New Economics Papers
on Collective Decision-Making
Issue of 2013‒06‒09
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Government Constraints and Economic Voting in Greece By Spyros Kosmidis
  2. Bi-communalism and the economic origins of democracy: a case study By Khemraj, Tarron
  3. Explaining the G7 and G10's influence on World Bank decisions: The role of formal and informal rules of governance By Arthur Foch
  4. Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents. By Dmitry A. Veselov
  5. On the measurement of sociopolitical consensus in direct democracies: Proposal of indexes By Alcantud, José Carlos R.; Muñoz-Torrecillas, María José
  6. Macroeconomics and Politics in the Accumulation of Greece’s Debt: An econometric investigation, 1975-2009 By George Alogoskoufis
  7. The emergence and the development of the federations: The Achaean federation, the United Provinces and the EU. By Economou, Emmanouel/Marios/Lazaros; Kyriazis, Nicholas
  8. Fiscal transfers and gerrymandering under decentralization in the Philippines By Joseph J. Capuno
  9. Tangible temptation in the social dilemma: Cash, cooperation, and self-control By Kristian Ove R. Myrseth; Gerhard Riener; Conny Wollbrant
  10. Cui Bono, Benefit Corporation? An Experiment Inspired by Social Enterprise Legislation in Germany and the US By Sven Fischer; Sebastian Goerg; Hanjo Hamann
  11. Industry - and firm-specific factors of innovation novelty By Natália Barbosa; Ana Paula Faria; Vasco Eiriz
  12. The effect of remittances prior to an election By Jean-Louis Combes; Christian Ebeke; Mathilde Maurel
  13. Systematic Reviews as a Tool in Evidence-Based Decision Making: Improving Research and Informing Practice. By Jill Constantine
  15. Rethinking the role of intermediaries as an architect of collective exploration and creation of knowledge in open innovation By Marine Agogue; Anna Yström; Pascal Le Masson
  16. Optimism bias in project appraisal: deception or selection? By Eliasson, Jonas; Fosgerau, Mogens

  1. By: Spyros Kosmidis
    Abstract: Incumbent parties in Southern Europe experienced losses in their electoral support that came along with a series of economic reforms imposed by the EU and the IMF. However, recent theories of accountability would predict lower levels of economic voting given the limited room left for national governments to manoeuvre the economy. To resolve this puzzle, the paper presents and models quarterly vote intention time series data from Greece (2000–2012) and links it with the state of the economy. The empirical results show that after the bailout loan agreement the Greek voters significantly shifted their assignment of responsibility for (economic) policy outcomes from the EU to the national government, which in turn heightened the impact of objective economic conditions on governing party support. The findings have implications for theories linking international structures, government constraints and democratic accountability.
    Keywords: Economic Voting; Greek Crisis; EU; Government Constraints; Accountability
    Date: 2013–05
  2. By: Khemraj, Tarron
    Abstract: The paper shows how democratic elections in a bi-communal society with entrenched ethnic voting results in an elected oligarchy in which elites of one ethnic group control the allocation of scarce economic resources. Using a simple strategic game, the paper shows that the control of resources results in the Nash equilibrium of uneven development. Heterogeneous agents are included in the model, which is solved for the conditions under which democratic consolidation might occur. Token resource transfers from elites to other groups will tend not to guarantee consolidation. Remittances to the masses tend to prevent democratic consolidation, while bi-lateral grants to an elite dominated government prevent consolidation under some restricted conditions. Constitutional institutions might be necessary to incentivize explicit cooperation – the anti-Nash equilibrium.
    Keywords: fractionalization, political economy, prisoner’s dilemma, bi-communalism, institutions
    JEL: O10 O54 O57 P0
    Date: 2013–03–01
  3. By: Arthur Foch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: This paper contributes to the literature examining the role played by donors' interests within International Financial Institutions by showing how the G7 and G10 countries manage to influence World Bank (WB) decisions to satisfy their interests. It demonstrates that the G7 and G10 meets the two conditions required to influence WB decisions: they form a unified group (1) possessing sufficient power (2). The main thrust of the argument is that the G7 and G10 provide opportunity for big countries to come together and unify their preferences regarding WB decisions. Referring to a new dataset I find conjunctions between the G7's declarations and the WB's decisions, primarily reflecting the G7's unity and influence over the WB. Then, relying on interviews with WB officials and an examination of WB formal and informal rules of governance, I show how G7 instructions provided outside the WB through declarations are relayed within to impact decisions.
