New Economics Papers
on Collective Decision-Making
Issue of 2014‒02‒08
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Pork barrel politics, voter turnout, and inequality: An experimental study By Jens Großer; Thorsten Giertz
  2. The Relationship between Federal Budget Amendments and Local Electoral Power By Firpo, Sergio; Ponczek, Vladimir; Sanfelice, Viviane
  3. Empirical social choice: An introduction By Kurrild-Klitgaard, Peter
  4. Ethnic Heterogeneity, Voting Partecipation and Local Economic Growth. The Case of Belgium By Alessandro Innocenti; Francesca Lorini; Chiara Rapallini
  5. Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners By Powdthavee, Nattavudh; Oswald, Andrew J.
  6. Some Unpleasant Bargaining Arithmetic? By Hülya Eraslan; Antonio Merlo
  7. Lobbying in a multidimensional policy space with salient issues By P. Roberti
  8. Political Firms, Public Procurement, and the Democratization Process By Straub, Stéphane
  9. Lobbying, family concerns and the lack of political support for estate taxation By DE DONDER, Philippe; PESTIEAU, Pierre
  10. Boundedly Rational Opinion Dynamics in Directed Social Networks: Theory and Experimental Evidence By Pietro Battiston; Luca Stanca
  11. Conflict and the Formation of Political Beliefs in Africa By Achyuta Adhvaryu; James Fenske
  12. Ambiguity on Audits and Cooperation in a Public Goods Game By Dai, Zhixin; Hogarth, Robin M.; Villeval, Marie Claire
  13. Political dynasties and poverty: Resolving the “chicken or the egg” question By Mendoza, Ronald; Beja Jr, Edsel; Venida, Victor; Yap II, David
  14. Relative concerns and delays in bargaining with private information By MAULEON, Ana; VANNETELBOSCH, Vincent
  15. Proximity and scientific collaboration: Evidence from the global wine industry By Lorenzo Cassi; Andrea Morrison; Roberta Rabellotti
  16. Organizational Coordination and Costly Communication with Boundedly Rational Agents By Dietrichson, Jens; Jochem, Torsten
  17. From Aliens to Citizens: The Political Incorporation of Immigrants By Bevelander, Pieter; Spång, Mikael
  18. Determinants of local governments’ reelection: New evidence based on a Bayesian approach By Maria Teresa Balaguer-Coll; María Isabel Brun-Martos; Anabel Forte; Emili Tortosa-Ausina

  1. By: Jens Großer; Thorsten Giertz
    Abstract: We experimentally study pork barrel politics in two-candidate majoritarian elections. Candidates form distinct supporter groups by favoring some voters in budget spending at the expense of others. We compare voluntary and compulsory costly voting and find that, on average, the former mode induces more narrowly targeted favors and therefore more inequality among otherwise identical voters. When the same candidates act over many elections, such as with parties, they tend to cultivate policy polarization by frequently favoring their exclusive supporters again and avoiding those of the opponent, and with compulsory voting we find additional frequent policy overlap for a separate subset of voters. Our findings are important for understanding how an inclination towards a sustained "divided society" can arise purely from the political process, absent of any coordination devices such as ideological preferences.
    Keywords: Pork barrel politics, voter turnout, inequality, Colonel Blotto games, laboratory experiments
    Date: 2014–01–31
  2. By: Firpo, Sergio (Sao Paulo School of Economics); Ponczek, Vladimir (Sao Paulo School of Economics); Sanfelice, Viviane (University of Rochester)
    Abstract: The objectives of this paper are twofold. First, we investigate whether politicians use resources from the federal budget as a strategy to maintain and expand their political capital. Second, we examine whether such a strategy is rewarded by voters who elect politicians who assist their municipalities through federal expenditures. The main contribution of this study is its illustration of how the use of fiscal policy affects the local political power of legislators in Brazil. We focus on the geographical distribution of votes received by politicians within their electoral districts instead of only examining the final outcomes of reelection efforts. Our findings indicate that politicians tend to favor municipalities that were important to their elections and that voters support candidates who have brought resources to their localities. However, given that Brazil uses a party-open-list proportional representation system for congressional elections, influencing the behavior of voters through amendments is not sufficient to increase a candidate's chances of winning reelection.
    Keywords: voter's preference, pork barrel, politician's strategies, electoral power
    JEL: H7
    Date: 2014–01
  3. By: Kurrild-Klitgaard, Peter
    Abstract: The year 2012 was the 30th anniversary of William H. Riker’s modern classic Liberalism against populism (1982) and is marked by the present special issue. In this introduction, we seek to identify some core elements and evaluate the current status of the Rikerian research program and its empirical applications. Special attention is given to three phenomena and their possible empirical manifestations: The instability of social choice in the form of (1) the possibility of majority cycles, (2) the non-robustness of social choices given alternative voting methods, and (3) the possibility of various forms of manipulation of the decisions (heresthetics). These topics are then connected to the contributions to the current special issue.
    Keywords: Social choice; Condorcet’s Paradox; voting theory; voting paradoxes; preferences; heresthetics.
