New Economics Papers
on Collective Decision-Making
Issue of 2013‒04‒20
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. What Causes Cost Overrun in Transport Infrastructure Projects?" By Bent Flyvbjerg; Mette K. Skamris Holm; S{\o}ren L. Buhl
  2. Overspend? Late? Failure? What the data say about IT project risk in the public-sector By Alexander Budzier; Bent Flyvbjerg
  3. Groupthink: Collective Delusions in Organizations and Markets By Benabou, Roland
  4. Double Whammy - How ICT Projects are Fooled by Randomness and Screwed by Political Intent By Alexander Budzier; Bent Flyvbjerg
  5. The effects of uncertainty, trust, structure and resistance to change in the diffusion of management accounting innovations: an agent based modeling approach. By Bertrand Masquefa; Pierre Teller
  6. “What Drives the Choice of Partners in R&D Cooperation? Heterogeneity across Sectors” By Erika Badillo; Rosina Moreno
  7. Literature review of the decision-­‐making determinants related to the influenza vaccination policy By Maria-Laura Silva; Lionel Perrier; Jean Marie Cohen; Anne Mosnier; John Paget; Hans-Martin Späth
  8. Emerging trends in employee participation in Sri Lanka By Ranaraja, Shyamali
  9. Exploring Tradeoffs in the Organization of Scientific Work: Collaboration and Scientific Reward By Michaël Bikard; Fiona E. Murray; Joshua Gans
  10. Congressional Influence as a Determinant of Subprime Lending By Stuart A. Gabriel; Matthew E. Kahn; Ryan K. Vaughn
  11. Using choice experiments to improve the design of weed decision support tools By Kragt, Marit Ellen; Llewellyn, Rick S.
  12. A General Coalition Structure: Some Equivalence Results By Bimonte, Giovanna
  13. Discourse, power and governmentality: Social movement research with and beyond Foucault By Baumgarten, Britta; Ullrich, Peter

  1. By: Bent Flyvbjerg; Mette K. Skamris Holm; S{\o}ren L. Buhl
    Abstract: This article presents results from the first statistically significant study of causes of cost escalation in transport infrastructure projects. The study is based on a sample of 258 rail, bridge, tunnel and road projects worth US$90 billion. The focus is on the dependence of cost escalation on (1) length of project implementation phase, (2) size of project and (3) type of project ownership. First, it is found with very high statistical significance that cost escalation is strongly dependent on length of implementation phase. The policy implications are clear: Decision makers and planners should be highly concerned about delays and long implementation phases because they translate into risks of substantial cost escalations. Second, it is found that projects have grown larger over time and that for bridges and tunnels larger projects have larger percentage cost escalations. Finally, by comparing cost escalation for three types of project ownership--private, state-owned enterprise and other public ownership--it is shown that the oft-seen claim that public ownership is problematic and private ownership effective in curbing cost escalation is an oversimplification. Type of accountability appears to matter more to cost escalation than type of ownership.
    Date: 2013–04
  2. By: Alexander Budzier; Bent Flyvbjerg
    Abstract: Implementing large-scale information and communication technology (IT) projects carries large risks and easily might disrupt operations, waste taxpayers' money, and create negative publicity. Because of the high risks it is important that government leaders manage the attendant risks. We analysed the based on a sample of 1,355 public0sector IT projects. The sample included large-scale projects, on average the actual expenditure was $130 million and the average duration was 35 months. Our findings showed that the typical project had no cost overruns and took on average 24% longer than initially expected. However, comparing the risk distribution with the normative model of a thin-tailed distribution, projects' actual costs should fall within -30% and +25% of the budget in nearly 99 out of 100 projects. The data showed, however, that a staggering 18% of all projects are outliers with cost overruns >25%. Tests showed that the risk of outliers is even higher for standard software (24%) as well as in certain project types, e.g., data management (41%), office management (23%), eGovernment (21%) and management information systems (20%). Analysis showed also that projects duration adds risk: every additional year of project duration increases the average cost risk by 4.2 percentage points. Lastly, we suggest four solutions that public-sector organization can take: (1) benchmark your organization to know where you are, (2) de-bias your IT project decision-making, (3) reduce the complexities of your IT projects, and (4) develop Masterbuilders to learn from the best in the field.
    Date: 2013–04
  3. By: Benabou, Roland (Princeton University)
    Abstract: This paper investigates collective denial and willful blindness in groups, organizations and markets. Agents with anticipatory preferences, linked through an interaction structure, choose how to interpret and recall public signals about future prospects. Wishful thinking (denial of bad news) is shown to be contagious when it is harmful to others, and self-limiting when it is beneficial. Similarly, with Kreps-Porteus preferences, willful blindness (information avoidance) spreads when it increases the risks borne by others. This general mechanism can generate multiple social cognitions of reality, and in hierarchies it implies that realism and delusion will trickle down from the leaders. The welfare analysis differentiates group morale from groupthink and identifies a fundamental tension in organizations' attitudes toward dissent. Contagious exuberance can also seize asset markets, generating investment frenzies and crashes.
