New Economics Papers
on Collective Decision-Making
Issue of 2013‒07‒28
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Do Politicians Shirk when Reelection Is Certain? Evidence from the German Parliament By Bernecker, Andreas
  2. REBUILDING THE DEMOCRACY OF THE TAXPAYER By Konstanin Yanovsky; Sergey Zhavoronkov; Sergey Shulgin; Ilia Zatcovetzky
  3. From Green Users to Green Voters By Diego Comin; Johannes Rode
  4. Risks, responsibility and public respect: Cases of entrepreneurs elected in the USA and in Russia By Konstanin Yanovsky; Sergey Zhavoronkov; Daniel Shestakov
  5. Bargaining and Power By Dominik Karos
  6. Is direct democracy a problem or a promise for fiscal outcomes? The case of the United States By Agnese Sacchi; Aline Pennisi
  7. What's left of the left? Partisanship and the political economy of labour market reform: why has the social democratic party in Germany liberalised labour markets? By Patrick Lunz
  8. The Evolution Of Cooperation In Business: Individual Vs. Group Incentives By Daniel Ladley; Ian Wilkinson; Louise Young
  9. Overconfidence in Political Behavior By Pietro Ortoleva; Erik Snowberg
  10. Partially Honest Nash Implementation:A Full Characterization By Lombardi, Michele; Yoshihara, Naoki
  11. Civic Organizations in Vietnam’s One-Party State: Supporters of Authoritarian Rule? By Jörg Wischermann
  12. Endogenous Preferences and Conformity: Evidence From a Pilot Experiment By Beraldo, Sergio; Filoso, Valerio; Marco, Stimolo
  13. Microblogs in China: Bringing the State Back In By Nele Noesselt
  14. Toward the Green Economy: Assessing Countries’ Green Power By Babette Never
  15. Board directors' preferences: What are good aggregation rules? By Duran, Mihael
  16. The long Term Effects of the Printing Press in Sub Saharan Africa By Julia Cagé; Valeria Rueda
  17. Traditional food crop marketing in Sub-Saharan Africa: Does gender matter? By Christina Handschuch; Meike Wollni
  18. Coalition governments, cabinet size, and the common pool problem: Evidence from the German states By Baskaran, Thushyanthan
  19. Power Convergence, Divergence and a Complex Interplay: Chile and the International and Transnational Anti-Corruption Campaign By Malte Gephart

  1. By: Bernecker, Andreas
    Abstract: Does stiffer electoral competition reduce political rent-seeking behavior? For a microanalysis of this question, I construct a new data set spanning the years 2005 to 2012 covering biographical and political information of German members of parliament (MPs) and including attendance rates in voting sessions for the first time. For the parliament elected in 2009, I show that indeed MPs who expect to face a close race in their district show significantly and relevantly lower absence rates in parliament beforehand. MPs of governing parties seem to react less to electoral competition. These results are confirmed by an analysis of the parliament elected in 2005, by several robustness checks, and also by employing an instrumental variable strategy exploiting convenient peculiarities of the German electoral system. This study is also the first to analyze how MPs elected via party lists react to different levels of electoral competition.
    Keywords: Accountability , Political Competition , Quality of Politicians , Rent-Seeking , Absences
    JEL: D72 H11 J45
    Date: 2013
  2. By: Konstanin Yanovsky (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Sergey Shulgin (Gaidar Institute for Economic Policy); Ilia Zatcovetzky (Gaidar Institute for Economic Policy)
    Abstract: The voter - bureaucrat is locked into a situation of a conflict of interests: as a conscientious citizen, he or she should support optimal expenditure levels for providing certain public goods, but as a person whose wellbeing and career depend on the volume of expenditures for providing public goods, he or she is interested in supporting volumes and prices which obviously exceed the levels acceptable for most citizens of the state. The bureaucrat is also interested in obtaining excess control and regulatory empowerment and authorization. It follows that a conscientious and enlightened functionary should submit a statement about a conflict of interests, and abstain from voting until retirement or demotion. A large and growing group of voters is made up of “professional” recipients of aid. It follows that persons, whose interests include the redistribution of resources of the taxpayers in their own favor, also have no moral right to make decisions by voting during elections. This applies in part also to those entrepreneurs who derive most of their income from the budget. Another grounding factor is the historical statistics of state budget balancing (the dynamics of state debt) and inflation (see Appendix 4: The History of Inflation and Budgetary Deficit after the Introduction of Universal Suffrage). In the age before universal suffrage, problems of financing were almost always an outcome of military cataclysms or other external shocks of a similar magnitude. In the age of universal suffrage, budgetary deficit, growing state debt, and inflation have become the norm.
