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on Collective Decision-Making |
| By: | Bent Flyvbjerg |
| Abstract: | This paper argues, first, that a major problem in the planning of large infrastructure projects is the high level of misinformation about costs and benefits that decision makers face in deciding whether to build, and the high risks such misinformation generates. Second, it explores the causes of misinformation and risk, mainly in the guise of optimism bias and strategic misrepresentation. Finally, the paper presents a number of measures aimed at improving planning and decision making for large infrastructure projects, including changed incentive structures and better planning methods. Thus the paper is organized as a simple triptych consisting in problems, causes, and cures. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1303.7400&r=cdm |
| By: | Bent Flyvbjerg; Massimo Garbuio; Dan Lovallo |
| Abstract: | The Economist recently reported that infrastructure spending is the largest it is ever been as a share of world GDP. With $22 trillion in projected investments over the next ten years in emerging economies alone, the magazine calls it the "biggest investment boom in history." The efficiency of infrastructure planning and execution is therefore particularly important at present. Unfortunately, the private sector, the public sector and private/public sector partnerships have a dismal record of delivering on large infrastructure cost and performance promises. This paper explains why and how to solve the problem. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1303.7403&r=cdm |
| By: | Bent Flyvbjerg; Nils Bruzelius; Werner Rothengatter |
| Abstract: | Back cover text: Megaprojects and Risk provides the first detailed examination of the phenomenon of megaprojects. It is a fascinating account of how the promoters of multibillion-dollar megaprojects systematically and self-servingly misinform parliaments, the public and the media in order to get projects approved and built. It shows, in unusual depth, how the formula for approval is an unhealthy cocktail of underestimated costs, overestimated revenues, undervalued environmental impacts and overvalued economic development effects. This results in projects that are extremely risky, but where the risk is concealed from MPs, taxpayers and investors. The authors not only explore the problems but also suggest practical solutions drawing on theory and hard, scientific evidence from the several hundred projects in twenty nations that illustrate the book. Accessibly written, it will be essential reading in its field for students, scholars, planners, economists, auditors, politicians, journalists and interested citizens. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1303.7404&r=cdm |
| By: | Bent Flyvbjerg |
| Abstract: | With a point of departure in the concept "uncomfortable knowledge," this article presents a case study of how the American Planning Association (APA) deals with such knowledge. APA was found to actively suppress publicity of malpractice concerns and bad planning in order to sustain a boosterish image of planning. In the process, APA appeared to disregard and violate APA's own Code of Ethics. APA justified its actions with a need to protect APA members' interests, seen as preventing planning and planners from being presented in public in a bad light. The current article argues that it is in members' interest to have malpractice critiqued and reduced, and that this best happens by exposing malpractice, not by denying or diverting attention from it as APA did in this case. Professions, organizations, and societies that stifle critique tend to degenerate and become socially and politically irrelevant "zombie institutions." The article asks whether such degeneration has set in for APA and planning. Finally, it is concluded that more debate about APA's ethics and actions is needed for improving planning practice. Nine key questions are presented to constructively stimulate such debate. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1303.7405&r=cdm |
| By: | INUI Tomohiko; EDAMURA Kazuma; Xiaofei TAN; TODO Yasuyuki; HANEDA Sho |
| Abstract: | Chinese cross-border outbound mergers and acquisitions (M&As) of firms in developed countries have been expanding rapidly since the mid-2000s. The major motives are expansion to new markets and sourcing of knowledge and strategic assets. This study is the first attempt to examine the effects of Chinese outbound M&As on firm performance, applying econometric analysis to large firm-level data. We find that sales, productivity, and tangible and intangible assets of acquiring firms increase substantially after M&A deals, while the research and development (R&D) intensity remains the same. These results suggest that Chinese firms on average achieve their intended goals of outbound M&As. |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:rpdpjp:13005&r=cdm |
| By: | Michel Grabisch (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: | In cooperative games, the core is the most popular solution concept, and its properties are well known. In the classical setting of cooperative games, it is generally assumed that all coalitions can form, i.e., they are all feasible. In many situations, this assumption is too strong and one has to deal with some unfeasible coalitions. Defining a game on a subcollection of the power set of the set of players has many implications on the mathematical structure of the core, depending on the precise structure of the subcollection of feasible coalitions. Many authors have contributed to this topic, and we give a unified view of these different results. |
