New Economics Papers
on Collective Decision-Making
Issue of 2014‒01‒17
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. Deliberation, leadership and information aggregation By Javier Rivas; Carmelo Rodríguez-Álvarez
  2. Margin of victory vs. opportunity-cost of time as voting motivators in the Biobio Region By Acuña, Andrés
  3. Referenda outcomes and the influence of polls: a social network feedback process By Ariel Guerreiro; Joao Amaro de Matos
  4. Voter suffrage and the political budget cycle: evidence from the London Metropolitan Boroughs 1902-1937 By Toke Aidt; Graham Mooney
  5. 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
  6. Towards autonomous decision-making: A probabilistic model for learning multi-user preferences By Peters, M.; Ketter, W.
  7. Leadership and conditional cooperation in public good games: What difference does the game make? By Edward J Cartwright; Denise Lovett
  8. When best-replies are not in equilibrium: understanding cooperative behaviour By Irenaeus Wolff
  9. The promise of transformation through participation: an analysis of Communal Councils in Caracas, Venezuela By Triviño Salazar, J.C.
  10. Leadership and International Climate Cooperation By Gregor Schwerhoff
  11. Measuring Agents' Reaction to Private and Public Information in Games with Strategic Complementarities By Camille Cornand; Frank Heinemann
  12. Migrant Networks and the Spread of Misinformation By Benjamin Elsner; Gaia Narciso; Jacco J. J. � Thijssen
  13. The Political Influence of Peer Groups: Experimental Evidence from the Classroom By Camila Campos; Sean Hargreaves Heap; Fernanda L L de Leon
  14. Obstacles to International Policy Coordination, and How to Overcome Them By Jonathan David Ostry; Atish R. Ghosh
  15. To Ban or Not to Ban: Foreign Lobbying and Cross National Externalities By Toke Aidt; Uk Hwang
  16. Competition and Cooperation in Network Games By Konovalov, Alexander
  17. A Politico-Economic Model of Public Expenditure and Income Taxation By Joan Esteban; Laura Mayoral

  1. By: Javier Rivas (Department of Economics, University of Bath); Carmelo Rodríguez-Álvarez (Departamento de Fundamentos del Análisis Económico II (Economía Cuantitativa) (Department of Foundations of Economic Analysis II (Quantitative Economics)), Facultad de Ciencias Económicas y Empresariales (Faculty of Economics and Business), Universidad Complutense de Madrid (Complutense University of Madrid))
    Abstract: We analyse committees of voters who take a decision between two options as a two- stage process. In a discussion stage, voters share non-verifiable information about a private signal concerning what is the best option. In a voting stage, votes are cast and one of the options is implemented. We introduce the possibility of leadership whereby a certain voter, the leader, is more influential than the rest at the discussion stage even though she is not better informed. We study information transmission and characterize the effects of the leader on the deliberation process. We find, amongst others, that both the quality of the decision taken by the committee and how truthful voters are at the discussion stage depends non-monotonically on how influential the leader is. In particular, although a leader whose influence is weak does not disrupt the decision process of the committee in any way, a very influential leader is less disruptive than a moderately influential leader.
    Keywords: Committees, Information Aggregation, Leadership, Voting
    JEL: D71 D72 D82
    Date: 2013–11–19
  2. By: Acuña, Andrés
    Abstract: The apathy for electoral and political participation in Latin America shows an increasing trend that deserves the scholar community's attention. In this sense, this paper models the voter registration decision in a mandatory voting system that includes the margin of victory as a potential motivator of voter enrollment. The empirical test is focused on the Biobio region, Chile, during the period 2003-2011. The results indicate that voter enrollment is negatively influenced by the margin of victory only if the model is separately regressed for presidential and mayoral elections. Marginal effects from W2LT regressions are lower in mayoral than in presidential elections, which indicates that the electorate participates depending on what is the political office in question. The citizen participation and racial effects are larger for men than women, which could reorient the design of public policy aimed to encourage the civic involvement of male indigenous population. Finally, the discrepancy between the W2LT results from two distant periods suggests a structural change in the Biobio's electorate during the last decade.
