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on Collective Decision-Making |
| By: | Matteo Triossi; Patricio Valdivieso; Benjamín Villena-Roldán |
| Abstract: | Proposers strategically formulate legislative bills before voting takes place. However, spatial voting models that estimate legislator’s ideological preferences do not explicitly consider this fact. In our model, proposers determine the ideology and valence of legislative bills to maximize their objective functions. Approaching to the median legislator ideology and increasing costly valence increases the passing probability, but usually decreases the proposer’s payoff. Using quantile utility proposer preferences, the model becomes tractable and estimable. In this way, we deal with the bill sample selection problem to estimate legislator’s preferences and also, the ideology of proposers, the proposed valence change, and the ideological stance of the statu quo in a common scale. Using Chilean Senate 2009 - 2011 roll call data, our results suggests that (1) political party affiliation significantly affects Senators’ ideology, (2) popular, young and male Senators are more extremist, and (3) proposers during Bachelet and Piñera’s terms have similar ideologies. Key words: |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:294&r=cdm |
| By: | Hansen, Stephen (Universitat Pompeu Fabra); McMahon, Michael (University of Warwick) |
| 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 newc hannel through which we can empirically identify expertise and preference parameters by using variation indecisions over heterogeneous priors.Relative to existing estimation approaches,our"Prior Based Identification" 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. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:135&r=cdm |
| By: | Felipe Balmaceda; Juan Esconar |
| Abstract: | This paper studies which social networks maximize trust and cooperation when agreements are implicitly enforced. We study a repeated trust game in which trading opportunities arise exogenously and the social network determines the information transmission technology. We show that cohesive communities, modeled as social networks of complete components, emerge as the optimal community design. Cohesive communities generate some degree of common knowledge of transpired play that allows players to coordinate their punishments and, as a result, yield relatively high equilibrium payoffs. Our results provide an economic rationale for the commonly argued optimality of cohesive social networks. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:295&r=cdm |
| By: | Boschman, Sanne (Delft University of Technology); van Ham, Maarten (Delft University of Technology) |
| Abstract: | The selective inflow and outflow of residents by ethnicity is the main mechanism behind ethnic residential segregation. Many studies have found that ethnic minorities are more likely than others to move to ethnic minority concentration neighbourhoods. An important question which remains largely unanswered is to what extent this can be explained by own group preferences, or by other neighbourhood or housing market factors. By using longitudinal register data from the Netherlands, this study contributes to the literature on neighbourhood selection by ethnic minorities in two ways. First, it distinguishes between different ethnic minority groups where most studies look at the group as a whole. Second, it takes into account multiple dimensions of neighbourhoods where most other studies look at neighbourhoods one-dimensionally, which allows us to test the own group preferences hypothesis. Using a conditional logit model we find that housing market constraints can partly explain the selection of ethnic minorities into minority concentration neighbourhoods. Also own-group preferences are found to be important in explaining neighbourhood selection. There are, however, differences between ethnic minority groups. Own-group preferences and housing market constraints together explain why Surinamese and Antilleans select into minority concentration neighbourhoods. When these factors are taken into account, Turks and Moroccans are still found to select into concentration neighbourhoods of ethnic minorities other than their own ethnic group. |
| Keywords: | segregation, neighbourhood selection, ethnicity, own-group preference, conditional logit, the Netherlands |
| JEL: | J15 R23 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7526&r=cdm |
| By: | Rodrigo César de Castro Miranda; Benjamin Miranda Tabak |
| Abstract: | This paper proposes a novel way to model a network of firm-bank and bank-bank interrelationships using a unique dataset for the Brazilian economy. We show that distress originating from firms can be propagated through the interbank network. Furthermore, we present evidence that the distribution of distress can have contagious effects due to correlated exposures. Our modeling approach and empirical results provide useful tools and information for policy makers and contribute to the discussion on assessing systemic risk in an interconnected world. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:bcb:wpaper:322&r=cdm |
| By: | Guiso, Luigi (EIEF & CEPR); Herrera, Helios (HEC Montreal); Morelli, Massimo (Columbia University) |