    Keywords: Universal suffrage, conflict of interest, taxpayers' democracy, pure and mixed public goods
    JEL: D72 D73 H41 N40 P16
    Date: 2013
  3. By: Diego Comin; Johannes Rode
    Abstract: We estimate the effect of the diffusion of photovoltaic (PV) systems on the fraction of votes obtained by the German Green Party. The logistic diffusion of PV systems offers a new identification strategy. We take first differences and instrument adoption rates (i.e. the first difference in the diffusion level) by lagged diffusion levels. The existing rationales for non-linearities in diffusion, and ubiquity of logistic curves ensure that our instrument is orthogonal to variables that directly affect voting patterns. We find that the diffusion of domestic PV systems caused 25 percent of the increment in green votes between 1998 and 2009.
    Date: 2013–07–01
  4. By: Konstanin Yanovsky (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Daniel Shestakov (Gaidar Institute for Economic Policy)
    Abstract: Adam Smith pointed out public respect, prestige as significant component of compensation "for some employment" ("honorableness... of employment"). We assumed, the public moral sanction on success (Weber), public demand for "self-made man" should correlate positively with number of businessmen elected (US Senators, Russian governors and State Duma Deputies). Expressive voting of this sort could support positive pro-market patterns (create positive externalities) - contrary to the "expressive policy (behavior) trap" (Hillman, 2010). During the USA "classical" period ("First 150 years" M. Friedman recommended to take as a model for underdeveloped countries), successful entrepreneurs enjoyed obvious advantages in elections. The same was true for outstanding military-men, for civilian experienced in combat and decorated with awards it also greatly improved their chances to be elected. To hold military heroes in public respect was equivalent of public demand for more quality pure public good "defense" provision. Arising of leftist parties and coalitions, standing for mixed public goods priority provision, accompanied by sensible changes in public respect distribution. Lawyers, businessmen and army officers (military heroes) are crowded out by public servants, "social activists", public school teachers since "Universal Suffrage" institution introduction. In Russia, entrepreneurial status, especially a successful entrepreneurs status, is accompanied by no tangible public recognition. However, the self-esteem of individuals employed in business remains relatively high. The officers "ahead start" was almost unobservable in Russia after very first elections. With our data we also found that economic freedom indicators associated with greater prestige of entrepreneurs within society are positively correlated with voting for pro-market parties and negatively correlated with voting for left.
    Keywords: employment prestige, business prestige, public respect, roving anti-business bandit, stationary anti-business bandit, and leftists' electoral support measured negative perception of business
    JEL: D72 K22 P16 Z13
    Date: 2013
  5. By: Dominik Karos (Department of Economics and Statistics, Saarland University)
    Abstract: Given a simple game, a power configuration specifies the power of each player in each winning coalition. We introduce a new power configuration which takes into account bargaining among players in coalitions. We show that under very weak conditions on a bargaining solution there is a power configuration which is stable with respect to renegotiations. We further show that given this power configuration there is a coalition which is both internally and Nash stable. We consider two different bargaining solutions on apex games and show under which conditions there are core stable coalitions. Finally, we investigate how infeasible coalition might affect the outcome and apply our model to the German parliament.