    Keywords: electoral participation; margin of victory; random effects Tobit model; voting behavior; Latin America; Chile
    JEL: C24 D72 O10
    Date: 2014–01
  3. By: Ariel Guerreiro; Joao Amaro de Matos
    Abstract: This paper proposes a model to explain the differences between outcomes of referenda and the voting trends suggested by polls. Two main effects are at stake. First, the evolution of the voters' attitudes is conditional on the public information made available to them. Second, the predisposition toward abstention among individuals within each voting group may be different. Our model describes how these two aspects of decision making may interact, showing how publicly available information may amplify the distinct tendency toward abstention between both groups and thus affect the outcome of the referendum. JEL codes:
    Date: 2013
  4. By: Toke Aidt; Graham Mooney
    Abstract: We study the opportunistic political budget cycle in the London Metropolitan Boroughs between 1902 and 1937 under two different suffrage regimes: taxpayer suffrage (1902-1914) and universal suffrage (1921-1937). We argue and find supporting evidence that the political budget cycle operates differently under the two types of suffrage. Taxpayer suffrage, where the right to vote and the obligation to pay local taxes are linked, encourages demands for retrenchment and the political budget cycle manifests itself in election year tax cuts and savings on administration costs. Universal suffrage, where all adult residents can vote irrespective of their taxpayer status, creates demands for productive public services and the political budget cycle manifests itself in election year hikes in capital spending and a reduction in current spending.
    Keywords: Local public finance, voting franchise, suffrage, opportunistic political budget cycles, London
    JEL: D7 H1 H7
    Date: 2014–08–01
  5. 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.
    Keywords: labour markets, partisanship, party competition
    JEL: J48 P16
    Date: 2013–07
  6. By: Peters, M.; Ketter, W.
    Abstract: Information systems have revolutionized the provisioning of decision-relevant information, and decision support tools have improved human decisions in many domains. Autonomous decision- making, on the other hand, remains hampered by systems’ inability to faithfully capture human preferences. We present a computational preference model that learns unobtrusively from lim- ited data by pooling observations across like-minded users. Our model quantifies the certainty of its own predictions as input to autonomous decision-making tasks, and it infers probabilistic segments based on user choices in the process. We evaluate our model on real-world preference data collected on a commercial crowdsourcing platform, and we find that it outperforms both individual and population-level estimates in terms of predictive accuracy and the informative- ness of its certainty estimates. Our work takes an important step toward systems that act autonomously on their users’ behalf.
    Keywords: assistive technologies, autonomous decision-making, multi-task learning, preferences, software agents
    JEL: C63 L15 O32
    Date: 2013–05–22
  7. By: Edward J Cartwright; Denise Lovett
    Abstract: We investigate experimentally whether the extent of conditional cooperation in public good games depends on the marginal return to the public good and type of game. The marginal return is varied from 0.2 to 0.4 to 0.8. The 'standard' game, in which three players contribute before a follower, is compared with a leader-follower game, in which one player leads and three follow. We find no strong evidence that the marginal return or type of game makes a difference to the extent of conditional cooperation. We also find no evidence that the type of game makes a difference to unconditional contributions. The level of marginal return does, however, have a strong effect on unconditional contributions. Our results highlight the critical role that can be played by leaders in a public good game.
    Keywords: Public good; conditional cooperation; reciprocity; leadership
    JEL: C72 H41
    Date: 2013–12
  8. By: Irenaeus Wolff
    Abstract: To understand cooperative behaviour in social-dilemma experiments, we need to understand the game participants play not only in monetary but in preference terms. Does a Nash-prediction based on participants' actual preferences describe their behaviour in a public-good experiment well? And if not, where does the observed behaviour diverge from the prediction? This study provides an environment which allows to answer these questions: when making their contribution decision, participants are informed about their co-playersÕ priorly-elicited conditional contribution preferences. This induces common knowledge of preferences and thereby leads to direct experimental control over the game participants play. Results show that most people play best-responses to their beliefs. At the same time, beliefs in a third of the cases do not correspond to an equilibrium prediction that is based on the elicited conditional-cooperation preferences. Moreover, more often than not, beliefs are empirically inaccurate. This holds true even in a treatment that gives participants the option to look up the set of equilibria of their game.
    Keywords: Public good, social dilemma, Nash-equilibrium, rational beliefs, conditional cooperation, social preferences.