| Abstract: | If voters of different countries adhere to different and deeply rooted cultural norms, the country leaders may fi nd it impossible to agree on efficient policies especially in hard times. The conformity constraint -political leaders unwillingness or impossibility to depart from these norms - has resulted in lack of timely intervention which has ampli ed an initially manageable debt crisis for some European countries to the point of threatening the Euro as a single currency. We show the conditions under which the introduction of a fi scal union can be obtained with consensus and be bene cial. Perhaps counter- intuitively, cultural diversity makes a fi scal union even more desirable. Some general lessons can also be drawn on the interaction of cultural evolution and institutional choice. |
| Keywords: | Conformity constraint, culture, debt crisis, fiscal union. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:137&r=cdm |
| By: | Kurt A. Ackermann (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich); Jürgen Fleiß (Institute of Statistics and Operations Research, Karl-Franzens-University Graz); Ryan O. Murphy (Chair of Decision Theory and Behavioral Game Theory, ETH Zurich) |
| Abstract: | There is accumulating evidence that decision makers are sensitive to the distribution of resources among themselves and others, beyond what is expected from the predictions of narrow self-interest. These social preferences are typically conceptualized as being static and existing independently of information about the other people influenced by a DM’s allocation choices. In this paper we consider the reactivity of a decision makers’s social preferences in response to information about the intentions or past behavior of the person to be affected by the decision maker’s allocation choices (i.e., how do social preferences change in relation to the other’s type). This paper offers a conceptual framework for characterizing the link between distributive preferences and reciprocity, and reports on experiments in which these two constructs are disentangled and the relation between the two is characterized. |
| Date: | 2013–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:grz:wpsses:2013-05&r=cdm |
| By: | Dobbelaere, Sabien (VU University Amsterdam); Luttens, Roland Iwan (Ghent University) |
| Abstract: | This paper provides an economic foundation for non-binding mediation to stimulate first collective bargaining agreements, as implemented in British Columbia since 1993. We show that the outcome of first-contract mediation is Pareto efficient and proves immune to the insider-outsider problem of underhiring. We also demonstrate that equilibrium wages and profits under mediation coincide with the Owen values of the corresponding cooperative game with the coalitional structure that follows from unionization. |
| Keywords: | BC first-contract model, mediation, collective bargaining, union, non-binding contract |
| JEL: | C71 J51 L20 K12 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7541&r=cdm |
| By: | David M. Bruner; John R. Boyce |
| Abstract: | This paper reports the results of an experimental test of the Nash equilibrium prediction of voluntary provision of property rights in a contest under anarchy. Specically, the experiment investigates whether pre-commitment induces positive provision of property rights. As pre- dicted, zero contributions to property rights are observed without pre- commitment. Positive voluntary contributions are observed with pre- commitment, but are less than predicted. Nonetheless, as predicted, stronger property rights with pre-commitment results in less con ict and more production. The experiment also tests predictions for group- size eects. While average contributions to property rights are un- aected by group-size, mean con ict increases and mean production decreases with larger groups. Key Words: Property Rights; Con ict; Public Goods; Experiments |
| JEL: | C72 C91 F35 O12 O43 P48 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:apl:wpaper:13-14&r=cdm |
| By: | S. Bortolotti; M. Casari; F. Pancotto |
| Abstract: | Norms of cooperation and punishment differ across societies, but also within a single society. In an experiment with two subject pools sharing the same geographical and cultural origins, we show that opportunities for peer punishment increase cooperation among students but not in the general population. In previous studies, punishment magnified the differences across societies in peoples ability to cooperate. Here, punishment reversed the order: with punishment, students cooperate more than the general population while they cooperate less without it. Our results obtained with students cannot be readily generalized to the society at large. |
| JEL: | C72 C90 Z13 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp898&r=cdm |
| By: | SGB Henry |
