New Economics Papers
on Collective Decision-Making
Issue of 2013‒05‒24
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. The Impact of Ideology in the Voting Decision Making Process By Jordana Costa; Ana Côrte-Real
  2. Freezeout, Compensation Rules and Voting Equilibria By Christian At; Sylvain Béal; Pierre-Henri Morand
  3. Sitting on the fence: Pork-barrels and democratization under threat of conflict. The case of Ghana, 1996 - 2004 By Pierre André; Sandrine Mesplé-Somps
  4. How Experts Decide: Preferences or Private Assessments on a Monetary Policy Committee?* By Stephen Hansen; Carlos Velasco Rivera; Michael McMahon
  5. Municipal Consolidation and Local Government Behavior: Evidence from Japanese Voting Data on Merger Referenda By Miyazaki, Takeshi
  6. The Condorcet paradox revisited By Herings P.J.J.; Houba H
  7. Expectations Traps and Coordination Failures with Discretionary Policymaking By Richard Dennis; Tatiana Kirsanova
  8. Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning By Florian Hoffmann; Roman Inderst; Marco Ottaviani
  9. Protests and Beliefs in Social Coordination in Africa By Marc Sangnier; Yanos Zylberberg
  10. What Determines State Capture in Poland? By Alwasiak , Stanislaw; Lewandowska-Kalina, Monika; Kalina, Lech; Kowalewski, Oskar; Mozdzen, Michal; Rybinski, Krzysztof
  11. Using Preferred Outcome Distributions to Estimate Value and Probability Weighting Functions in Decisions under Risk By Donkers, A.C.D.; Lourenço, C.J.S.; Dellaert, B.G.C.; Goldstein, D.G.
  12. Does Having a Female Sarpanch Promote Service Delivery for Women and Democratic Participation of Women? Evidence from Maharashtra, India By Dhanmanjiri Sathe; Stephan Klasen; Jan Priebe; Mithila Biniwale
  13. Evidence-based activism: Patients’ organisations, users’ and activist’s groups in knowledge society By Vololona Rabeharisoa
  14. Political connections and depositor discipline By Disli, Mustafa; Schoors , Koen; Meir, Jos
  15. Estimating Bayesian Decision Problems with Heterogeneous Priors* By Stephen Hansen; Michael McMahon
  16. Are Consumer Decision-Making Phenomena a Fourth Market Failure? By Lunn, Pete
  17. The Role of Age in Jury Selection and Trial Outcomes By Shamena Anwar; Patrick Bayer; Randi Hjalmarsson
  18. New Forms of Employee Participation in the United States: Practice and theory (Japanese) By TAKEUCHI-OKUNO Hisashi
  19. Economics 2.0: The Natural Step towards A Self-Regulating, Participatory Market Society By Dirk Helbing

  1. By: Jordana Costa (Universidade do Porto); Ana Côrte-Real (Faculdade de Economia e Gestão, Universidade Católica Portuguesa - Porto)
    Abstract: The purpose of this research is to better understand the importance of ideology for the Portuguese voter, in particular its impact on the voting decision making process. The importance of such a study is due to a common understanding, between Political Marketing and Communication scholars, that the ideology is being replaced by other more important features, such as political brand, among others. The objective was, therefore, to understand what is the voters point of view on the subject, most importantly, to pinpoint the actual relevance of ideology from the voters’ perspective when they cast a political vote. Being that it was necessary to inquiry the voters themselves, quantitative methodology was used, in the form of a questionnaire. The research has shown that, contrary to the widespread trend between academics, the voters consider, still, the ideology as a highly important feature for them to undertake a voting decision. This study can be of benefit to political Marketers, so that used techniques can be enhanced and methods devised, in order to not only gain political campaigns but, and more importantly, the voters’ loyalty.
    Keywords: Ideology; Voting Decision Making Process; Political Marketing; Political Product.