    Keywords: Coalition Formation, Power, Bargaining
    JEL: C71 D71
    Date: 2013–06
  6. By: Agnese Sacchi; Aline Pennisi
    Abstract: In time of worry for large deficits, the question on whether direct democracy can be a problem or a promise to better rule modern societies may arise. Both theoretical and empirical studies provide mixed answers. This paper investigates both the indirect (i.e. the existence) and the direct effects (i.e. the usage) of direct democracy institutions on major fiscal outcomes across the American States during 1992-2009. Being based on a more recent time span than previous contributions, our study includes more detailed information such as the type of institution, the voting result, and the topics of concern. The main results suggest that States permitting initiatives spend less than those without, confirming some previous findings. However, when initiatives are effectively used, their practice contributes to increase spending among those States allowing them. The intensity of different initiatives also matters for fiscal outcomes as well as the nature of topics involved.
    Keywords: Voter initiatives; Fiscal policy; Positive constitutional economics; State government. (*)
    JEL: H71 H72 P16 O51
    Date: 2013–07
  7. By: Patrick Lunz
    Abstract: The German social democratic party initiated in 2003 the greatest overhaul of labour market legislation in decades, severely cutting unemployment benefits and slashing employment protection legislation. How can we explain this radical policy shift? This paper will present a counter-intuitive answer, arguing that the SPD implemented the reforms because of electoral interests. The rationale is two-fold and relates to changes in labour market policy supply and policy demand. First, the German social democrats strategically adjusted their labour market policy supply, seeking to maximise their office pay-offs by appealing to the median voter in a competitive political space. Second, the shift in policy-supply is also a reaction to changes in labour market policy-demand, with crucial segments of the electorate turning more favourably to welfare state retrenchment. This shift disproportionally benefited the conservative CDU and liberal FDP and forced the SPD to reposition itself in the party landscape.
    Date: 2013–07–16
  8. By: Daniel Ladley; Ian Wilkinson; Louise Young
    Abstract: Cooperative relations, within and between firms, play important roles in business. How to produce such relations, however, is less well understood. Building on work in evolutionary biology we examine the conditions under which group based incentives result in better performance than individual based incentives. We find that when individual and group interests are not aligned, group incentive systems lead to both higher group and individual performance. Hybrid reward systems, with both group and individual components, are found on average to be inferior to pure group based systems, but superior for some specific cases.
    Keywords: Emergence of cooperation, Incentive systems, Iterated games, Group selection
    JEL: D00 M52 C63
    Date: 2013–07
  9. By: Pietro Ortoleva; Erik Snowberg
    Abstract: This paper studies, theoretically and empirically, the role of overconfidence in political behavior. Our model of overconfidence in beliefs predicts that overconfidence leads to ideological extremeness, increased voter turnout, and increased strength of partisan identification. Moreover, the model makes many nuanced predictions about the patterns of ideology in society, and over a person's lifetime. These predictions are tested using unique data that measure the overconfidence, and standard political characteristics, of a nationwide sample of over 3,000 adults. Our predictions, eight in total, find strong support in this data. In particular, we document that overconfidence is a substantively and statistically important predictor of ideological extremeness and voter turnout.
    JEL: C83 D03 D72 D83
    Date: 2013–07
  10. By: Lombardi, Michele; Yoshihara, Naoki
    Abstract: Given the framework introduced by Dutta and Sen (2012), this paper offers a comprehensive analysis of (Nash) implementation with artially honest agents when there are three or more participants. First, it establishes a condition which is necessary and sufficient for implementation. Second, it provides simple tests for checking whether or not a social choice correspondence can be implemented. Their usefulness is shown by examining implementation in a wide variety of environments.
    Keywords: Implementation, Nash equilibrium, social choice correspondences, partial honesty, Condition μ
    JEL: C72 D71
    Date: 2013–07
  11. By: Jörg Wischermann (GIGA German Institute of Global and Area Studies)
    Abstract: Associationalism under authoritarian rule is not automatically a good thing. The empirical findings laid out in this article indicate that authoritarian dispositions and practices are prevalent in all types of Vietnamese civic organizations, at least as far as internal decision-making processes are concerned. As is the case in most countries of Southeast Asia, old as well as new ideas of the state and state traditions have a strong impact on the patterns of authoritarianism found in Vietnamese civic organizations. From the empirical findings, it might be concluded that Vietnamese civic organizations support authoritarian rule – though the extent of such support varies; this has generally been an underresearched question. This pioneering article seeks to stimulate further research by offering new insights into how authoritarian power is exercised in Vietnam by addressing how associations’ activities stabilize rules, how the associated legitimizing effects can be conceptualized and understood in theoretical terms, and what would be a suitable operationalization of the aforementioned concepts.