    Keywords: World Bank; governance; informality; G10; power; influence
    Date: 2013–04
  4. By: Dmitry A. Veselov (Centre d'Economie de la Sorbonne and National Research University Higher School of Economics)
    Abstract: We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of redistribution as well as for the level of entry barriers preventing the creation of more efficient firms. We show that under the majority voting rule there are three possible stable political outcomes: full redistribution and low barriers to entry (“liberal” order), high redistribution and high barriers to entry (“corporatism”). We show that key variables determining the political outcome are the expected gain from technological adoption, the ratio of total profits to total wages, and the skewness of human capital distribution.
    Keywords: Barriers to entry, majority voting, quality-ladders model, wealth inequality, talent inequality, economic growth.
    JEL: O33 P16 P48
    Date: 2013–05
  5. By: Alcantud, José Carlos R.; Muñoz-Torrecillas, María José
    Abstract: We investigate the measurement of sociopolitical consensus in direct democracies by means of three novel Consensus Indexes. They are special cases of Approval Consensus Measures, a tool from social choice that evaluates the degree of cohesiveness in a fixed group of agents that vote on a list of issues. We perform a basic dynamic analysis of the Swiss votes in popular initiatives, in periods marked by the main reforms and political crisis along those years. We provide novel quantitative arguments to validate the hypotheses that those reorganizations had an impact in terms of sociopolitical consensus during the last decade in comparison with prior stages. In addition we study the cumulative consensus in Italian referendums since 1974. We also investigate to what extent our indexes reflect the existence of periods in the development of referendums as a constitutional praxis.
    Keywords: Consensus indexes; sociopolitical consensus; direct democracy.
    JEL: D79 H79
    Date: 2013–05–27
  6. By: George Alogoskoufis
    Abstract: This paper focuses on an econometric investigation of the macroeconomic and political factors that contributed to Greece’s excessive debt accumulation and its failure to adequately address its fiscal imbalances, from the restoration of democracy in 1974 till the crisis of 2009. The econometric investigation is based on a model in which two political parties alternate in power, and in which governments choose primary expenditure and taxes to minimize deviations from politically determined expenditure and tax targets, subject to a debt accumulation equation. The model predicts a political equilibrium in which primary expenditure and taxes follow feedback rules which go in the direction of stabilizing the debt to GDP ratio. However, this stabilization incentive is weaker in election years. The model also predicts potential partisan differences in the evolution of primary expenditure and taxes, due to the different preferences of political parties. Estimates of government reaction functions to public debt for the period 1975-2009 suggest a rather weak stabilizing reaction of primary deficits to public debt. This stabilizing reaction disappears in election years, which are characterized by strong fiscal expansions. We find no evidence of partisan differences in the reaction of primary deficits to inherited debt, but we do find evidence of lower primary deficits in the post-1992 Maastricht treaty period. Overall the model accounts for the accumulation of Greece’s government debt in terms of the trend increase in primary expenditure, the positive shocks to primary expenditure in election years and the weak stabilizing reaction of government revenue, due to tax smoothing.
    Keywords: macroeconomics and politics, government debt, primary deficit, stabilization, elections, political parties, Greece
    JEL: E6 H6 C5
    Date: 2013–03
  7. By: Economou, Emmanouel/Marios/Lazaros; Kyriazis, Nicholas
    Abstract: In the present essay we analyse for the first time as far as we know the development of democracy, which emerged in Greece during the classical period, into the proto-federations of the democratic city-states. We examine their political institutions and policies, like common defense and external policy, military organization, representative federal bodies like popular assemblies, parliament, generals as military and political commanders, federal finance ministers etc., as well as their economic institutions and policies: Common currency, federal budget and federal revenues. We address in more detail as a case study the Achaean Federation. Then, we compare this particular proto-federation with the United Provinces (UP, the Dutch Republic) and show structural and organizational similarities. Lastly, we compare the Achaean federation with today’s European Union (EU) and conclude that in some respects the proto-federation was more advanced than the EU, and thus can serve as a benchmark in addressing current European issues.
