New Economics Papers
on Collective Decision-Making
Issue of 2013‒12‒06
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. Path-Breakers: How Does Women's Political Participation Respond to Electoral Success? By Bhalotra, Sonia R.; Clots-Figueras, Irma; Iyer, Lakshmi
  2. Coalition Formation in a Legislative Voting Game By Christiansen, N.; Georganas, S.; Kagel, J. H.
  3. Manipulated voters in competitive election campaigns By Kemal K?vanc Akoz; Cemal Eren Arbatli
  4. Judgment aggregation and agenda manipulation By Dietrich, Franz
  5. Election Fraud and Post-Election Conflict: Evidence from the Philippines By Benjamin Crost; Joseph H. Felter; Hani Mansour; Daniel I. Rees
  6. The dynamics of public investment under persistent electoral advantage By Marina Azzimonti
  7. Redistribution and the political support of free entry policy in the Schumpeterian model with heterogenous agents By Dmitry Veselov
  8. Meritocracy, Egalitarianism and the Stability of Majoritarian Organizations By Salvador Barberà; Carmen Beviá; Clara Ponsatí
  9. Adopting new medical technologies in Russian public hospitals: what causes inefficiency? By Liudmila Zasimova; Sergey Shishkin
  10. Institutional interactions and economic growth: The joint effects of property rights, veto players and democratic capital By Justesen, Mogens K.; Kurrild-Klitgaard, Peter
  11. The philosophy of sovereignty, human rights, And democracy in Russia By Mikhail Antonov
  12. Political institutions and income (re-)distribution: Evidence from developed economies By Feld, Lars P.; Schnellenbach, Jan
  13. Characterizing behavioral decisions with choice data By Patricio S. Dalton; Sayantan Ghosal
  14. Revenue autonomy preference in German state parliaments By Heinemann, Friedrich; Janeba, Eckhard; Moessinger, Marc-Daniel; Schröder, Christoph
  15. Electoral rules and public expenditure;composition: Evidence from Italian regions By Raffaella SANTOLINI
  16. Decentralization, Vertical Fiscal Imbalance, and Political Selection By Massimo Bordignon; Matteo Gamalerio; Gilberto Turati
  17. Information and Two-Sided Platform Profits By Andrei Hagiu; Hanna Halaburda

  1. By: Bhalotra, Sonia R. (University of Essex); Clots-Figueras, Irma (Universidad Carlos III de Madrid); Iyer, Lakshmi (Harvard Business School)
    Abstract: This paper analyzes the effect of a woman's electoral victory on women's subsequent political participation. Using the regression discontinuity afforded by close elections between women and men in India's state elections, we find that a woman winning office leads to a large and significant increase in the share of female candidates from major political parties in the subsequent election. This stems mainly from an increased probability that previous women candidates contest again, an important margin in India where a substantial number of incumbents do not contest re-election. There is no significant entry of new female candidates, no change in female or male voter turnout and no spillover effects to neighboring areas. Further analysis points to a reduction in party bias against women candidates as the main mechanism driving the observed increase in women's candidacy.
    Keywords: candidacy, gender, politics, India
    JEL: J16 J71 P16
    Date: 2013–11
  2. By: Christiansen, N.; Georganas, S.; Kagel, J. H.
    Abstract: We experimentally investigate the Jackson-Moselle (2002) model where legislators bargain over policy proposals and the allocation of private goods. Key comparative static predictions of the model hold as policy proposals shift in the predicted direction with private goods, with the variance in policy outcomes increasing as well. Private goods increase total welfare even after accounting for their cost and help secure legislative compromise. Coalition formations are better characterized by an efficient equal split between coalition partners than the stationary subgame perfect equilibrium prediction.
    Keywords: legislative bargaining; policy decisions; private goods; experiment
    Date: 2013
  3. By: Kemal K?vanc Akoz (Department of Economics, New York University, 19 W. 4th Street, 6FL, New York, NY 10012); Cemal Eren Arbatli (Department of Economics, National Research University-Higher School of Economics, 26 Shabolovka Street, Building 3, 3116A, Moscow, Russia)
    Abstract: We provide a game-theoretical model of manipulative election campaigns with two political candidates and a continuum of Bayesian voters. Voters are uncertain about candidate positions, which are exogenously given and lie on a unidimensional policy space. Candidates take unobservable, costly actions to manipulate a campaign signal that would otherwise be fully informative about a candidate’s distance from voters relative to the other candidate. We show that if the candidates differ in campaigning efficiency, and voters receive the manipulated signal with an individual, random noise, then the cost-efficient candidate wins the election even if she is more distant from the electorate than her opponent is. In contrast to the existing election campaign models that do not support information manipulation in equilibrium, our paper rationalizes misleading political advertising and suggests that limits on campaign spending may potentially improve the quality of information available to the electorate
    Keywords: Hidden actions, election campaigns, manipulation, propaganda, bias.