    Date: 2013
  9. By: Triviño Salazar, J.C.
    Abstract: Communal Councils (CCs) in Venezuela are deemed as part of a greater project of social transformation under a radical approach to participatory democracy. The Hugo Chavez’s administration endorsed the creation of thousands of allegedly self-governing CCs in every neighbourhood of every city or town in the country. The initial goal was to address people’s most urgent needs while including them in the decision-making process in their communities. The passing of President Chavez, a charismatic leader who was the driving force behind Chavismo and the Bolivarian Revolution, represents a challenge to the participatory process where CCs have been framed. Within this overall context, a radical approach to participation should lay the foundations of a State-led process of social transformation of the left. Based on this, the objectives of this paper are: on the one hand, to propose a set of indicators to study spaces of participation at the community level framed in a State-led process of social transformation; on the other, to show the viability of these indicators in the analysis of Communal Councils in the context of the Bolivarian Revolution in Venezuela. These indicators refer to the recognition of ‘the other’; autonomy from state institutions; mobilization of the community; and design and internal dynamics. In order to advance these objectives, this paper explores how participation in the CCs has been operationalized under the Bolivarian Revolution. Therefore, this research has empirically implemented the proposed indicators in six CCs of Caracas through semi-structure interviews with community leaders. The results suggest that the type of participation offered is one strongly conditioned by an ideological system which promises transformation but impedes this transformation in practice. I have called this situation a ‘conditioned participation’.
    Keywords: Bolivarian Revolution, Communal Councils, community, participatory democracy, radical democracy, spaces of participation
    Date: 2013–04–24
  10. By: Gregor Schwerhoff (Potsdam Institute for Climate Impact Research, Germany)
    Abstract: Which kind of reaction can a nation or group of nations expect when leading by example in climate policy? This literature survey describes possible positive reaction mechanisms from different fields of economics, some of which have scarcely been linked to climate economics previously. One effect may be behavioral, a reaction motivated by fairness, reciprocity or norms. Second, other nations may interpret the leader's action as a signal on his preference or the value of the objective and adjust their own policy based on the new information. Third, the leader may provide a service to other nations, which decreases their costs and risks. The followers could benefit by learning successful policies, adopting technologies and obtaining information on the cost of environmental policy. In addition to these economic mechanisms, a leading group of nations might initiate a political process of successive enlargements.
    Keywords: Climate Change, Leadership, Public Good Provision
    JEL: H41 O33 Q54
    Date: 2013–11
  11. By: Camille Cornand (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon); Frank Heinemann (Fachgebiet Makroökonomik - Technische Universität Berlin)
    Abstract: In games with strategic complementarities, public information about the state of the world has a larger impact on equilibrium actions than private information of the same precision, because public signals are more informative about the likely behavior of others. We present an experiment in which agents' optimal actions are a weighted average of the fundamental state and their expectations of other agents' actions. We measure the responses to public and private signals. We find that, on average, subjects put a larger weight on the public signal. In line with theoretical predictions, as the relative weight of the coordination component in a player's utility increases, players put more weight on the public signal when making their choices. However, the weight is smaller than in equilibrium, which indicates that subjects underestimate the information contained in public signals about other players' beliefs.
    Keywords: coordination games; strategic uncertainty; private information; public information
    Date: 2014–01–07
  12. By: Benjamin Elsner (Institute for the Study of Labor (IZA)); Gaia Narciso (Trinity College Dublin); Jacco J. J. � Thijssen (University of York)
    Abstract: Diaspora networks provide information to future migrants and influence both their decision to migrate and their success in the host country. While the existing literature explains the effect of networks on migration decisions through the size of the migrant community, we show that the quality of the network is an equally important determinant. We argue that networks that are more integrated in the society of the host country can give more accurate information about job prospects to future migrants. In a decision model with imperfect signalling we show that migrants with access to a better network are more likely to make the right decision - they migrate only if they gain - and they migrate earlier. We test these predictions empirically using data on recent Mexican migrants to the US, and exploit the geographic diffusion of Mexicans since the 1980s as well as the settlement of immigrants that came during the Bracero program in the 1950s to instrument for the quality of networks. The results provide strong evidence that connections to a better-integrated network lead to better outcomes after migration. Yet we find no evidence that the quality of the network affects the timing of migration.