| Keywords: | TU-game; Solution concept; Core; Feasible coalition; Communication graph; Partially ordered set |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cesptp:hal-00803233&r=cdm |
| By: | Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Huanxiu GUO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I) |
| Abstract: | Since 2003, a grass-roots movement of New Rural Reconstruction (NRR) has emerged in China to experience alternative model of rural development. The movement adopts a particular approach for rural development on basis of rural social and cultural reconstruction. In order to understand this social approach, we investigate an original NRR experiment in a poor village of south China, where organic farming is promoted by means of basketball game. An in-depth household survey is conducted to qualitatively analyze this social approach and derive intuitive hypothesis of extended social network for empirical test. With a panel structure dataset collected by the survey, we quantitatively identify the causal effect of social network by exploiting the endogeneity of social network formation. Our identification result provides micro evidence for a large social multiplier effect in the diffusion of organic farming, whereas it is negative for organic experts. Also, our results highlight the role of women, education and labor force for the development of organic farming. On basis of these results, we conclude that organic farming is suitable but challenging for small villages in China, while social activity is a good lever to achieve farmers' collective action for its large diffusion. |
| Keywords: | New rural reconstruction; Social network; Organic farming; China. D71;O33;Q55 |
| Date: | 2013–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00802119&r=cdm |
| By: | Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group) |
| Abstract: | A group of actors, individuals or firms, can engage in collectively providing projects which may be costly or generating revenues and which may benefit some and harm others. Based on requirements of procedural fairness (Güth and Kliemt, 2013), we derive a bidding mechanism determining endogenously who participates in collective provision, which projects are implemented, and the positive or negative payments due to the participating members. We justify and discuss this procedural fairness approach and compare it with that of optimal, e.g. welfaristic game theoretic mechanism design (e.g. Myerson, 1979). |
| Keywords: | Procedural fairness, Mechanism design, Equality axiom, Public provision, Collective action |
| JEL: | D44 D46 D61 D62 D63 D71 D72 D73 D74 |
| Date: | 2013–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-013&r=cdm |
| By: | Corinne Autant-Bernard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Cilem Selin Hazir (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon) |
| Abstract: | Due to the strong polarisation of economic activities in space and rise in collaborative behaviour, increasing attention has recently been devoted to the relationship between geography and network formation. The studies conducted on this topic reveal a high variation in terms of methodologies. Putting special emphasis on R&D networks, the aim of this chapter is to review the different methods and assess their ability to address the issues raised by the relationship between network and space. We first discuss the different facets of the relationship between geography and networks. Then, we detail the methodological approaches and their capability to test each effect of geography on network formation. We argue that the effect of distance on dyads have received the major attention so far, but the development of block modelling and top-down approaches opens new research perspectives on how distance or location might affect formation of more complex structures. Moreover, recent improvement in temporal models also offers also offers opportunities to better separate spatial effects from that of influence over time. |
| Keywords: | Social Network Analysis ; Stochastic Actor-based Models ; Gravity models ; Complex Network Analysis ; ERG ; Preferential Attachment Model |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00803536&r=cdm |
| By: | Antoinette Baujard (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Frédéric Gavrel (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Herrade Igersheim (BETA - Bureau d'économie théorique et appliquée - CNRS : UMR7522 - Université de Strasbourg - Université Nancy II); Jean-François Laslier (PREG - Pole de recherche en économie et gestion - CNRS : UMR7176 - Polytechnique - X); Isabelle Lebon (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie) |
| Abstract: | Under evaluative voting, the voter freely grades each candidate on a numerical scale, with the winning candidate being determined by the sum of the grades they receive. This paper compares evaluative voting with the two-round system, reporting on an experiment which used various evaluation scales, conducted during the first round of the 2012 French presidential election. Invitations to participate in the study were extended to around 5,000 voters in three cities, and the experiment attracted 2,340 participants. Basing our argument on the ranks, relative scores, and grade profiles of candidates, we show that the two-round system favors "exclusive" candidates, that is candidates who elicit strong feelings, while evaluative rules favor "inclusive" candidates, that is candidates who attract the support of a large span of the electorate. These differences are explained by two complementary reasons: the opportunity for the voter to support several candidates under evaluative voting rules, and the specific pattern of strategic voting under the official, two-round voting rule. |