    Date: 2013–05
  2. By: Christian At (CRESE, Université de Franche-comté); Sylvain Béal (CRESE, Université de Franche-Comté); Pierre-Henri Morand (Université d'Avignon et des pays de Vaucluse)
    Abstract: A single proposer has the opportunity to generate a surplus by taking the assets of a group of individuals. These individuals are called upon to vote for accepting or rejecting the monetary offer made to them by the proposer, who needs the agreement of a qualified majority. The voters who rejected the offer while the qualified majority is met are frozen out but they can claim a compensation in exchange for their asset. This article analyses how compensation rules influence both the votes and the offer made by the proposer. We find that unanimity rule or compensation equals to the proposal or voters' initial wealth maximize the expected social surplus that entirely accrues to the proposer. We show that increasing the offer does not always increase the probability of acceptance, in sharp contrast to many close models. We identify the optimal offer when the compensation does not depend on the proposal. Increasing the compensation always reduces the expected social surplus and the expected profit of the proposer, but does not always benefit to the voters. Reinforcing the qualified majority always increases the expected profit of the proposer, and can decrease both the expected social surplus and the expected utility of the voters. When the compensation is based on the proposal we find that the success or the failure of the proposition depends crucially of the compensation's shape.
    Keywords: Voting games, Compensations, Fairness, Freezeout, Regulatory takings, Debt restructuring
    JEL: D72 K2
    Date: 2013–05
  3. By: Pierre André; Sandrine Mesplé-Somps (THEMA, Universite de Cergy-Pontoise; Institut de Recherche pour le Développement (IRD))
    Abstract: This paper studies political competition in the case of a democratization process. We present an illustrative model describing political competition when the opposition threatens the stability of the country. In some cases, our model predicts the government should invest in opposition districts to avoid political agitation. This contrasts with existing literature on established democracies, where public funds usually target ruling party supporters or electorally tight districts. We empirically observe the first democratic changeover in Ghana in 2000. Implementing a diff-in-diff strategy, we find that districts with a leading political party member appear to receive slightly more public funds when their party is not in charge. This phenomenon is found in urban areas and in areas that vote the most for this leading member’s party. Hence it occurs in places with the potential for political agitation.
    Keywords: Public goods, Elections, Politics, Ghana.
    JEL: D72 O55 R53
    Date: 2013
  4. By: Stephen Hansen; Carlos Velasco Rivera; Michael McMahon
    Abstract: Using voting data from the Bank of England, we show that different individual assessments of the economy strongly influence votes after controlling for individual policy preferences. We estimate that internal members form more precise assessments than externals and are also more hawkish, though preference differences are very small if members vote strategically. Counterfactual analysis shows that committees add value through aggregating private assessments, but that gains to larger committees taper off quickly beyond five members. There is no evidence that externals add value through preference moderation. Since their assessments also have lower precision, mixed committees may not be optimal.
    Keywords: Committees, Monetary policy
    JEL: E52 E58 D78
    Date: 2013–04
  5. By: Miyazaki, Takeshi
    Abstract: The empirical literature investigating the role of key features of local governments regarding decisions on consolidation tends to use a dummy that takes 1 if adjacent local governments decide to merge. Under the estimation method, it is difficult to identify which governments have no incentive to merge. The current study presents an empirical test of decision on consolidation using voting data from Japanese local referenda that distinctively identify the preferences of specific individual municipalities. I find evidence that municipalities that could enjoy large economies of scale from a merger prefer consolidation, and large and small municipalities are likely to merge.
    Keywords: Boundary reform, economics of scale, local referenda, median voter model, municipal consolidation
    JEL: H11 H76 H77
    Date: 2013–05
  6. By: Herings P.J.J.; Houba H (GSBE)
    Abstract: We analyze the Condorcet paradox within a strategic bargaining model with majority voting, exogenous recognition probabilities, and no discounting. Stationary subgame perfect equilibria (SSPE) exist whenever the geometric mean of the players' risk coefficients, ratios of utility differences between alternatives, is at most one. SSPEs ensure agreement within finite expected time. For generic parameter values, SSPEs are unique and exclude Condorcet cycles. In an SSPE, at least two players propose their best alternative and at most one player proposes his middle alternative with positive probability. Players never reject best alternatives, may reject middle alternatives with positive probability, and reject worst alternatives. Recognition probabilities represent bargaining power and drive expected delay. Irrespective of utilities, no delay occurs for suitable distributions of bargaining power, whereas expected delay goes to infinity in the limit where one player holds all bargaining power. Contrary to the case with unanimous approval, a player benefits from an increase in his risk aversion.
