nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2013‒06‒24
eighteen papers chosen by
Stan C. Weeber
McNeese State University

  1. Who’s Favored by Evaluative Voting ? An Experiment Conducted During the 2012 French Presidential Election. By Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
  2. Does Political Representation through Parties Decrease Voters' Acceptance of Decisions? By Emanuel Towfigh; Andreas Glöckner; Sebastian Goerg; Philip Leifeld; Carlos Kurschilgen; Aniol Llorente-Saguer; Sophie Bade
  3. Elections, Information, and State-Dependent Candidate Quality By Thomas Jensen
  4. Balancing the Power to Appoint Officers By Salvador Barberà; Danilo Coelho
  5. Why Do Members of Congress Support Agricultural Protection? By Bellemare, Marc F.; Carnes, Nicholas
  6. Committee Design with Endogenous Participation By Volker Hahn
  7. Public Evaluation and Political Acceptance of Sustainable Land Use Polices: A populist democracy policy failure? By Henning, Christian H.C.A.; Zarnekow, Nana; Petri, Svetlana; Albrecht, Ernst; Hedtrich, Johannes
  8. Voting or Buying: Inconsistency in Preferences toward Food Safety in Restaurants By Alphonce, Roselyne; Alfnes, Frode; Sharma, Amit
  9. Exit options and the allocation of authority By Bester, Helmut; Krähmer, Daniel
  10. Consequential Cash Choice Experiments: Provision Rules and Decision Support for Restoration of NROCs Ecosystem By Kafle, Achyut; Swallow, Stephen K.
  11. Political Economy in a Changing World By Daron Acemoglu; Georgy Egorov; Konstantin Sonin
  12. Spatial effects in organic agriculture adoption in Honduras: the role of social conformity, positive externalities, and information By Wollni, Meike; Andersson, Camilla
  13. Cooperation under punishment: Imperfect information destroys it and centralizing punishment does not help By Sven Fischer; Kristoffel Grechenig; Nicolas Meier
  14. Self-Serving Behavior in Price-Quality Competition By Marco Bertini; Daniel Halbheer; Oded Koenigsberg
  15. Wondering How Others Interpret It: Social Value of Public Information By Alia Gizatulina
  16. “I’ll Have What He’s Having”: Group Ordering Behavior in Food Choice Decisions By Ellison, Brenna; Lusk, Jayson
  17. When the Economics of a Decision Matters More than the Psychology of the Decision: Understanding the Economic Significance of Auction Fever. By Matthew W. McCarter; Abel M. Winn; Adam D. Galinsky
  18. The effects of ownership structure on corporate financing decisions: Evidence from stock market liberalization By Thomas Flavin; Thomas O'Connor

  1. By: Antoinette Baujard; Frédéric Gavrel; Herrade Igersheim; Jean-François Laslier; Isabelle Lebon
    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.
    JEL: D72 C93
    Date: 2013
  2. By: Emanuel Towfigh (Max Planck Institute for Research on Collective Goods, Bonn); Andreas Glöckner (Max Planck Institute for Research on Collective Goods, Bonn); Sebastian Goerg (Max Planck Institute for Research on Collective Goods, Bonn); Philip Leifeld (University of Konstanz, Zukunftskolleg); Carlos Kurschilgen (Max Planck Institute for Research on Collective Goods, Bonn); Aniol Llorente-Saguer (Max Planck Institute for Research on Collective Goods, Bonn); Sophie Bade (Royal Holloway University of London, Department of Economics)
    Abstract: Are decisions by political parties more or less accepted than direct-democratic decisions? The literature on parties as brand names or labels suggests that the existence of political parties lowers information and transaction costs of voters by providing ideological packages. Building on this important argument, we posit that this informational rationale for parties is not universally applicable and is contingent on the context of the decision that is made. Intermediary political decision-making institutions may impose additional costs on voters in situations where the decision is perceived to be personally important to the individual voter. We conduct an experimental online vignette study to substantiate these claims. The results imply that a combination of representative democracy and direct democracy, conditional on the distribution of issue importance among the electorate, is optimal with regard to acceptance of a decision.