| Abstract: | In a dramatic change from the euphoria in the early 2000s based on a widespread belief in the “success” of the partial independence of the Bank of England, UK policymakers are now faced with great uncertainties about the future. The Coalition government responded to the financial crisis by changing the responsibilities for banking supervision and regulation and creating new institutions to deal with them. The UK was not alone in such moves and there is increased attention world-wide to greater regulatory powers and state-dependent provisioning as key to any future financial architecture. However, changes to the conduct of monetary policy are also necessary. Using the UK experience up to 2008 as a case study, we argue that the authorities here placed too much faith in the proposition that inflation-forecast targeting by an independent central bank was all that was needed. Over the previous two decades evidence accumulated that both undermined the belief that the low inflation with stable growth during the so-called “Great Moderation” was due to the new policy regime and that showed systemic risk in the financial sector was rapidly growing. We maintain that these two things were in evidence well before the financial crisis in 2008–9 and the leadership at the BoE was in error not to factor them into their interest rate decisions early on. Had this evidence been taken more seriously and had proactive action been taken based upon it, the effects of the world-wide financial crisis on the UK would very probably have been smaller. This episode highlights both the shortcomings in the DSGE paradigm favoured by the BoE and other central banks for their macroeconomic analysis as well as the very considerable difficulties in practice in creating the sort of open and transparent monetary institutions envisaged in the academic literature. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fmg:fmgsps:sp225&r=cdm |
| By: | Daniel McFadden; Carlos Noton; Pau Olivella |
| Abstract: | We study the consequences of imposing a minimum coverage in an insurance market where enrollment is mandatory and agents have private information on their true risk type. If the regulation is not too stringent, the equilibrium is separating in which a single firm monopolizes the high risks while the rest attract the low risks, all at positive profits. Hence individuals, regardless of their type, "subsidize" insurers. If the legislation is sufficiently stringent the equilibrium is pooling, all firms just break even and low risks subsidize high risks. None of these results require resorting to non-Nash equilibrium notions. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:edj:ceauch:301&r=cdm |
| By: | Enrico Moretti; Daniel Wilson |
| Abstract: | We evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three year period. A 10% decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22%. Most of the gains are due to the relocation of star scientist to adopting states, with limited effect on the productivity of incumbent scientists already in the state. The gains are concentrated among private sector inventors. We uncover little effect of subsidies on academic researchers, consistent with the fact that their incentives are unaffected. Our estimates indicate that the effect on overall employment in the biotech sector is of comparable magnitude to that on star scientists. Consistent with a model where workers are fairly mobile across states, we find limited effects on salaries in the industry. We uncover large effects on employment in the non-traded sector due to a sizable multiplier effect, with the largest impact on employment in construction and retail. Finally, we find limited evidence of a displacement effect on states that are geographically close, or states that economically close as measured by migration flows. |
| Keywords: | Public policy ; Biotechnology ; Technological innovations ; Research and development |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:2013-17&r=cdm |
| By: | Caria, Antonia Stefano; Hassen, Ibrahim Worku |
| Abstract: | In this study we focus on exclusion from job contact networks, which constitutes a major disadvantage for labor market participants in settings where referral hiring is common and information about jobs hard to obtain. In a mid-size town in northern Ethiopia, where these mechanisms are at work, we observe that many individuals do not access local job contact networks. Models of strategic network formation and behavioral decision theory suggest that given the right incentives, job contact networks should be more inclusive. On these grounds we hypothesize that workers would link to peripheral peers when this maximizes their chances of referral and when self-regarding concerns are absent due to social preferences. |
| Keywords: | social network, Labor market, field experiment, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1282&r=cdm |
| By: | Ingmar Schumacher (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, IPAG - Business School); Benteng Zou (CREA - Center for Research in Economic Analysis - Université du Luxembourg) |