    Keywords: Institutions, economic organization, Achaean federation, United Provinces,EU
    JEL: H5 H56 H7 N9
    Date: 2013–03–05
  8. By: Joseph J. Capuno (School of Economics, University of the Philippines Diliman)
    Abstract: While gerrymandering in developing countries is often pushed by local authorities to secure political advantages, fiscal grants systems under decentralization may also have result in the same. We investigate this issue to identify the correlates of the growth in the number of cities in the Philippines in 2001-2010. Using a panel of municipal-level data, incremental fiscal transfers are found to drive cityhood. Also, political payoffs -- like the incumbent mayor's re-election or having another member of the same political clan elected to the same position -- motivate the creation of new cities. Reforms in the country's fiscal transfer program are suggested.
    Keywords: Gerrymandering, fiscal grants, decentralization
    JEL: H11 H73 H77
    Date: 2013–06
  9. By: Kristian Ove R. Myrseth (ESMT European School of Management and Technology); Gerhard Riener (DICE, University of Düsseldorf); Conny Wollbrant (University of Gothenburg)
    Abstract: The social dilemma may contain, within the individual, a self-control conflict between urges to act selfishly and better judgment to cooperate. Examining the argument from the perspective of temptation, we pair the public good game with treatments that vary the degree to which money is abstract (merely numbers on-screen) or tangible (tokens or cash). We also include psychometric measures of self-control and impulsivity. Consistent with our hypothesis, we find in the treatments that render money more tangible a stronger positive association between cooperation and self-control—and a stronger negative association between cooperation and impulsivity. Our results shed light on the conditions under which self-control matters for cooperation.
    Keywords: Self-control, pro-social behavior, public good experiment, temptation
    JEL: D01 D03 D64 D70
    Date: 2013–05–24
  10. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Hanjo Hamann (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: How do barely incentivized norms impact incentive-rich environments? We take social enterprise legislation as a case in point. It establishes rules on behalf of constituencies that have no institutionalized means of enforcing them. By relying primarily on managers' other-regarding concerns whilst leaving corporate incentive structures unaltered, how effective can such legislation be? This question is vital for the ongoing debate about social enterprise forms, as recently introduced in several US states and in British Columbia, Canada. We ran a laboratory experiment with a framing likened to German corporate law which traditionally includes social standards. Our results show that a stakeholder provision, as found in both Germany and the US, cannot overcome material incentives. However, even absent incentives the stakeholder norm does not foster other regarding behavior but slightly inhibits it instead. Our experiment thus illustrates the paramount importance of taking into account both incentives and framing effects when designing institutions. We tentatively discuss potential policy implications for social enterprise legislation and the stakeholder debate.
    Keywords: experiment, stakeholder value, social enterprise, benefit corporation, corporate law
    JEL: D01 A12 M52 D03 L21 M14
    Date: 2013–02
  11. By: Natália Barbosa (Universidade do Minho - NIPE); Ana Paula Faria (Universidade do Minho - NIPE); Vasco Eiriz (Universidade do Minho - Departamento de Gestão)
    Abstract: This paper investigates the underlying factors that might shape the firm’s choices with respect to degrees of innovation novelty. Using a sample of 2983 firms observed under the Portuguese Community Innovation Survey, we assess the relative relevance of a set of firm- and industry-specific factors in explaining firms’ choices about incremental or radical innovation. The results indicate that both the firm’s idiosyncratic historical factors giving rise to heterogeneous R&D capabilities and the industry context have power to shape the firm’s innovation choices, even though firm-specific factors appear to be more powerful. The estimated impacts on firm’s innovation novelty are, nonetheless, significantly moderated by the type of firm and industry.
    Keywords: Radical and incremental innovation, competitive environment, R&D capabilities.