    Date: 2013–05
  3. By: Thomas Jensen (Department of Economics, University of Copenhagen)
    Abstract: The quality of political candidates often depends on the current state of the world, for example because their personal characteristics are more valuable in some situations than in others. We explore the implications of state-dependent candidate quality in a model of electoral competition where voters are uncertain about the state. Candidates are fully informed and completely office-motivated. With a reasonable restriction on voters' ?beliefs, an equilibrium where candidates' ?positions reveal the true state does not exist. Non-revealing equilibria always exist. Some main findings are that canddates' ?positions can diverge more in equilibrium when they differ more in state-dependent quality and when the electorate is less well informed.
    Keywords: Electoral competition; Candidate quality; Uncertainty; Information; Polarization
    JEL: D72
    Date: 2013–02–20
  4. By: Salvador Barberà; Danilo Coelho
    Abstract: Rules of k names are frequently used methods to appoint individuals to office. They are two-stage procedures where a first set of agents, the proposers, select k individuals from an initial set of candidates, and then another agent, the chooser, appoints one among those k in the list. In practice, the list of k names is often arrived at by letting each of the proposers screen the proposed candidates by voting for v of them and then choose those k with the highest support. We then speak of v-rules of k names. Our main purpose in this paper is to study how different choices of the parameters v and k affect the balance of power between the proposers and the choosers. From a positive point of view, we analyze a strategic game where the proposers interact to determine what list of candidates to submit. From a normative point of view, we study the performance of different rules in expected terms, under different informational assumptions. The choice of v and k is then analyzed from the perspectives of efficiency, fairness and compromise.
    Keywords: voting rules, constitutional design, Strong Nash equilibrium, rule of k names
    JEL: D02 D71 D72
    Date: 2013–05
  5. By: Bellemare, Marc F.; Carnes, Nicholas
    Abstract: It seems paradoxical that developed countries continue subsidizing agriculture even though their agricultural sectors have been declining in relative importance since the middle of the 20th century. What drives support for agricultural protection in developed countries? We answer this question by testing three competing hypotheses about what drives support for agricultural protection in the US: (i) legislator preferences, (ii) electoral incentives, or (iii) lobbying. Using data on the roll call votes of the members of the 106th through the 110th Congresses (1999-2009) and the scores given to each legislator by the Farm Bureau, our findings suggest electoral incentives explain a great deal of the variation in support for agricultural protection, but that legislator preferences and lobbying play a role, too. Moreover, legislator preferences and electoral incentives appear to be substitutes for one another. Why does Congress support agricultural protection? Because many members have electoral incentives to—and because many of those who do not still have other personal or strategic interests at stake.
    Keywords: Agricultural Policy, Agricultural Protection, Farm Bill, Congress, Voting, Lobbying
    JEL: D72 Q18
    Date: 2013–06–16
  6. By: Volker Hahn (Department of Economics, University of Konstanz, Germany)
    Abstract: We investigate the optimal design of a committee in a model with the endogenous participation of experts who have private information about their own abilities. We study three different dimensions of committee design: members' wages, the number of seats, and the communication system. We show that, surprisingly, higher wages lead to lower quality experts. By contrast, transparency improves the quality of experts on the committee. We provide a complete characterization of optimal committees. They are characterized by low wages and can be transparent or opaque. An increase in the significance of the decision requires a larger optimal committee, but does not call for different wages or for another communication system. Finally, we prove that the optimal committee design represents the best possible mechanism for the principal.
    Keywords: Committee decision-making, information aggregation, adverse selection, efficiency wages, transparency, career concerns
    JEL: D71 D82 J45
    Date: 2013–06–12
  7. By: Henning, Christian H.C.A.; Zarnekow, Nana; Petri, Svetlana; Albrecht, Ernst; Hedtrich, Johannes
    Abstract: This paper studies the ability of the political process to design public policies implying an eective and ecient provision of global and local environmental public goods. While it is commonly accepted that the market is unable to guarantee an ecient provision of public goods, such as environmental protection or food security, the question is if or under which condition political processes are ecient mechanisms of public good provision. Beyond policy failure due special interest politics policy failure also results from the fact that economic processes are often rather complex and hence laymen use simple mental models (political beliefs) to understand policy impacts. If political beliefs are biased political decisionmaking based on public opinion leads to rather inecient policies establishing the paradox of populist democracy policy failure. We use own choice experiment data on sustainable land use policy in Germany to estimate econometrically the WTP for relevant global and local environmental public goods as well as voters' political willingness-to-vote for specic land use policies. Based on these estimations we derive underlying political belief. Further, we assess to what extend a populist democracy policy failure results, i.e. to what extend policy choices driven by political beliefs imply inecient land use policies when compared to the counterfactual evidence-based policy choices driven by model-based technological relations.