    JEL: B2 B3 D6 D69 D71 D72
    Date: 2014–01
  4. By: Alessandro Innocenti; Francesca Lorini; Chiara Rapallini (Dipartimento di Scienza per l'Economia e l'Impresa)
    Abstract: The paper analyzes the case of Belgium to provide insight into the relationships among ethnic heterogeneity, voting participation and local economic growth. We find that heterogeneity, and external and internal mobility reduce immigrants’ voting participation, while we do not find support for the hypothesis that voting participation is related to local economic growth, with the exception of Flanders, which is the most ethnically homogeneous region of Belgium. This finding is interpreted as showing that an increase in ethnic heterogeneity prevails over other factors in determining local economic performance via a decline in social capital.
    Keywords: ethnic heterogeneity, voting, political participation, local economic growth, Tiebout model.
    JEL: D72 H4 H7 N4 R1
    Date: 2014
  5. By: Powdthavee, Nattavudh (London School of Economics); Oswald, Andrew J. (University of Warwick)
    Abstract: The causes of people's political attitudes are largely unknown. We study this issue by exploiting longitudinal data on lottery winners. Comparing people before and after a lottery windfall, we show that winners tend to switch towards support for a right-wing political party and to become less egalitarian. The larger the win, the more people tilt to the right. This relationship is robust to (i) different ways of defining right-wing, (ii) a variety of estimation methods, and (iii) methods that condition on the person previously having voted left. It is strongest for males. Our findings are consistent with the view that voting is driven partly by human self-interest. Money apparently makes people more right-wing.
    Keywords: voting, gender, lottery wins, political preferences, income, attitudes
    JEL: D1 D72 H1 J7
    Date: 2014–01
  6. By: Hülya Eraslan (Department of Economics, John Hopkins University); Antonio Merlo (Department of Economics, University of Pennsylvania)
    Abstract: It is commonly believed that, since unanimity rule safeguards the rights of each individual, it protects minorities from the possibility of expropriation, thus yielding more equitable outcomes than majority rule. We show that this is not necessarily the case in bargaining environments. We study a multilateral bargaining model à la Baron and Ferejohn (1989), where players are heterogeneous with respect to the potential surplus they bring to the bargaining table. We show that unanimity rule may generate equilibrium outcomes that are more unequal (or less equitable) than under majority rule. In fact, as players become perfectly patient, we show that the more inclusive the voting rule, the less equitable the equilibrium allocations.
    Keywords: Multilateral bargaining, voting rules, inequality
    JEL: C78 D70
    Date: 2014–01–03
  7. By: P. Roberti
    Abstract: We present a citizen-candidate model on a multidimensional policy space with lobbying, where citizens regard some issues more salient than others. We find that special interest groups that lobby on less salient topics move the implemented policy closer to their preferred policy, compared to the ones that lobby on more salient issues. When we introduce two types of citizens, who differ with respect to the salience of issues, we find pooling equilibria where voters are not able to offset the effect of lobbying on the implemented policy. This result is in sharp contrast with previous work on unidimensional citizen-candidate models that predict the irrelevance of lobbying on the implemented policy. In an extension of the model we provide citizens with the possibility of giving monetary contributions to lobbies in order to increase their power. With more than one lobby per dimension we have two findings. First, under some conditions only the most extreme lobbies receive contributions. Second, the effectiveness of a lobby is maximized when the salience of an issue is low in the population and high for a small group of citizens.
    JEL: D72 D74 D78
    Date: 2014–01
  8. By: Straub, Stéphane
    Abstract: In 2008, an opposition coalition defeated the Paraguayan Colorado Party, which had been in power for 61 years, including 35 years of the longest dictatorship in South America. Using data of all the public procurement transactions from 2004 through 2011 and the political connections of the 700 largest public providers, this paper documents how the volume of contracts received by connected firms evolved after this landmark political change. It shows that firms connected with the first ring of power were punished and that there were efficiency gains, mostly in the form of institutions shifting to bigger and more competitive contracts, but that these gains were constrained by the scarcity of entrepreneurs able to step in to replace firms connected to the previous regime. This demonstrates that the potential economic benefits of democratization are hampered by the perverse rent-seeking entrepreneurial incentives created by a long-term single-party authoritarian regime.
    Keywords: Procurement, Political Connections, Rent-seeking, Democratization, Authoritarian regimes.
    JEL: D72 H57 O5
    Date: 2014–01–29
  9. By: DE DONDER, Philippe (Toulouse School of Economics, France); PESTIEAU, Pierre (CREPP, Université de Liège & HEC Belgium; Université catholique de Louvain, CORE, Belgium; Toulouse School of Economics, France)
    Abstract: We provide an explanation for why estate taxation is surprisingly little used over the world, given the skewness of the estate distribution. Taxing estates implies meddling with intra-family decisions, which may be frown upon by many. At the same time, the concentration of estates means that a low proportion of the population stands to gain a lot by decreasing estate taxation. We provide an analytical model, together with numerical simulations, where agents bequeathing large estates make monetary contributions that are used to play up the salience of the encroachment aspects of estate taxation on family decisions in order to decrease its political support.
