 2013–02
  14. By: Alberto Alesina; Bryony Reich
    Abstract: Nations stay together when citizens share enough values and preferences and can communicate with each other. Homogeneity amongst people can be built with education, teaching a common language to facilitate communication, but also by brute force such as prohibiting local cultures. Democracies and non-democracies have different incentives when it comes to choosing how much and by what means to homogenize the population. We study and compare both regimes in a model where the size of countries and the degree of active homogenization in endogenous. We also offer some historical discussions of cases which illustrate our theoretical results.
    JEL: F3
    Date: 2013–02
  15. By: Masja van Meeteren (Erasmus University Rotterdam); Sonia Pereira (Institute of Geography and Spatial Planning, University of Lisbon)
    Abstract: This paper draws on qualitative and quantitative data on the migration experiences of Brazilians living in Portugal and the Netherlands to reflect and expand upon the existing knowledge on the role of social networks in migration processes. We consider different migrant profiles based on principal migration motives to identify differentiated socio-demographic profiles and relate these to migration strategies. We show that differences in the ways migrants access and use social networks in their migration projects can be related to these different migration motives and profiles. Simultaneously, we compare two distinct immigration contexts both in terms of contemporary immigration regimes and working opportunities and historical links to Brazil. Our findings demonstrate that migration scholars need to move beyond the narrow conceptualisation of social networks based on community or kin relationships, to consider multiple configurations involving different agents – both in the origin and destination countries – at different stages of the migration process. In addition, we show that future analyses would benefit from taking into account the differences between migrants driven by distinct motivations in different places.
    Keywords: Social networks, immigration, migration motives, Portugal, Brazil, Netherlands
    Date: 2013–03
  16. By: Christian Roessler; Sandro Shelegia; Bruno Strulovici
    Abstract: A frequently heard explanation for the underdeveloped metro system in Rome is the following one: "If we tried to build a new metro line, it would probably be stopped by archeological finds that are too valuable to destroy, so the investment would be wasted." This statement, which seems self-contradictory from the perspective of a single decision maker, can be rationalized in a voting model with diverse constituents. One would think that commitment to finishing the metro line (no matter what is discovered in the process) can resolve this inefficiency. We show, however, that a Condorcet cycle occurs among the plans of action one could feasibly commit to, precisely when the metro project is defeated in step-by-step voting (that is, when commitment is needed). More generally, we prove a theorem for binary-choice trees and arbitrary learning, establishing that no plan of action which is majority-preferred to the equilibrium play without commitment can be a Condorcet winner among all possible plans. Hence, surprisingly, commitment has no power in a large class of voting problems. JEL Classification Numbers: DD70, H41, C70
    Keywords: Dynamic Voting, Condorcet Winner, Commitment, Condorcet Cycle, Social Experimentation, Status Quo Bias, Social Inefficiency, Social Inertia
    Date: 2013–03–13
  17. By: Issaoui, Fakhri; El Montasser, Ghassen
    Abstract: Liberals and libertarians believe that justice is deeply embodied in liberalism. The famous physiocratic maxim "let them do business, let people and goods move: the world works by itself" relegated to second place some virtues such as justice and equity by considering them as mechanical outputs produced by market mechanisms. The invisible hand of Adam Smith is so benevolent that it inherently purifies various actions of the market. However, reality does not often look forward to these considerations often qualified as ideal. The market is not fair and Pareto optimality is still running even if an individual walks away from the rich to the detriment of another. A rereading of justice by Rawls empowered liberalism to return to normality long sought and rarely approved. However, at the level of political governance, justice is far from being installed whenever democracy casts away almost all individuals (people) and supports a few to govern. This latter, hypothetically unable to personify and care for individuals, is forced to crush individual preferences by directing them to an unknown preference qualified as the people's preference. The aim of this paper is to study this issue by emphasizing the obligation of reviewing democracy so that it serves best the values of liberalism and justice.
    Keywords: justice, fairness, Liberalism, preference transmission
    JEL: A10 A11 A14
    Date: 2013–02–15
  18. By: Donze, Jocelyn; Gunnes, Trude
    Abstract: This paper studies how a firm fosters formal and informal interactions among its employees to create a collective identity and positively influence effort. We develop a model where employees have both a personal and a social ideal for effort, and where the firm can make its workforce more sensitive to this social ideal by allocating part of the work time to social interactions. We show that by investing in social capital, the firm can increase the power of peer pressure, make screening among heterogeneous employees less costly and, finally, augment the effectiveness of monetary incentives.
    Keywords: monetary and non monetary incentives, social norms, norm regulation, identity
    JEL: D03 D21 D86 J33 M5
    Date: 2013–03–05
  19. By: Jeanette Brosid-Koch; Timo Heinrich; Christoph Helbach
    Abstract: This study tests experimentally whether teams can create synergies in strategic interactions. For our comparison between team and individual behavior we employ the race game. This game has the advantage that the optimal strategy does neither depend on beliefs about other players nor on distributional or efficiency concerns. Our results reveal that teams do not only outperform individuals but that they can also beat the “truth-wins” benchmark. In particular, varying the length of the race game we find that the team advantage increases with the complexity of the game. The latter finding supports the conjectures made by Charness et al. (2010) and Cooper and Kagel (2005), who suggest a relation between task complexity and the size of synergies created by teams.
    Keywords: Race game; strategic sophistication; team decision making
    JEL: C72 C91 C92
    Date: 2013–01
  20. By: Centorrino, Samuele; Concina, Laura
    Abstract: We show that introducing a competitive preliminary stage in a sequential public good game helps select one of the more cooperative leaders in the group. Using a modified second price auction, we find that bids have a strong positive predictive power on individual contributions. Moreover, evidence is provided that trust can explain voluntary and cooperative leadership. However, followers reaction to voluntary leaders may rise free riding behaviour, with uncertain effect on total public good provision.
    Keywords: Public good experiment Leadership Self-selection Cooperation Trust Public good provision.
    JEL: A13 C72 C92 H41 Z13
    Date: 2013–02

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