    Keywords: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games;
    Date: 2013
  7. By: Richard Dennis; Tatiana Kirsanova
    Abstract: Discretionary policymakers cannot manage private-sector expectations and cannot coordinate the actions of future policymakers. As a consequence, expectations traps and coordination failures can occur and multiple equilibria can arise. To utilize the explanatory power of models with multiple equilibria it is first necessary to understand how an economy arrives to a particular equilibrium. In this paper we employ notions of learnability and self-enforceability to motivate and identify equilibria of particular interest. Central among these criteria are whether the equilibrium is learnable by private agents and jointly learnable by private agents and the policymaker. We use two New Keynesian policy models to identify the strategic interactions that give rise to multiple equilibria and to illustrate our methods for identifying equilibria of interest. Importantly, unless the Pareto-preferred equilibrium is learnable by private agents, we find little reason to expect coordination on that equilibrium.
    Keywords: Discretionary policymaking, multiple equilibria, coordination, equilibrium selection
    JEL: E52 E61 C62 C73
    Date: 2013–05
  8. By: Florian Hoffmann; Roman Inderst; Marco Ottaviani
    Abstract: Using personal data collected on the internet, fi?rms and political campaigners are able to tailor their communication to the preferences and orientations of individual consumers and voters, a practice known as hypertargeting. This paper models hypertargeting as selective disclosure of information to an audience with limited attention. We characterize the private incentives and the welfare impact of hypertargeting depending on the wariness of the audience, on the intensity of competition, and on the feasibility of price discrimination. We show that policy intervention that bans the collection of personally identi?able data (for example, through stricter privacy laws requiring user consent) is bene?ficial when consumers are naive, competition is limited, and fi?rms are able to price discriminate. Otherwise, privacy regulation often back?fires. Keywords: Hypertargeting, selective disclosure, limited attention, consumer privacy regulation, personalized pricing, competition. JEL Classi?fication: D83 (Search; Learning; Information and Knowledge; Communication; Belief), M31 (Marketing), M38 (Government Policy and Regulation).
    Date: 2013
  9. By: Marc Sangnier (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - École des Hautes Études en Sciences Sociales [EHESS] - Ecole Centrale Marseille (ECM)); Yanos Zylberberg (CREI - Centre de Recerca en Economia Internacional - Universitat Pompeu Fabra)
    Abstract: Leaders' misbehaviors may durably undermine the credibility of the state. Using individual level survey in the aftermath of geo-localized social protests in Africa, we find that trust in monitoring institutions and beliefs in social coordination strongly evolve after riots, together with trust in leaders. As no signs of social unrest can be recorded before, the social conflict can be interpreted as a sudden signal sent on a leader's action from which citizens extract information on the country's institutions. Our interpretation is the following. Agents lend their taxes to a leader with imperfect information on the leader's type and the underlying capacity of institutions to monitor her. A misbehavior is then interpreted as a failure of institutions to secure taxes given by citizens and makes agents (i) reluctant to contribute to the state effort, (ii) skeptical about the contributions of others.
    Keywords: social conflicts; norms of cooperation; trust; institutions
    Date: 2013–04
  10. By: Alwasiak , Stanislaw; Lewandowska-Kalina, Monika; Kalina, Lech; Kowalewski, Oskar; Mozdzen, Michal; Rybinski, Krzysztof
    Abstract: In this paper we examine the determinants of ex-ante state capture analyzing all the legal acts that have been passed in the period 1990-2011 in Poland. We find that during this the majority of legal acts were passed with the aim to satisfy the interest of particular groups. Furthermore, the regression analysis shows that the likelihood of state capture increases during the period of economic growth and local elections. The likelihood of state capture, however, declines during presidential elections. The results we attribute to different interests of political parties in the period of local and presidential election. Finally, we find that the state capture increased over the years in Poland. Additionally, we show that the EU accession did not prevent state capture in Poland. In contrast, the financial crisis of 2007 resulted in a wake-up effect and the likelihood of state capture declined in Poland.