    JEL: L21 L10
    Date: 2013
  12. By: Jean-Louis Combes (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Christian Ebeke (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Mathilde Maurel (Centre d'Economie de la Sorbonne - Centre d'Economie de la Sorbonne - Centre d'Economie de la Sorbonne)
    Abstract: This paper focuses on the relationships between remittances, elections, and government consumption as a percentage of GDP. We combine data from the National Elections across Democracy and Autocracy (NELDA) dataset compiled and discussed in Hyde and Marinov (2012) and the World Development Indicators dataset. We focus on 70 young democracies in the developing world. The period under investigation is 1990-2010. The main objective of the paper is to assess whether remittances have an influence on the political manipulation, which may occur prior to an election, through in increase in the government consumption-to-GDP-ratio. It appears that remittances dampen the political business cycle (PBC). Furthermore, the PBC is reduced up to the point where it is fully cancelled out at a remittance threshold of 10.7 percent of GDP. Those findings are robust to different econometric strategies and robustness checks.
    Keywords: Political Business Cycles;Remittances
    Date: 2013–05–28
  13. By: Jill Constantine
    Keywords: Systematic Reviews, Evidence-Based Decision-Making, Improving Research, Education
    JEL: I
    Date: 2013–05–30
  14. By: Sophia El Kerdini (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Sophie Hooge (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: This paper focuses on the first stages of the innovation process within the Fuzzy Front End activities and illustrates the contribution of creativity in strategic foresight activities through the analysis of a collaborative research led in partnership with the dedicated team of a global French carmaker. The paper investigates the findings of the literature to highlights the importance of the individual level toward the collective collaboration in futures studies and in particular in the strategic foresight activities. We shed light on the issue to build a conceptual collective framework that enables to explore the unknown. Main managerial implications of such framework are twofold: 1/ in structuring new and shared knowledge and 2/ in expliciting the benefits of joined creativity and strategic foresight.
    Keywords: strategic foresight, conceptual framework, creativity, scenario building, cognition, C-K theory-based tools, TRIZ theory-based tools
    Date: 2013–04–19
  15. By: Marine Agogue (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris); Anna Yström (Chalmers - Chalmers University of Technology - Chalmers University of Technology); Pascal Le Masson (CGS - Centre de Gestion Scientifique - MINES ParisTech - École nationale supérieure des mines de Paris)
    Abstract: This paper questions the applicability of traditional notions of intermediary activities, which are usually categorized as either brokering or networking, in cases of high uncertainty regarding technologies, markets or which actors to involve. In the case of collaborative open innovation, especially in circumstances when no single organization is able to take on the challenge alone, the activities traditionally associated with intermediation do not suffice to describe what an intermediary can do to support innovation. This paper presents two cases of intermediaries working with the early phases of traffic safety innovations, and how they have managed to develop their activities beyond solely brokering and networking, but also to take an active role in the process of joint exploration and creation of knowledge. We use a qualitative approach to analyze the two cases in order to provide examples of how rethinking intermediation activities can support open innovation in a collaborative setting. The findings suggest that intermediaries taking on a more active role, which could be described as an architect which designs prerequisites and offers leadership in the process of joint exploration and creation of knowledge.
    Date: 2013
  16. By: Eliasson, Jonas (KTH Royal Institute of Technology); Fosgerau, Mogens (DTU Transport)
    Abstract: A number of highly cited papers by Flyvbjerg and associates have shown that ex-ante infrastructure appraisals tend to be overly optimistic. Ex post evaluations indicate a bias where investment cost is higher and demand lower on average than predicted ex ante. These authors argue that the bias must be attributed to intentional misrepresentation by project developers. This paper shows that the bias may arise simply as a selection bias, without there being any bias at all in predictions ex ante, and that such a bias is bound to arise whenever ex ante predictions are related to the decisions whether to implement projects. Using a database of projects we present examples indicating that the selection bias may be substantial. The examples also indicate that benefit-cost ratios remains a useful selection criterion even when cost and benefits are highly uncertain, gainsaying the argument that such uncertainties render cost-benefit analyses useless.
    Keywords: Cost overruns; Forecast accuracy; Cost-benefit analysis; Appraisal; Selection bias; Winner’s curse
    JEL: R40 R42
    Date: 2013–06–03

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