| Abstract: | In this article we study the implication of thresholds in preferences. To model this we extend the basic model of John and Pecchenino (1994) by allowing the current level of environmental quality to have a discrete impact on how an agent trades off future consumption and environmental quality. In other words, we endogenize the semi-elasticity of utility based on a step function. We motivate the existence of the threshold based on research from political science, from arguments based on regulation and standards, cultural economics as well as ecological economics. Our results are that the location of the threshold determines both the potential steady states as well as the dynamics. For low (high) thresholds, environmental quality converges to a low (high) steady state. For intermediate levels it converges to a stable p-cycle, with environmental quality being asymptotically bounded below and above by the low and high steady state. We discuss implications for intergenerational equity and policy making. As policy implications we study shifts in the threshold. Our results are that, in case it is costless to shift the threshold, it is always worthwhile to do so. If it is costly to change the threshold, then it is worthwhile to change the threshold if the threshold originally was su ciently low. Lump-sum taxes may lead to a development trap and should be avoided if there are uncertainties about the threshold or the eff ectiveness of the policy. |
| Keywords: | Keywords: thresholds, endogenous preferences, environmental quality, policy intervention. |
| Date: | 2013–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00850543&r=cdm |
| By: | Berg, Erland (University of Oxford); Ghatak, Maitreesh (London School of Economics); Manjula, R (ISEC); Rajasekhar, D (ISEC); Roy, Sanchari (University of Warwick) |
| Abstract: | This paper studies the interaction of incentive pay and social distance in the dissemination of information.We analyse theoretically as well as empirically the effect of incentive pay when agents have pro-social objectives,but also preferences over dealing with one social group relative to another. In a randomised field experiment under taken across 151 villages in South India,local agents were hired to spread information about a public health insurance programme.Relative to flat pay,incentive pay improves knowledge transmission to households that are socially distant from the agent,but not to households similar to the agent. |
| Keywords: | public services,information constraints,incentive pay, social proximity,knowledge transmission |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:133&r=cdm |
| By: | Johnson, Michael E.; Birner, Regina |
| Abstract: | This study examines the role of research in agricultural policy making in Malawi at a time when the Africa Union and the New Partnership for Africa’s Development have been seeking to promote greater evidenced-based decision making in agriculture. Drawing on both theory and actual past experiences documented in the literature, results are intended to improve our understanding of the extent to which research has played any role in influencing policy change in Malawi. This is done in the context of the evolution of the country’s fertilizer subsidy policies. |
| Keywords: | Policy process, Agricultural policy, Policy research, fertilizer, fertilizer policy, fertilizer subsidies, fertilizer subsidy, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1266&r=cdm |
| By: | Ivanyna, Maksym; Shah, Anwar |
| Abstract: | This paper is intended to provide an assessment of the impact of the silent revolution (decentralization reforms) of the last three decades on moving governments closer to people to establish fair, accountable, incorruptible and responsive governance. To accomplish this, a unique data set is constructed for 182 countries by compiling data from a wide variety of sources to examine success toward decentralized decision making across the globe. An important feature of this data set is that, for comparative purposes, it measures government decision making at the local level rather than at the sub-national levels used in the existing literature. The data are used to rank countries on political, fiscal and administrative dimensions of decentralization and localization. These sub-indexes are aggregated and adjusted for heterogeneity to develop an overall ranking of countries on the closeness of their government to the people. The resulting index is associated with higher level of human development and lower level of corruption, and thus provides a useful explanation of the Arab Spring and other recent political movements and waves of dissatisfaction with governance around the world. -- |
| Keywords: | localization,decentralization,home rule,fiscal autonomy,political autonomy,administrative autonomy,local governance,government accountability,trust in government,good governance,responsive,accountable and fair governance |
| JEL: | H10 H11 H83 I31 O10 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201338&r=cdm |
| By: | Miller, Marcus (University of Warwick); Thomas, Dania (University of Glasgow) |
| Abstract: | The Eurozone debt crisis has stimulated lively debate on mechanisms for sovereign debt restructuring. The immediate threat of exit and the breakup of the currency union may have abated; but the problem of dealing with significant debt overhang remains. After considering two broad approaches - institutional versus contractual – we look at a hybrid solution that combines the best of both. In addition to debt contracts with Collective Action Clauses, this includes a key amendment to the Treaty establishing the European Stability Mechanism, together with innovative statecontingent contracts and a Special Purpose Vehicle to market them. |
| Keywords: | Eurozone |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:143&r=cdm |