    Keywords: law, corruption, state capture, public interest, transition country, Poland
    JEL: H40 H41 H62 K42 P37
    Date: 2013–02–28
  11. By: Donkers, A.C.D.; Lourenço, C.J.S.; Dellaert, B.G.C.; Goldstein, D.G.
    Abstract: In this paper we propose the use of preferred outcome distributions as a new method to elicit individuals’ value and probability weighting functions in decisions under risk. Extant approaches for the elicitation of these two key ingredients of individuals’ risk attitude typically rely on a long, chained sequence of lottery choices. In contrast, preferred outcome distributions can be elicited through an intuitive graphical interface, and, as we show, the information contained in two preferred outcome distributions is sufficient to identify non-parametrically both the value function and the probability weighting function in rank-dependent utility models. To illustrate our method and its advantages, we run an incentive-compatible lab study in which participants use a simple graphical interface – the Distribution Builder (Goldstein et al. 2008) – to construct their preferred outcome distributions, subject to a budget constraint. Results show that estimates of the value function are in line with previous research but that probability weighting biases are diminished, thus favoring our proposed approach based on preferred outcome distributions.
    Keywords: decision making;rank dependent utility;risk preference;distribution builder;micro economics;preference elicitation
    Date: 2013–05–08
  12. By: Dhanmanjiri Sathe (University of Pune); Stephan Klasen (Georg-August-University Göttingen); Jan Priebe; Mithila Biniwale
    Abstract: In this paper we examine the impact of mandated reservations for female sarpanchs in the gram panchayats on perceptions of service delivery and women’s democratic participation. Using survey data from the Sangli district, Maharashtra, we find that the availability of basic, public services is significantly higher in female sarpanch villages as compared to the male sarpanch villages, when the elections have been held three to 3 1/2 years before the survey; while service delivery in villages with more recently elected female sarpanchs is worse. Further, the reservations have a significant, positive impact on the democratic participation of the women in the female sarpanch villages, again driven by the impact of female sarpanchs elected 3 ½ years before the survey. The democratic participation of women, in turn, affects the availability of services very robustly. The findings suggest that the positive effects in terms of service delivery and democratic participation will take some time to materialize.
    Keywords: Mandated reservations; Service delivery; political participation
    Date: 2013–04–11
  13. By: Vololona Rabeharisoa (Centre de Sociologie de l'Innovation, Mines ParisTech)
    Abstract: This article proposes the notion of ‘evidence-based activism’ to capture patients’ and health activists’ groups’ focus on knowledge production and knowledge mobilisation in the governance of health issues. It shows how these groups engage with, and articulate a variety of credentialed knowledge and ‘experiential knowledge’ with a view to explore concerned people’s situations, to make themselves part and parcel of the networks of expertise on their conditions in their national contexts, and to elaborate evidence on the issues they deem important to address both at an individual and a collective level.
    Keywords: evidence-based activism, patients’ and health activists’ groups, expertise, healthcare policies, collective inquiry, technological democracies
    JEL: I18
    Date: 2013–05
  14. By: Disli, Mustafa (BOFIT); Schoors , Koen (BOFIT); Meir, Jos (BOFIT)
    Abstract: We examine the effects of political connections on depositor discipline in a sample of Turkish banks. Banks with former members of parliament at the helm enjoy reduced depositor discipline, especially if the former politician’s party is currently in power – less so if the former politician served as a minister. Banks with structural problems are more likely to appoint former politicians, but our results remain robust after controlling for selection effects. Ministers may reduce depositor discipline less because they signal severe problems and because the additional government deposits they bring to the bank during their term tend to leave with them.
    Keywords: depositor discipline; political connections; banks
    JEL: D70 G10 G21
    Date: 2013–04–23
  15. By: Stephen Hansen; Michael McMahon
    Abstract: In many areas of economics there is a growing interest in how expertise and preferences drive individual and group decision making under uncertainty. Increasingly, we wish to estimate such models to quantify which of these drive decision making. In this paper we propose a new channel through which we can empirically identify expertise and preference parameters by using variation in decisions over heterogeneous priors. Relative to existing estimation approaches, our Prior Based Identication" extends the possible environments which can be estimated, and also substantially improves the accuracy and precision of estimates in those environments which can be estimated using existing methods.