    Keywords: civil society, authoritarianism, authoritarian rule, Vietnam
    Date: 2013–07
  12. By: Beraldo, Sergio; Filoso, Valerio; Marco, Stimolo
    Abstract: Conformity behavior, i.e. the agreement between an individual's choices and the prevailing behavior of a reference group, is a commonly observed phenomenon. Though some types of social interactions may give raise to specific incentives to adopt either a majoritarian or a contrarian behavior, we want to investigate whether the same behavioral pattern emerges even when no economic motivator is present. To accomplish this task, we employ an experimental Vickrey median price auction designed to provide incentives to reveal individual preferences truthfully. Whereas we feed the control group with just the median price, we give out additional information on other players' bids for those in the treated groups. These informations are designed to provide hints at revising individual bids. Our main results point to a strong tendency of the individuals to adapt their behavior to those of the individuals which can be observed. Moreover, although a clear shaping effect (a regression toward the median price) does emerge for the control group, the provision of information about the actual behavior of a sample of the relevant group is able to minimize or neutralize the shaping effect. Specifically, we find that players adjust to a divergence between their bids and the average bid of a reference group by a factor of 47.4\%—87.3\%. These figures point to a relevant role for conformity in group behavior.
    Keywords: Endogenous preferences, shaping effect, social conformity, Vickrey auction
    JEL: C91 C92 D44
    Date: 2013–07–22
  13. By: Nele Noesselt (GIGA Institute of Asian Studies)
    Abstract: This paper reflects the adaptation and transformation of the Chinese party-state’s governing strategy in the digital era. Through a discourse analysis of the current Chinese debate on the role of microblogs in China, it argues that China’s political elites have revised their social management strategy. They now tend to base their political decision-making on strategic calculations that reflect online public opinion in order to increase the system’s efficiency and to generate a new kind of performance-based legitimacy. This turn to a more responsive mode of governance has been driven by the findings of Internet surveys and reports provided by Chinese research institutes and advisory bodies. A close reading of these documents and reports helps to answer the question of why authoritarian states such as China do not prohibit the spread of new communication technologies, even though these are said to have triggered or at least facilitated the rebellions of the Arab Spring.
    Keywords: governance in China, e-government, e-governance, deliberation
    Date: 2013–02
  14. By: Babette Never (GIGA German Institute of Global and Area Studies)
    Abstract: The green power potential of a country is a central factor in the transformation to a green economy. This paper argues that green power will become a decisive factor for global change. Green power combines sustainability, innovation and power into one concept. By merging insights from political science, economics and innovation research, this paper develops a multidimensional, multilevel concept of green power that takes both resources and processes into account. A first empirical assessment of the current distribution of green power in global environmental governance shows that China and India, in particular, as well as Brazil and Costa Rica are catching up in clean technology and renewable energy. The European Union, Germany and the United States still dominate, but they are not fully maximizing their green power potential. In spite of their discursive power, the green power potential of the least developed countries is relatively small, making the jump toward a green economy unlikely.
    Keywords: climate change, power, global environmental governance, innovation, green economy.