    Keywords: Agricultural and Food Policy, Land Economics/Use, Political Economy,
    Date: 2013
  8. By: Alphonce, Roselyne; Alfnes, Frode; Sharma, Amit
    Abstract: Consumers sometimes prefer stricter food regulations as voters than as consumers. A prime example is that battery-cage eggs were the most sold types of eggs in California in 2008 when 63% of voters supported the animal welfare proposition forbidding battery-cage eggs starting from from 2015. In this paper, we investigate whether a similar consumer-citizen duality might exist in willingness to pay for food safety standards in restaurants. Using a split sample willingness to pay survey we find that consumers have a higher willingness to pay for improved restaurant food safety standards when voting than when acting as consumers. The results are discussed in the light of the literature on trust, social choice and public choice theory.
    Keywords: Consumer-Citizen Duality, WTP, Food-Safety in Restaurants, United States, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2013
  9. By: Bester, Helmut; Krähmer, Daniel
    Abstract: We analyze the optimal allocation of authority in an organization whose members have conflicting preferences. One party has decision-relevant private information, and the party who obtains authority decides in a self-interested way. As a novel element in the literature on decision rights, we consider exit option contracts: the party without decision rights is entitled to prematurely terminate the relation after the other party's choice. We show that under such a contract it is always optimal to assign authority to the informed and not to the uninformed party, irrespective of the parties' conflict of interest. Indeed, the first-best efficient solution can be obtained by such a contract. --
    Keywords: authority,decision rights,exit options,incomplete contracts,asymmetric information
    JEL: D23 D82 D86
    Date: 2013
  10. By: Kafle, Achyut; Swallow, Stephen K.
    Abstract: Investigating incentives, through valuation context and questions, that motivate respondents to reveal their true values for environmental good under consideration has been a long-standing area of research in stated preference literature. A large number of previous non-market valuation studies have focused on various dimensions of valuation questions and context and have investigated how these dimensions a↵ect the incentives to answer truthfully. An importnat, but relatively less-explored, area is the incusion of a provision rule, by which environmental good under investigation will be provided, and how this a↵ects participants’ incentives to tell the true values. Provision rules, that are made explicit to survey respondents, provide a connection between survey choices and actual outcomes. Advancements in Mechanism Design Theory have recently attracted researchers’ attention on examining alternative provision rules using discrete choice experiments (DCE) and comparing preferences and tradeo↵s across provision rules. Only very few studies,mostly in laboratory experiments, have attempted to examine the influence of the inclusion of a provision rule in elicited preferences and tradeo↵s. Employing a split-sample approach, this study compares a single decision-maker’s choice and a plurality vote provision rules in in-person choice experiments using real cash for actual implementation of ecosystem restoration project on the ground. A very preliminary conditional logit model results suggest that both rules produce statistically similar preference functions in terms of marginal values and tradeo↵s between restoration attributes. Further analysis is yet to be conducted to ensure these preliminary results hold consistently using a Latent Class Model to incorporate preference heterogeneity for ecosystem restoration.