    JEL: C72 D72 D82 D84
    Date: 2013
  4. By: Dietrich, Franz
    Abstract: When individual judgments ('yes' or 'no') on some propositions are aggregated into collective judgments, the agenda setter can sometimes reverse a collective judgment by changing the set of propositions under consideration (the agenda). I define different kinds of agenda manipulation, and axiomatically characterize the aggregation rules immune to each kind. Two axioms emerge as central for preventing agenda manipulation: the familiar independence axiom, requiring propositionwise aggregation, and the axiom of implicit consensus preservation, requiring the respect of any (possibly implicit) consensus. I prove that these axioms can almost never be satisfied together by a (non-degenerate) aggregation rule.
    Keywords: judgment aggregation, agenda manipulation, impossibility theorems
    JEL: D70 D71 D72
    Date: 2013–09
  5. By: Benjamin Crost (University of Colorado Denver); Joseph H. Felter (Center for International Security and Cooperation, Stanford University); Hani Mansour (University of Colorado Denver); Daniel I. Rees (University of Colorado Denver)
    Abstract: Previous studies have documented a positive association between election fraud and the intensity of civil conflict. It is not clear, however, whether this association is causal or due to unobserved institutional and cultural factors. This paper examines the relationship between election fraud and post-election violence in the 2007 Philippine mayoral elections. Using the density test developed by McCrary (2008), we find evidence that incumbents were able to win tightly contested elections through fraud. In addition, we show that narrow incumbent victories were associated with an increase in post-election casualties, which is consistent with the hypothesis that election fraud causes conflict. We conduct several robustness tests and find no evidence that incumbent victories increased violence for reasons unrelated to fraud.
    Date: 2013–11
  6. By: Marina Azzimonti
    Abstract: This paper studies the effects of asymmetries in re-election probabilities across parties on public policy and their subsequent propagation to the economy. The struggle between groups that disagree on targeted public spending (e.g., pork) results in governments being endogenously short-sighted: Systematic underinvestment in infrastructure and overspending on targeted goods arise, above and beyond what is observed in symmetric environments. Because the party enjoying an electoral advantage is less short-sighted, it devotes a larger proportion of revenues to productive investment. Hence, political turnover induces economic fluctuations in an otherwise deterministic environment. I characterize analytically the longrun distribution of allocations and show that output increases with electoral advantage, despite the fact that governments expand. Volatility is non-monotonic in electoral advantage and is an additional source of inefficiency. Using panel data from US states I confirm these findings.
    Keywords: Public investments
    Date: 2013
  7. By: Dmitry Veselov (National Research University Higher School of Economics, Laboratory of Macroeconomic Analysis)
    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, low redistribution and low barriers for entry (“liberal” order), high redistribution and high barriers for 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: economic systems, political barriers for growth, majority voting, quality-ladders model, wealth inequality, talent inequality, economic growth
    JEL: O33 P16 P48
    Date: 2013
  8. By: Salvador Barberà; Carmen Beviá; Clara Ponsatí
    Abstract: Egalitarianism and meritocracy are competing principles to distribute the joint benefits of cooperation. We examine the consequences of letting members of society vote between those two principles, in a context where groups of a certain size must be formed in order for individuals to become productive. Our setup induces a hedonic game of coalition formation. We study the existence of core stable partitions (organizational structures) of this game. We show that the inability of voters to commit to one distributional rule or another is a potential source of instability. But we also prove that, when stable organizational structures exist, they may be rich in form, and different than those predicted by alternative models of group formation. Non- segregated groups may arise within core stable structures. Stability is also compatible with the coexistence of meritocratic and egalitarian groups. These phenomena are robust, and persist under alternative variants of our initial model.