    JEL: F22 J15 J61
    Date: 2014–01
  13. By: Camila Campos (Insper); Sean Hargreaves Heap (King's College London); Fernanda L L de Leon (University of East Anglia)
    Abstract: People who belong to the same group often behave alike. Is this because people with similar preferences naturally associate with each other or because group dynamics cause individual preferences and/or the information that they have to converge? This is the question that we address with a natural experiment. We focus on the possible influence of peers on two types of individual political behaviour: political identification on a left-right spectrum and political engagement. We find no evidence that peer political identification affects individual identification. But we do find that peer engagement affects individual engagement, individual political knowledge and political identification among those who are initially least engaged. We argue this (and other evidence) is most likely to arise from peer effects on the information that individuals have and not their preferences.
    Date: 2013–12
  14. By: Jonathan David Ostry; Atish R. Ghosh
    Abstract: In bilateral and multilateral surveillance, countries are often urged to consider alternative policies that would result in superior outcomes for the country itself and, perhaps serendipitously, for the world economy. While it is possible that policy makers in the country do not fully recognize the benefits of proposed alternative policies, it is also possible that the existing policies are the best that they can deliver, given their various constraints, including political. In order for the policy makers to be able and willing to implement the better policies some quid pro quo may be required—such as a favorable policy adjustment in the recipients of the spillovers; identifying such mutually beneficial trades is the essence of international policy coordination. We see four general guideposts in terms of the search for globally desirable solutions. First, all parties need to identify the nature of spillovers from their policies and be open to making adjustments to enhance net positive spillovers in exchange for commensurate benefits from others; but second, with countries transparent about the spillovers as they see them, an honest broker is likely to be needed to scrutinize the different positions, given the inherent biases at the country level. Third, given the need for policy agendas to be multilaterally consistent, special scrutiny is needed when policies exacerbate global imbalances and currency misalignments; and fourth, by the same token, special scrutiny is also needed when one country’s policies has a perceptible adverse impact on financial-stability risks elsewhere.
    Keywords: Economic policy;International cooperation;Welfare;
    Date: 2013–12–12
  15. By: Toke Aidt; Uk Hwang
    Abstract: This paper studies the costs and benefits of foreign lobbying. We show how and when foreign lobbying can help internalize cross national externalities. We argue that this is an often overlooked benefit of foreign lobbying. We also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country. A key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not. We illustrate the logic with examples from trade policy and environmental regulation.
    JEL: D62 D72
    Date: 2014–08–01
  16. By: Konovalov, Alexander (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We consider games where agents are embedded in a network of bilateral relationships and have multivariate strategy sets. Some components of their strategies correspond to individual activities, while the other strategic components are related to joint activities and interaction with the partners. We introduce several new equilibrium concepts that account for the possibility that players act competitively in individual components of their strategy but cooperate on the components corresponding to joint activity or collaboration. We apply these concepts to the R&D collaboration networks model where firms engage in bilateral joint projects with other firms. The analysis shows that investments are highest under bilateral cooperation and lowest under full cooperation because the spillovers associated to bilateral collaboration are bound to the partnership. This leads to welfare being maximized under bilateral collaboration when there are a few firms in the market and under non-cooperation in markets with many firms; full cooperation is never social welfare maximizing. Investigating the issue of endogenous network formation, we find that bilateral cooperation increases (lowers) the profits of more (less) connected firms. However, this does not always lead to a denser stable network of R&D collaboration under bilateral cooperation.
    Keywords: network games; bilateral cooperation; hybrid equilibrium; R&D collaboration networks
    JEL: L13 L14 L22 O31 O32
    Date: 2014–01
  17. By: Joan Esteban; Laura Mayoral
    Abstract: We model the political process as consisting of voting on the issue considered salient, public expenditure, with a subsequent consensus over size of government and income taxation. We prove that for each majoritarian choice there is a unique consensus policy on progressivity and government size. We empirically validate the implication that the sign of the relationship between inequality and progressivity chosen by the median voter is conditional on the degree of substitutability between government and market supplied goods. We also obtain that this substitutability has a negative impact on the negative marginal effect of inequality on the size of government.
    Keywords: government policy, income taxation, public expenditure
    JEL: H23 H50 O50
    Date: 2013–11

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