    Keywords: provision rules, real-money choice experiments, ecosystem restoration, decision-support tool, Demand and Price Analysis, Research Methods/ Statistical Methods,
    Date: 2013
  11. By: Daron Acemoglu; Georgy Egorov; Konstantin Sonin
    Abstract: We provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on the Markov Voting Equilibria, which require that economic and political changes should take place if there exists a subset of players with the power to implement such changes and who will obtain higher expected discounted utility by doing so. Assuming that economic and political institutions as well as individual types can be ordered, and preferences and the distribution of political power satisfy natural “single crossing” (increasing differences) conditions, we prove the existence of a pure-strategy equilibrium, provide conditions for its uniqueness, and present a number of comparative static results that apply at this level of generality. We then use this framework to study the dynamics of political rights and repression in the presence of radical groups that can stochastically grab power. We characterize the conditions under which the presence of radicals leads to repression (of less radical groups), show a type of path dependence in politics resulting from radicals coming to power, and identify a novel strategic complementarity in repression.
    JEL: C71 D71 D74
    Date: 2013–06
  12. By: Wollni, Meike; Andersson, Camilla
    Abstract: In low potential agricultural areas like the Honduran hillsides characterized by soil degradation and erosion, organic agriculture can provide a means to break the downward spiral of resource degradation and poverty. We use original survey data to analyze the factors influencing the decision to convert to organic agriculture. Previous studies have emphasized the role of spatial patterns in the diffusion and adoption of agricultural technologies in general and organic agriculture in particular. These spatial patterns can result from a variety of underlying factors. In this article we test various potential explanations, including the availability of information in the farmer's neighborhood, social conformity concerns and perceived positive external effects of the adoption decision, in a spatially explicit adoption model. We find that farmers who believe to act in accordance with their neighbors' expectations and with greater availability of information in their neighborhood network are more likely to adopt organic agriculture. Furthermore, perceived positive productivity spillovers to neighboring plots decrease the probability of adoption. We discuss the implications of our findings for the dissemination of sustainable agricultural technologies in low-potential agricultural areas in developing countries.
    Keywords: neighborhood effects, social conformity, spatial autoregressive probit model, organic agriculture, technology adoption, Central America, Community/Rural/Urban Development, Environmental Economics and Policy, International Development, Research and Development/Tech Change/Emerging Technologies, Research Methods/ Statistical Methods, O13, O33, Q12, Q16,
    Date: 2013–05
  13. By: Sven Fischer (Max Planck Institute for Research on Collective Goods, Bonn); Kristoffel Grechenig (Max Planck Institute for Research on Collective Goods, Bonn); Nicolas Meier
    Abstract: We run several experiments which allow us to compare cooperation under perfect and imperfect information and under a centralized and decentralized punishment regime. We nd that (1) centralization by itself does not improve cooperation and welfare compared to an informal, peer-to-peer punishment regime and (2) centralized punishment is equally sensitive to noise as decentralized punishment, that is, it leads to signicantly lower cooperation and welfare (total prots). Our results shed critical light on the widespread conjecture that the centralization of punishment institutions is welfare increasing in itself.
    Keywords: Public Goods, cooperation, centralized punishment, imperfect information, decentralized punishment, peer to peer punishment
    JEL: C92 K42 H42 D03
    Date: 2013–04
  14. By: Marco Bertini (London Business School, London); Daniel Halbheer (Department of Business Administration (IBW), University of Zurich); Oded Koenigsberg (London Business School, London)
    Abstract: Managers like to think well of themselves and of the firms that employ them. Yet, such positive illusions can prejudice the evaluation of market outcomes and, as a result, provoke biased responses. In particular, we examine the possibility that managers self-servingly credit success in the market to product quality but blame failure on price. We draw on the social psychology of causal attributions to substantiate this idea and predict how managers adjust price and quality on the basis of prior results. Next, we report one experiment that tests the different elements of our theory, as well as insights from two surveys and a marketing simulation that add robustness to the findings. Finally, we develop an analytical model of price-quality competition to understand the profit impact of self-serving behavior. Counter to intuition, we find that under certain conditions firms can benefit from the biased actions of their managers.