    Keywords: egalitarianism, meritocracy, coalition formation, hedonic games, core stability, assortative mating
    JEL: C62 C71 D02 D71
    Date: 2013–11
  9. By: Liudmila Zasimova (National Research University Higher School of Economics, Laboratory for Economic Research in Public Sector, deputy head); Sergey Shishkin (National Research University Higher School of Economics, Institute of Health Economics, research supervisor)
    Abstract: The adoption of new medical technologies in Russian public hospitals is an important part of healthcare modernization and thus is a subject for public finance and regulation. Here we examine the decision-making process on adoption of new technologies in Russian hospitals, and the institutional environment in which they are made. We find that public hospitals operate within a strategic-institutional model of decision making and tend to adopt technologies that bring indirect benefits to their heads/physicians. Unlike Western clinics, the interests of Russian hospital heads and physicians are driven by the possibilities to obtain income from a part of hospital activities: the provision of chargeable medical services to the population, as well as receiving informal payments from patients. The specifically Russian feature of the decision-making process is that hospitals are strongly dependent on health authorities’ decisions about new equipment acquisition. The inefficiency problems arise from the contradiction between hospitals’ and authorities’ financial motivation for acquiring new technologies: hospitals tend to adopt technologies that bring benefits to their heads/physicians and minimize maintenance and servicing costs, while authorities’ main concern is initial cost of technology. The main reason for inefficiency of medical technology adoption arises from centralization of procurement of medical equipment for hospitals that creates the preconditions for rent-seeking behaviour of persons making such decisions
    Keywords: medical technology, adoption, public hospital, Russia, causes of inefficiency
    JEL: I10
    Date: 2013
  10. By: Justesen, Mogens K.; Kurrild-Klitgaard, Peter
    Abstract: We investigate the possible interaction effects that the extent of property rights protection and separation of powers in a political system have on economic growth. Using analysis of panel data from more than countries over the period 1970-2010 we find that the growth effects of property rights increase when political power is divided among more veto players. When distinguishing between institutional veto players (political institutions) and partisan veto players (fractionalization among political parties), we further find that the growth effects of property rights are driven mainly by checks on the chief executive (in bicameral systems) and primarily found in countries with large stocks of democratic capital.
    Keywords: Economic growth; institutions; property rights; veto players; democracy.
    JEL: D72 E02 O17 O43 P14 P16 P17 P48
    Date: 2013–11
  11. By: Mikhail Antonov (National Research University Higher School of Economics (St. Petersburg). Associate Professor of Law)
    Abstract: This paper examines the correlation between the concepts of sovereignty, human rights, and democracy in Russian legal and political debate, analyzing this correlation in the context of Russian philosophical discourse. It argues that sovereignty is often used as a powerful argument which allows the overruling of international humanitarian standards and the formal constitutional guarantees of human rights. This conflict between sovereignty and human rights also recurs in other countries, and many legal scholars demand the revision or even abandonment of the concept of sovereignty. In Russia this conflict is aggravated by some characteristic features of the traditional mentality which frequently favors statism and collective interests over individual ones, and by the state building a “power vertical” subordinating regional and other particularistic interests to the central power. These features and policies are studied in the context of the Slavophile-Westernizer philosophical divide. This divide reveals the pros and contras put forward by the Russian supporters of the isolationist (conservative) policy throughout contemporary history, and especially in the sovereignty debates in recent years. The Russian Constitution contains many declaratory statements about human rights and democracy, but their formulations are vague and have little concrete effect in court battles where the application of international humanitarian law is counterbalanced by the concerns of the protection of sovereignty. These concerns coincide with isolationist and authoritarian policies, which led in 2006 to their amalgamation into the concept of “sovereign democracy.” This concept is considered in this paper to be a recurrence of the Russian conservative tradition. Even though the concept in its literal meaning has been abandoned by its author and supporters, most of its ideas are still on the cusp of the official political discourse which reproduces the pivotal axes of the Russian political philosophy of the 19th century
    Keywords: sovereignty, human rights, legal mentality, democracy, sovereign democracy, Constitution, international law, Constitutional Court, Slavophiles, Westernizers, conservatism, individual liberties
    JEL: K1
    Date: 2013
  12. By: Feld, Lars P.; Schnellenbach, Jan
    Abstract: We discuss the effect of formal political institutions (electoral systems, fiscal decentralization, presidential and parliamentary regimes) on the extent and direction of income (re-) distribution. Empirical evidence is presented for a large sample of 70 economies and a panel of 13 OECD countries between 1981 and 1998. The evidence indicates that presidential regimes are associated with a less equal distribution of disposable incomes, while electoral systems have no significant effects. Fiscal competition is associated with less income redistribution and a less equal distribution of disposable incomes, but also with a more equal primary income distribution. Our evidence also is in line with earlier empirical contributions that find a positive relationship between trade openness and equality in primary and disposable incomes, as well as the overall redistributive effort. --
    Keywords: Redistribution,Formal Institutions,Fiscal Decentralization,Presidential and Parliamentary Regimes,Electoral Systems
    JEL: D31 H22 H11 H50 I38 P50
    Date: 2013
  13. By: Patricio S. Dalton; Sayantan Ghosal
    Abstract: A number of different models with behavioral economics have a reduced form rep- resentation where potentially boundedly rational decision-makers do not necessarily in- ternalize all the consequences of their actions on payo¤ relevant features (which we label as psychological states) of the choice environment. This paper studies the restrictions that such behavioral models impose on choice data and the implications they have for welfare analysis. First, we propose a welfare benchmark that is justi…ed using standard axioms of rational choice and can be applied to a number of existing seminal behavioral economics models. Second, we show that Sens axioms and fully characterize choice data consistent with behavioral decision-makers. Third, we show how choice data to infer information about the normative signi…cance of psychological states and establish the possibility of identifying welfare dominated choices.