    Keywords: Bayesian decision making; expertise; preferences; estimation
    JEL: D72 D81 C13
    Date: 2013–04
  16. By: Lunn, Pete
    Abstract: This paper challenges the increasingly common view that the findings of behavioural economics constitute a fourth type of market failure. The market failure framework elevates the standard competitive market model to the status of an ideal. It provides us with tools to identify departures from the ideal model and to deduce a direction policy might take to restore it. Many behavioural phenomena also imply departures from the ideal model. Yet rather than allowing us to deduce a good direction for policy, the findings question the legitimacy and usefulness of this deductive theoretical framework for policy analysis. Two policy problems are highlighted here: the validity of inferring that consumers' choices after an intervention improve outcomes relative to their previous choices, and the potential for distributional consequences when policy alters consumers' choices. The paper concludes that, given these problems, conceiving of the relevant behavioural phenomena as an additional form of market failure is potentially to misunderstand their implications for consumer and competition policy.
    Keywords: Market Failure/Decision-making biases/Behavioural economics/Regulation
    JEL: D03 D18 L96
    Date: 2013–04
  17. By: Shamena Anwar; Patrick Bayer; Randi Hjalmarsson
    Abstract: This paper uses data from 700 felony trials in Sarasota and Lake Counties in Florida from 2000-2010 to examine the role of age in jury selection and trial outcomes. The results imply that prosecutors are more likely to use their peremptory challenges to exclude younger members of the jury pool, while defense attorneys exclude older potential jurors. To examine the causal impact of age on trial outcomes, the paper employs a research design that isolates the effect of the random variation in the age composition of the pool of eligible jurors called for jury duty. Consistent with the jury selection patterns, the empirical evidence implies that older jurors are significantly more likely to convict. Results are robust to the inclusion of broad set of controls including county, time, and judge fixed effects. These findings imply that many cases are decided differently for reasons that are completely independent of the true nature of the evidence in the case – i.e., that there is substantial randomness in the application of criminal justice.
    Date: 2013
  18. By: TAKEUCHI-OKUNO Hisashi
    Abstract: Japanese labor and employment law is based on the "command-and-control" model in which the government sets uniform minimum labor standards and enforces them through penalties and administrative inspections while leaving the determination of above-the-standard working conditions to employers, employees, and labor unions. However, the "command-and-control" system is facing challenges due to limited government resources and declining union density. At the same time, there is a shift in the Japanese labor and employment law toward emphasizing the role of employers and employees in its enforcement, although the system of employee representation through which employees are guaranteed to participate in workplace governance collectively is not well arranged. Bearing the situation of the Japanese labor and employment law, this discussion paper looks into the practice and theory of the new form of employee participation in the United States. In the United States, approaches have been made to let employers, labor unions, and other employees' organization regulate the working conditions, including minimum standards set by statutes, and monitor their enforcement, and some scholars discuss the theory of how these approaches can be fit into the well-arranged system of self-regulation. This article introduces the details of the recent development of the practice and theory of self-regulation based on the book <i>Regoverning the Workplace: From Self-Regulation to Co-Regulation</i> (Yale University Press, 2010) by Cynthia Estlund and discusses lessons for Japanese labor and employment law.
    Date: 2013–05
  19. By: Dirk Helbing
    Abstract: Despite all our great advances in science, technology and financial innovations, many societies today are struggling with a financial, economic and public spending crisis, over-regulation, and mass unemployment, as well as lack of sustainability and innovation. Can we still rely on conventional economic thinking or do we need a new approach? I argue that, as the complexity of socio-economic systems increases, networked decision-making and bottom-up self-regulation will be more and more important features. It will be explained why, besides the "homo economicus" with strictly self-regarding preferences, natural selection has also created a "homo socialis" with other-regarding preferences. While the "homo economicus" optimizes the own prospects in separation, the decisions of the "homo socialis" are self-determined, but interconnected, a fact that may be characterized by the term "networked minds". Notably, the "homo socialis" manages to earn higher payoffs than the "homo socialis". I show that the "homo economicus" and the "homo socialis" imply a different kind of dynamics and distinct aggregate outcomes. Therefore, next to the traditional economics for the "homo economicus" ("economics 1.0"), a complementary theory must be developed for the "homo socialis". This economic theory might be called "economics 2.0" or "socionomics". The names are justified, because the Web 2.0 is currently promoting a transition to a new market organization, which benefits from social media platforms and could be characterized as "participatory market society". To thrive, the "homo socialis" requires suitable institutional settings such a particular kinds of reputation systems, which will be sketched in this paper. I also propose a new kind of money, so-called "qualified money", which may overcome some of the problems of our current financial system.
    Date: 2013–05

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