    Keywords: cognitive dissonance, wishful thinking, toxic assets, financial crises, market crashes, manias speculative bubbles, market exuberance, morale, optimism, overconfidence, organizational culture, groupthink, cognitive biases anticipatory feelings, resolution of uncertainty, psychology
    JEL: D03 D23 D53 D83 D84 E32 G01 G14 Z1
    Date: 2013–03
  4. By: Alexander Budzier; Bent Flyvbjerg
    Abstract: The cost-benefit analysis formulates the holy trinity of objectives of project management - cost, schedule, and benefits. As our previous research has shown, ICT projects deviate from their initial cost estimate by more than 10% in 8 out of 10 cases. Academic research has argued that Optimism Bias and Black Swan Blindness cause forecasts to fall short of actual costs. Firstly, optimism bias has been linked to effects of deception and delusion, which is caused by taking the inside-view and ignoring distributional information when making decisions. Secondly, we argued before that Black Swan Blindness makes decision-makers ignore outlying events even if decisions and judgements are based on the outside view. Using a sample of 1,471 ICT projects with a total value of USD 241 billion - we answer the question: Can we show the different effects of Normal Performance, Delusion, and Deception? We calculated the cumulative distribution function (CDF) of (actual-forecast)/forecast. Our results show that the CDF changes at two tipping points - the first one transforms an exponential function into a Gaussian bell curve. The second tipping point transforms the bell curve into a power law distribution with the power of 2. We argue that these results show that project performance up to the first tipping point is politically motivated and project performance above the second tipping point indicates that project managers and decision-makers are fooled by random outliers, because they are blind to thick tails. We then show that Black Swan ICT projects are a significant source of uncertainty to an organisation and that management needs to be aware of.
    Date: 2013–04
  5. By: Bertrand Masquefa (CRIFP - Centre de Recherche en Ingénierie Financière et Finances Publiques - Université Nice Sophia Antipolis (UNS)); Pierre Teller (CRIFP - Centre de Recherche en Ingénierie Financière et Finances Publiques - Université Nice Sophia Antipolis (UNS))
    Abstract: This article considers the effects of uncertainty, structure, trust and resistance to change on the success or failure of management accounting innovations diffusion. The diffusion process is examined through a social network of nodes and ties. Ties represent communication channels through which the diffusion flows and nodes represent organizational actors who facilitate or impede the diffusion process. Trust is operationalized through strong ties and structure is modeled with the density of ties within organizational units and ties between organizational units. Uncertainty represents the degree of controversy that is often inherent to management accounting innovation and change. Initially, organizational actors can be in three possible states: adopters, detractors and non-adopters. Innovation adopters or detractors embedded in the organizational network will mobilize their own network of strong ties to convince non-adopters to adopt or reject the innovation. This research aims at exploring the effects of uncertainty, trust, structure and perception of a management accounting innovation on the likelihood of success of the diffusion process. The authors used an agent based modeling approach to simulate the behavior of organizational agents within an organizational context. The results suggest that mechanistic and organic structures are contingently conducive of success in the implementation of management accounting innovation. The likelihood of success depends on the interplay of the controversy of the innovation, the number of the initial adopters or detractors and the trusted component of network ties.
    Keywords: uncertainty, trust, structure, social networks, innovation, diffusion, management accounting, agent-based modeling
    Date: 2013–04–05
  6. By: Erika Badillo (Faculty of Economics, University of Barcelona); Rosina Moreno (Faculty of Economics, University of Barcelona)
    Abstract: In this paper we analyse the heterogeneity in firms’ decisions to engage in R&D cooperation, taking into account the type of partner (other companies from the same group, suppliers or customers, competitors, and research institutions) and the sector to which the firm belongs (industrial or services). We use information from the Technological Innovation Panel (PITEC) for the years 2006-2008 and estimate multivariate probit models corrected for endogeneity. We find that the determinants of R&D cooperation differ between sectors. In the industrial sector, the perception of risk as an obstacle to innovation reduces the likelihood of cooperating with companies in the same group and competitors, while in the service sector it reduces cooperation with suppliers or customers. For its part, the possibility of accessing additional human resources has a significantly positive effect on cooperation with all types of partner in the service sector, but not for manufactures..
    Keywords: R&D cooperation; Choice of partners; Industrial sector; Service sector; Innovative Spanish firms. JEL classification: O30; O32; L24; L60; L80.