    Keywords: Behavioral Choices, Revealed and Normative Preferences, Individual Welfare, Axiomatic Characterization.
    JEL: D03 D60 I30
    Date: 2013–11
  14. By: Heinemann, Friedrich; Janeba, Eckhard; Moessinger, Marc-Daniel; Schröder, Christoph
    Abstract: Fiscal federalism in Germany is characterized by lacking sub-national tax autonomy and intensive fiscal equalization. Due to a sunset clause, the current equalization system has to be renegotiated by the year 2019. Against this backdrop, this contribution studies the reform preferences of members of state parliaments. The study makes use of a self-conducted survey among the members of all 16 German state parliaments. It tests to which extent the preferences of these veto players for tax autonomy and fiscal equalization are driven by states' self-interest, party ideology and individual characteristics. The results are helpful to understand the political-economic constraints of federal reforms. They indicate that besides the individual ideological position higher state wealth and lower debt levels are linked to larger reform support. Therefore, a promising new reform would have to address budgetary legacies like high pre-existing debt. --
    Keywords: fiscal equalization,tax competition,fiscal federalism
    JEL: H63 H74 H77
    Date: 2013
  15. By: Raffaella SANTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: The paper investigates the effects produced by the electoral system on expenditure composition by exploring the case of Italian regions over the period 1986-2009. Empirical analysis shows that the regional current expenditure transfers distributed to families and firms significantly decrease when the regional electoral system moves from being proportional to mixed. Particularly striking is the reduction in pre-electoral years under the regional mixed-regime. Although not robust across different empirical specifications, an increase in the regional expenditure on local public goods is found when the regional electoral system becomes mixed.
    Keywords: local institutional design, panel data analysis, public expenditure composition, regional government
    JEL: D72 H30 H72
    Date: 2013–11
  16. By: Massimo Bordignon (Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Matteo Gamalerio (University of Warwick); Gilberto Turati (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche, Università di Torino)
    Abstract: In a career-concern model of politics with endogenous candidacy and different types of politicians, following a decentralization reform, politicians with different skills are elected in municipalities characterized by different levels of autonomous resources. As an effect, consumer welfare increases only, or mainly, in richer municipalities. We test these predictions by exploiting the differentiated reduction in Vertical Fiscal Imbalance in Italian municipalities, due to the strong difference in the tax base, following the decentralization reforms of the '90s. Results strongly support our predictions and are robust to several alternative stories.
    Keywords: decentralization, vertical fiscal imbalance, quality of politicians
    JEL: D72 D78
    Date: 2013–11
  17. By: Andrei Hagiu (Harvard Business School, Strategy Unit); Hanna Halaburda (Bank of Canada)
    Abstract: We study the effect of different levels of information on two-sided platform profits?under monopoly and competition. One side (developers) is always informed about all prices and therefore forms responsive expectations. In contrast, we allow the other side (users) to be uninformed about prices charged to developers and to hold passive expectations. We show that platforms with more market power (monopoly) prefer facing more informed users. In contrast, platforms with less market power (i.e., facing more intense competition) have the opposite preference: they derive higher profits when users are less informed. The main reason is that price information leads user expectations to be more responsive and therefore amplifies the effect of price reductions. Platforms with more market power benefit because this leads to demand increases, which they are able to capture fully. Competing platforms are affected negatively because more information intensifies price competition.
    Keywords: two-sided platforms, information, responsive expectations, passive expectations, wary expectations
    Date: 2013–11

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