    Keywords: Self-serving behavior, attribution theory, price-quality competition, managerial decision-making
    JEL: D21 D22 L21 L22 M31
    Date: 2013–05
  15. By: Alia Gizatulina (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: This paper studies the social value of public information in environments without common knowledge of the data-generating process. We show that the stronger the coordination motive behind agents’ behaviour is, the more they use private or public signals in the way that they suspect others are doing it. Consequently, the negative impact of public communication noted by Morris and Shin (2002) can be amplified if agents suspect that others take the public signal too literally and/or are too inattentive to their private signals. Social welfare, if measured as in Morris and Shin (2002), always increases in the precision of the public signal when each agent evaluates its precision correctly, but believes that others did not understand the public signal at all, which suggests that there is a scope to “obliterate” public communication in a specific way, by making it, e.g., sophisticated and technical. By contrast, measuring welfare as in Woodford (2005) reverses, in general, desirability for such obliteration and non-commonality of signals’ understanding.
    Keywords: transparency, central bank communication, common p-belief, coordination game, higher-order uncertainty
    JEL: D82 E58
    Date: 2013–04
  16. By: Ellison, Brenna; Lusk, Jayson
    Abstract: Current research has focused on whether nutrition labeling and pricing policies (i.e., soda taxes) influence food decisions; however, less attention has been given to how peers influence one’s food decisions. This study uses sales receipts from a full-service restaurant to take a closer look at how people order in groups. Results of the study revealed people may be less variety-seeking than previous research suggests; in fact, diners were more likely to seek variety when choosing an individual item, but not when choosing a menu category. In other words, diners wanted to be different from their dining companions, but not too different. This result was further confirmed with a model of food choice which shows diners derived more utility from an entrée when a fellow diner ordered an entrée in the same category. Interestingly, the presence of calorie labels on menus did not change the marginal utility of calories, suggesting peer effects may outweigh the effects of nutritional information.
    Keywords: food decisions, group ordering behavior, variety-seeking vs. conformism, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Institutional and Behavioral Economics,
    Date: 2013
  17. By: Matthew W. McCarter (College of Business, University of Texas at San Antonio and Economic Science Institute, Chapman University); Abel M. Winn (Argyros School of Business & Economics, Chapman University); Adam D. Galinsky (Columbia Business School, Colombia University)
    Abstract: This article uses archival data from English auctions of animal art and eBay gift cards coupled with two laboratory experiments to study the effect of financial stakes on an interdependent decision-making phenomenon critical to organizational success: auction fever. Congruent with rational irrationality theory, we find evidence that the frequency and severity of auction fever decreases as the stakes increase, calling into question the economic significance of the phenomenon. In Study 1, we used two archival field datasets to show that the frequency and magnitude of overbidding decrease as the bidder’s willingness to pay increases. In Study 2 a laboratory experiment replicated this finding as winners make up a minority (only 15.2%) of overbidders, making losers (who incur no cost for overbidding) four-and-half times more likely to experience “auction fever”. In Study 3, we compare the frequency of auction fever between an English auction institution (where only the winner pays) and penny auction institution (where every bidder pays) – and find that the frequency of auction fever declines from 33% in English auctions to 12.7% in penny auctions. In contrast to the English auctions, bidders in the penny auction were more likely to spend beyond their initial limits when their (perceived) item values were higher; this occurs because the cost of each additional bid is smaller relative to the perceived value of the item. These results demonstrate that financial stakes of a decision may override seemingly robust psychological processes and they encourage researchers to test their ideas in contexts where the economic significance of a decision is considerable.
    Keywords: Auction Fever, Bidder’s Curse, Economic Significance, English Auction, Overbidding, Penny Auction, Statistical Significance
    Date: 2013
  18. By: Thomas Flavin (Department of Economics Finance and Accounting, National University of Ireland, Maynooth); Thomas O'Connor (Department of Economics Finance and Accounting, National University of Ireland, Maynooth)
    Abstract: We analyze the impact of firm-specific stock market liberalization events on the capital structure and debt maturity decisions of firms from emerging market economies. We differentiate between firms based on their ownership structures at the time of liberalization and analyze their post-liberalization behavior regarding corporate financing decisions. Our empirical results show that single-class-share firms (typically with stronger corporate governance and better information environments) respond differently to their dual-class-share counterparts. Liberalization results in lower debt reliance for the former group while the latter lengthen the maturity of their debt portfolios.
    Keywords: Financing choices; Debt maturity; Investability
    JEL: F30 G15 G32
    Date: 2013

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