| Keywords: | Voting, In Situ Experiment, Evaluative Voting, Approval Voting, Two-round system |
| Date: | 2013–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00803024&r=cdm |
| By: | Antony Millner; Hélène Ollivier; Leo Simon |
| Abstract: | An incumbent political party, who cares only about voters' welfare, faces future political competition from a similarly well-intentioned party whose beliefs about the consequences of a `long-run' public policy are different from its own. We show that when the incumbent can endogenously influence whether learning occurs (active learning), future political competition gives her an incentive to distort her policy choices so as to reduce uncertainty and disagreement in the future. This incentive pushes all incumbents' policies in the same direction. We demonstrate this mechanism in a two period model of the regulation of a stock pollutant that combines the literature on uncertainty and learning in intertemporal choice with a simple model of political competition. If the interaction between active learning and political competition is strong enough, all incumbents, regardless of their beliefs, will emit more than they would like. Our model thus offers a candidate explanation for the weakness of long-run environmental policy in democracies that applies even in an ideal world in which politicians' objectives are aligned with voters'. The mechanism we identify is likely to apply in many long-run public policy contexts. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:lsg:lsgwps:wp104&r=cdm |
| By: | Fosgaard, Toke (Department of Food and Resource Economics, University of Copenhagen); Hansen , Lars Gårn (Department of Food and Resource Economics, University of Copenhagen); Wengström, Erik (Department of Economics, Lund University) |
| Abstract: | We investigate framing effects in a large-scale public good experiment. We measure indicators of explanations previously proposed in the literature, which when combined with the large sample, enable us to estimate a structural model of framing effects. The model captures potential causal effects and the behavioral heterogeneity of cooperation variability. We find that framing only has a small effect on the average level of cooperation but a substantial effect on behavioral heterogeneity and we show that this can be explained almost exclusively by a corresponding change in the heterogeneity of beliefs about other subjects’ behavior. Preferences are on the other hand stable between frames. |
| Keywords: | Framing; Public Goods; Internet Experiment; Simulation |
| JEL: | C13 C71 C93 H41 |
| Date: | 2013–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lunewp:2013_006&r=cdm |
| By: | Moussa Diaby (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Hélène Ferrer (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Fabrice Valognes (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie) |
| 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 approval voting, we show that it is possible to improve the return of the crop. Hence, by selecting the best varieties to be planted 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: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00804065&r=cdm |
| By: | Laszlo Goerke (Institute for Labour Law and Industrial Relations in the EU, University of Trier); Markus Pannenberg |
| Abstract: | Subjective well-being (SWB) is generally argued to rise with relative income. However, direct evidence is scarce on whether and how intensively individuals undertake income comparisons, to whom they relate, and what they perceive their relative income to be. In this paper, novel data with direct information on income comparison intensity and perceived relative income with respect to predetermined reference groups is used to provide evidence on the relationship between income comparisons and SWB. We find negative correlations between comparison intensity and SWB for co-workers, people in the same occupation and friends. For job-related reference groups income comparisons are mostly upwards and perceiving to earn less than the reference group is negatively correlated with SWB. |
| Keywords: | Income Comparisons, Endogenous Reference Groups, German Socio-Economic Panel (SOEP), Subjective Well-Being |
| JEL: | D31 D62 I31 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:iaa:dpaper:201303&r=cdm |
| By: | Daniela Glätzle-Rützler; Matthias Sutter; Achim Zeileis |
| Abstract: | Myopic loss aversion (MLA) has been found to play a persistent role for investment behavior under risk. We study whether MLA is already present during adolescence. Quite surprisingly, we find no evidence of MLA in a sample of 755 adolescents. This finding is at odds with previous findings, and it might be explained by self-selection effects. In other dimensions, however, we are able to replicate stylized findings in our pool of adolescents, such that teams invest higher amounts than individuals and that women invest less than men. |
| Keywords: | myopic loss aversion, experiment, adolescents, team-decision making |
| JEL: | C91 D03 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2013-07&r=cdm |
| By: | Darwisheh, Housam |