    Date: 2012–07
  7. By: Maria-Laura Silva (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon, Centre Léon Bérard - CRLCC Léon Bérard); Lionel Perrier (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Jean Marie Cohen (GROG - Réseau des Groupes Régionaux d'Observation de la Grippe - Coordination nationale); Anne Mosnier (GROG - Réseau des Groupes Régionaux d'Observation de la Grippe - Coordination nationale); John Paget (Netherlands Institute for Health Services Research - Netherlands Institute for Health Services Research); Hans-Martin Späth (Institut des Sciences Pharmaceutiques et Biologiques - Université Claude Bernard - Lyon I)
    Abstract: Background : Seasonal influenza concerns the worldwide population every year, whilst pandemic influenza is an unpredictable threat. Due to an important socioeconomic impact, mitigation measures must be specified. Governments elaborate vaccination policy based on scientific evidence. However, this process is, in general, not transparent. Objectives : To study the decision-making process related to the influenza vaccination policy, identifying the actors involved, the decisions made and describing the information used by type and level of importance. Methods : Six major databases were searched in seven languages, without time limit, using keywords related to influenza vaccination, decision-making and health policy. Titles and abstracts were screened according to three established criteria. Selected articles were analysed and compared against a checklist for context, stakeholders and evidence. Results : 111 articles were retrieved since the 1990s, most of them (40%) were conducted in the USA. The decision-making process mainly concerned vaccination strategies (53%) and pandemic preparedness (28%). Stakeholders were identified at an institutional, production and consumer level. Evidence used by policy-makers was similar (e.g. logistics of vaccines), but the factors influencing were different (e.g. social conditions). Conclusion : Considering the imminent risk of socio-economic disruption and media pressure, the pandemic threat needs to be integrated into an analysis of decision making processes regarding seasonal influenza vaccination.
    Keywords: decision-making; influenza vaccination; public health policy
    Date: 2013–04–05
  8. By: Ranaraja, Shyamali
    Keywords: workers participation, workers representation, collective bargaining, trade union, works council, Sri Lanka, participation des travailleurs, représentation des travailleurs, négociation collective, syndicat, comité d'entreprise, Sri Lanka, participación de los trabajadores, representación de los trabajadores, negociación colectiva, sindicato, comité de empresa, Sri Lanka
    Date: 2013
  9. By: Michaël Bikard; Fiona E. Murray; Joshua Gans
    Abstract: When do scientists and other knowledge workers organize into collaborative teams and why do they do so for some projects and not others? At the core of this important organizational choice is, we argue, a tradeoff between the productive efficiency of collaboration and the credit allocation that arises after the completion of collaborative work. In this paper, we explore this tradeoff by developing a model to structure our understanding of the factors shaping researcher collaborative choices in particular the implicit allocation of credit among participants in scientific projects. We then use the annual research activity of 661 faculty scientists at one institution over a 30-year period to explore the tradeoff between collaboration and reward at the individual faculty level and to infer critical parameters in the organization of scientific work.
    JEL: O31 O33
    Date: 2013–04
  10. By: Stuart A. Gabriel; Matthew E. Kahn; Ryan K. Vaughn
    Abstract: We apply unique loan level data from New Century Financial Corporation, a major subprime lender, to assess whether attributes of Congressional Representatives were associated with access to and pricing of subprime mortgage credit. Research findings indicate higher likelihoods of subprime loan origination and lower mortgage pricing among borrowers represented by the Republican and Democratic leadership of Congress. Black borrowers also benefitted from significantly larger loan amounts in those same districts. Also, borrowers received mortgage interest rate discounts in districts where New Century donated to the Congressional Representative. Findings provide new insights into the political geography of the subprime crisis and suggest gains to trade between New Century Financial Corporation and targeted Congressional Representatives in the extension, pricing and sizing of subprime mortgage credit.
    JEL: G21 R21
    Date: 2013–04
  11. By: Kragt, Marit Ellen; Llewellyn, Rick S.
    Abstract: The potential for computer-based decision support tools (DSTs) to better inform farm management decisions is well-recognised. However, despite considerable investment in a wide range of tools, the uptake by advisers and farmers remains low. Greater understanding of the demand and the most valued features of decision support tools has been proposed as an important step in improving the impact of DSTs. Using a choice experiment, we estimated the values that Australian farm advisers attach to specific attributes of decision support tools, in this case relating to weed and herbicide resistance management. The surveys were administered during dedicated workshops with participants who give weed management advice to grain growers. Results from various discrete choice models showed that advisers’ preferences differ between private fee-charging consultants, those attached to retail outlets for cropping inputs, and advisers from the public sector. Reliably accurate results were valued, but advisers placed a consistently high value on models with an initial input time of three hours or less, compared to models that are more time demanding. Results from latent class models revealed a large degree of personal preference heterogeneity across advisers. Although the majority of advisers attributed some value to the capacity for DST output that is specific to individual paddocks, approximately one quarter of respondents preferred generic predictions for the district rather than greater specificity. The use of a novel non-market valuation approach can help to inform development of decision support tools with attributes valued by potential users.