    Date: 2013–06
  15. By: Duran, Mihael
    Abstract: I analyze how boards of directors with heterogeneous preferences can affect the information shared with the CEO with the help of a cheap-talk model that allows for large groups of receivers. This paper provides new insights on how heterogeneity of boards can change the way of communication between the board and the CEO, related to different ways of decision making. My model gives some insights how heterogeneous preferences can have an impact on how communication between CEO and the board of directors takes place. I also indicate how coalition forming in the boardroom can be influenced by director's and CEO's perferences. Finnaly this model gives a possible answer why board of directors hetreogeneity differs even for shareholder representatives if there are any empoyees on the board. --
    Keywords: Board of directors,Cheap talk,Director's preferences,Heterogeneity,Multiple audiences
    JEL: C71 C72 D72 D82 G34
    Date: 2013
  16. By: Julia Cagé (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales [EHESS] - Ecole des Ponts ParisTech - Ecole normale supérieure de Paris - ENS Paris - Institut national de la recherche agronomique (INRA), Harvard University [Cambridge] - University of Harvard); Valeria Rueda (IEP Paris - Sciences Po Paris - Institut d'études politiques de Paris - Institut d'Études Politiques [IEP] - Paris - PRES Sorbonne Paris Cité - Fondation Nationale des Sciences Politiques [FNSP])
    Abstract: This article examines the long-term consequences of the introduction of the printing press in the 19th century on newspaper readership and other civic attitudes in sub-Saharan Africa. In sub-Saharan Africa, Protestant missionaries were the first both to import the printing press technology and to allow the indigenous population to use it. We build a new geocoded dataset locating Protestant missions in 1903. This dataset includes, for each mission station, the geographic location and its characteristics, as well as the educational and health related investments undertaken by the mission. We show that proximity to a historical missionary settlement endowed with a printing press significantly increases newspaper readership today within regions located close to historical mission settlements. We also find a positive impact on political participation at the community level. Results are robust to a variety of identification strategies that attempt to address the potential endogenous selection of missions into printing and externalities on education and literacy.
    Keywords: Printing press ; Protestant missions ; Historical persistence ; Newspaper readership ; Political participation
    Date: 2013–07
  17. By: Christina Handschuch (Georg-August University Göttingen); Meike Wollni (Georg-August University Göttingen)
    Abstract: Specialization and commercialization of agricultural production is seen as a key to lift small-scale farmers in developing countries out of poverty. While participation in high-value markets has been shown to be beneficial for farmers, especially the smallest and least endowed farmers are often excluded from these markets due to high transaction costs. In this context, marketing traditional food crops poses an important income alternative. The present study aims to contribute to the scarce literature on traditional food crops by analyzing the factors influencing (a) the households’ decision to participate in the finger millet market and (b) the selling prices obtained by the household. A special focus of our analysis lies on the role of gender and collective action. Based on household data from 270 finger millet producers, a probit model on market participation and a linear regression model on the selling price are estimated. Results show that participation in a finger millet group positively influences the decision to market finger millet. While female household members who do not participate in a group are disadvantaged in terms of selling prices, there is no gender effect on selling prices if a female household member participates in a finger millet group.
    Keywords: Kenya; finger millet; marketing; collective action; gender
    Date: 2013–07–15
  18. By: Baskaran, Thushyanthan
    Abstract: The theoretical literature on common pool problems in fiscal policy suggests that government fragmentation increases public expenditures. In parliamentary regimes, the fragmentation hypothesis refers to (i) coalition governments and (ii) cabinet size. This paper explores the effect of coalition governments and cabinet size on public expenditures with panel data covering all 16 German States over the period 1975-2010. Identification is facilitated by the large within-variation in the incidence of coalition governments and the size of the cabinet in the German States. In addition, I exploit a feature of state electoral laws to construct a credible instrument for the likelihood of coalition governments. --
    Keywords: government fragmentation,common pool problems,coalition government,cabinet size,public expenditures
    JEL: D78 H61 H72
    Date: 2013
  19. By: Malte Gephart (GIGA German Institute of Global and Area Studies)
    Abstract: Several anthropological scholars have argued from an ethnographic viewpoint that local understandings of corruption vary around the world. Others who have critically analyzed the international and transnational anti-corruption campaign (ITACC) have argued that the ITACC is capable of covering up these differences, which creates misunderstandings about the aims in the fight against corruption. This article combines and advances both arguments by applying a post-development perspective and argumentative discourse analysis (ADA) to explore the local anti-corruption discourse in Chile – a country that is considered a success case in Latin America. This exploration shows that Chile’s anti-corruption activities are highly political and are deeply related to narratives in the country’s transition to democracy. By relating local narratives back to the ITACC the article reveals a complex interplay between local (and competing) corruption narratives that, at the same time, partially form discourse coalitions with the ITACC.
    Keywords: corruption, anti-corruption, discourse analysis, narratives, Chile, Latin America, post development
    Date: 2013–05

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