| Abstract: | The ensuing bloodshed and deteriorating humanitarian crisis in Syria, the failure of the United Nations Security Council to reach a consensus on what action to take, and the involvement of contending external actors partially reflect the complexity of the current impasse. Despite the importance of regional and international factors, however, this papers attempts to argue that the domestic dynamics of the Syrian crisis have been vitally important in determining the course of the popular uprising and the regime’s response. In this, Syria’s crisis belongs with the Arab Spring the trajectories and prospects of which have been shaped by dynamics within regimes. It will be seen that the formal and informal institutional structure of the Ba‘thist regime in Syria has been critical to its resilience and ability to stay united so far while attempting to crush a peaceful popular uprising that turned into insurgency in the face of the regime’s violent crackdown. |
| Keywords: | Syria, Politics, Political system, Internal conflicts, Political economy, Regime cohesion |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper389&r=cdm |
| By: | Gerald Eisenkopf (Department of Economics, University of Konstanz, Germany) |
| Abstract: | The heterogeneous effort supply in intergroup contests explains why groups have a manager. However, the objectives of group managers and members often differ. Using data from an experiment this paper studies whether this conflict of interests affects leadership effectiveness. The managers have an advisory role only and cannot change the monetary incentives of the group members in any context. Depending on the treatment some managers prefer more competition than the group members, some less, and some do not have any incentive at all. The results show that managers can coordinate their groups rather effectively. Their incentives shape the competitive behavior of the 'subordinates'. However group members follow the non-binding investment recommendations of their group manager more closely if management compensation is not incentivized. |
| Keywords: | Communication, Experiment, Rent-seeking, Management compensation, Group decision making |
| JEL: | C72 C92 D72 D74 M12 |
| Date: | 2013–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:knz:dpteco:1306&r=cdm |
| By: | KOHLER, Stefan |
| Abstract: | Two deviations of alternating-offer bargaining behavior from economic theory are observed together, yet have been studied separately. Players who could secure themselves a large surplus share if bargainers were purely self-interested incompletely exploit their advantage. Delay in agreement occurs even if all experimentally controlled information is common knowledge. This paper rationalizes both regularities coherently by modeling heterogeneous social preferences, either self-interest or envy, of one bargaining party as private information in a three period game of bargaining and preference screening and signaling. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ner:euiflo:urn:hdl:1814/23782&r=cdm |
| By: | KORKMAZ, Gizem |
| Abstract: | This thesis studies the interplay between network structure and strategic decision making given the backdrop of economic and social networks. The first two chapters study how firms’ incentives to invest in costly R&D are affected by the pattern of R&D collaborations in a certain industry. These two chapters propose formal models that build upon and enrich the previous literature, which abstracted from two crucial dimensions of the problem. The first chapter introduces the possibility that inter-firm links aiming at R&D collaboration could facilitate market collusion. The second chapter incorporates network-based externalities resulting from informational flows and congestion that are associated with R&D collaborations. These chapters suggest that the benefits of possible inter-firm collaboration must be reevaluated from the point of their welfare consequences. The last chapter aims to improve our understanding of how collective action spreads in large and complex networks in which agents use online social networks as communication tools. To this end, we develop a dynamic game-theoretic model of the “on-set of revolutions” that focuses on the local spread of information in order to study how network structure, knowledge and information-sharing interact in facilitating coordination through online communication networks. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:ner:euiflo:urn:hdl:1814/25137&r=cdm |
| By: | Da Silva, Sergio |
| Abstract: | Group thinking is the notion that animals do those things that maximize the chance of survival of their species. It is wrong because natural selection does not favor what is good for the group or the species; it favors what is good for the individual. Here, I show through examples how group thinking also pervades economics. In connection with the fallacy of group thinking, I also discuss how economics fails to ground itself in the underlying knowledge provided by biology. I also argue that economists need to redirect their conventional approach to study group behavior. Current macroeconomics is reductionist while the route followed by biology, physics, and chemistry was to resort to a different approach when focusing on macro systems made up of a large number of heterogeneous micro units. The group level pattern self-organizes as it is not encoded directly in the individual-level rules. And here the right mathematical models can help deduce hidden connections between the interactions of individuals and the patterns that emerge at the group level. |
| Keywords: | group thinking, biology, economics |
| JEL: | B41 D7 Y8 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:45660&r=cdm |