    Keywords: Decision support, Weed management, Herbicide resistance, Adoption, Agriculture, Choice Modelling, Agribusiness, Farm Management, Research and Development/Tech Change/Emerging Technologies, Q19, Q51,
    Date: 2013–03–29
  12. By: Bimonte, Giovanna
    Abstract: It is well known that in a differential information economy the free coalition formation may imply some theoretical difficulties. It does not suffice to say that a coalition can be formed by several agents. We define a set of all possible coalitions as the set of those coalitions that can be formed and joint by any agent. There exists, in this way, a rule imposed over coalition formation. We assume that only a subset $\mathcal{S}$ of $\Sigma$ is alowed to form. In such way, we fix over the set of agents an aggregation rule for which the coalitions can be formed only if they belong to this subset. We have restricted the set of coalitions that can be joined by traders. The main result is the equivalence between two private core concept: the classical one for a differential information economy and the private core restricted.
    Keywords: Differential information economy, restriction on coalition formation, private core.
    JEL: D11 D51 D82
    Date: 2013
  13. By: Baumgarten, Britta; Ullrich, Peter
    Abstract: In this article some ideas will be outlined, on how protest research can be stimulated, enriched and reformulated by (post-)Foucaultian thinking. We argue that Foucault and his very concepts of discourse and power provide a perspective on social movements that avoids too simple rational actor concepts, is more long-term oriented and pays more attention to the diverse aspects of the context of social movement action than does mainstream social movement research. We focus on four types of processes that can be analysed from a Foucaultian perspective. 1. Discourses define the boundaries for what can be thought of and communicated at a given point of time in a given society. These boundaries also apply for social movement actors. 2. Within these boundaries of the generally unthinkable we can analyse the framing of social movements and how they contribute to discourses. 3. Further, there are internal communicative practices of movement knowledge generation. These can be viewed as a set of (productive as well as restrictive) discursive regularities. 4. Discourses shape the subjectivity of the people, and thus impact on the mobilizing potential of social movements. Referring to governmentality studies we show how changing rationalities may influence the likelihood of social critique and protest. -- Foucault und die vielen theoretischen und empirischen Arbeiten, die auf seinen Gedanken aufbauen, erfreuen sich momentan innerhalb der Sozialwissenschaften großer Resonanz. Aus diesem Grund ist es sehr verwunderlich, dass dies bisher kaum Einfluss auf den Mainstream der Bewegungs- und Protestforschung hatte. Wir stellen hier einige Ideen vor, wie die bewegungs- und Protestforschung durch (post-)foucault'sche Konzepte und Gedanken bereichert und verändert werden könnte. Wir argumentieren, dass Foucault, insbesondere seine Konzepte von Diskurs und Macht, eine Perspektive auf soziale Bewegungen und Protest nahelegt, die vereinfachende Konzepte von rationalen Akteuren vermeidet, stärker an langfristigen Entwicklungen interessiert ist und bestimmte Kontextbedingungen von Aktivismus stärker berücksichtigt als der bisherige Mainstream der Bewegungsforschung. Wir betrachten in diesem Artikel vier Zusammenhänge von sozialen Bewegungen und Diskursen aus einer Foucault'schen Perspektive: 1. Diskurse bestimmen die Grenzen des in einer bestimmten Gesellschaft zu einer bestimmten Zeit Denk- und Sagbaren. Diese Grenzen gelten auch für Akteure sozialer Bewegungen. 2. Innerhalb dieser Grenzen des generell Denk- und Sagbaren können wir die Rahmungs- bzw. Deutungsprozesse sozialer Bewegungen analysieren und betrachten, wie diese wiederum Einfluss auf Diskurse ausüben. 3. Es lassen sich interne Kommunikationspraktiken innerhalb von Bewegungen analysieren, durch die Bewegungswissen entsteht. Diese können als Set von (ermöglichenden und begrenzenden) diskursiven Regeln betrachtet werden. 4. Diskurse prägen Subjekte und beeinflussen damit das Mobilisierungspotential von sozialen Bewegungen. Angelehnt an die Gouvernementalitätsforschung zeigen wir, welchen Einfluss Wandlungen der Regierungsweisen auf die Möglichkeit von Sozialkritik und Protest haben.
    Keywords: social movements,protest,discourse,Foucault,governmentality,power,knowledge,framing,Soziale Bewegungen,Protest,Diskurs,Foucault,Gouvernementalität,Macht,Wissen,Deutungsmusteranalyse
    Date: 2012

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