    Keywords: estate taxation, family values, political economy, lobbying, Kantian equilibrium
    JEL: D72 H31
    Date: 2014–01–13
  10. By: Pietro Battiston; Luca Stanca
    Abstract: This paper investigates opinion dynamics and social influence in directed communication networks. We study the properties of a generalized boundedly rational model of opinion formation in which individuals aggregate the information they receive by using weights that are a function of their neighbors' indegree. We then present an experiment designed to test the predictions of the model. We find that both Bayesian updating and boundedly rational updating à la DeMarzo et al. (2003) are rejected by the data. Consistent with our theoretical predictions, the social influence of an agent is positively and significantly affected by the number of individuals she listens to. When forming their opinions, agents do take into account the structure of the communication network, although in a sub-optimal way.
    Keywords: Social Networks, Learning, Social In uence, Bounded Rationality
    JEL: D85 D83 A14 L14 Z13
    Date: 2014–01
  11. By: Achyuta Adhvaryu (University of Michigan Stephen M. Ross School of Business); James Fenske (University of Oxford, Department of Economics)
    Abstract: We test whether living through conflict in childhood changes political beliefs and engagement. We combine data on the location and intensity of conflicts since 1945 with nationally representative data on political attitudes and behaviors from 17 sub-Saharan African countries. Exposure from ages 0 to 14 has a very small standardized impact on later attitudes and behaviors. This finding is robust to migration and holds across a variety of definitions, specifications, and sources of data. Our results suggest that at the population level in Africa, conflict does not alter political beliefs, though the most exposed sub-populations may experience large, lasting effects.
    Keywords: conflict, political beliefs, early childhood, Africa
    JEL: D72 D74 O12 O17
    Date: 2014–01
  12. By: Dai, Zhixin (CNRS, GATE); Hogarth, Robin M. (Universitat Pompeu Fabra); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate the impact of various audit schemes on the future provision of public goods, when contributing less than the average of the group is sanctioned exogenously and the probability of an audit is unknown. We study how individuals update their beliefs about the probability of being audited, both before and after audits are definitely withdrawn. We find that when individuals have initially experienced systematic audits, they decrease both their beliefs and their contributions almost immediately after audits are withdrawn. In contrast, when audits were initially less frequent and more irregular, they maintain high beliefs about the probability of being audited and continue cooperating long after audits have been withdrawn. Inconsistency in experiencing audits across time clearly increases the difficulty of learning the true audit probabilities. Thus, conducting less frequent and irregular audits with higher fines can increase efficiency dramatically.
    Keywords: ambiguity, audits, sanctions, beliefs, cooperation, public goods, experiment
    JEL: C92 H41 D83
    Date: 2014–01
  13. By: Mendoza, Ronald; Beja Jr, Edsel; Venida, Victor; Yap II, David
    Abstract: Political dynasties—members of the same family occupying elected positions sequentially for the same position or simultaneously across different positions—have become a common feature in many developing countries with democratic political systems. In the Philippines, for instance, political dynasties are prevalent in poorer regions, which lead to the following query: does poverty bring about political dynasties, or do political dynasties engender poverty? Using an instrumental variable technique to analyze metrics on political dynasties, we find strong evidence that poverty entrenches political dynasties but weak evidence that political dynasties reduce or exacerbate poverty.
    Keywords: democracy; political dynasty; inclusive growth; political equality; social inequality
    JEL: D70 I39 O53 P16
    Date: 2014–02–01
  14. By: MAULEON, Ana; VANNETELBOSCH, Vincent
  15. By: Lorenzo Cassi; Andrea Morrison; Roberta Rabellotti
    Abstract: International collaboration among researchers is a far from linear and straightforward process. Scientometric studies provide a good way of understanding why and how international research collaboration occurs and what are its costs and benefits. Our study investigates patterns of international scientific collaboration in a specific field: wine related research. We test a gravity model that accounts for geographical, cultural, commercial, technological, structural and institutional differences among a group of Old World (OW) and New World (NW) producers and consumers. Our findings confirm the problems imposed by geographical and technological distance on international research collaboration. Furthermore, they show that similarity in trade patterns has a positive impact on international scientific collaboration. We also find that international research collaboration is more likely among peers, in other words, among wine producing countries that belong to the same group, e.g. OW producers or newcomers to the wine industry.
    Keywords: Proximity, International scientific collaboration, Wine industry, Gravity model, Scientometrics, Emerging countries
    Date: 2014–02
  16. By: Dietrichson, Jens (Department of Economics, Lund University); Jochem, Torsten (Faculty of Economics and Business, University of Amsterdam)
    Abstract: How does costly communication affect organizational coordination? This paper develops a model of costly communication based on the weakest-link game and boundedly rational agents. Solving for the stochastically stable states, we find that communication increases the possibilities for efficient coordination compared to a setting where agents cannot communicate. But as agents face a trade-off between lowering the strategic uncertainty for the group and the costs of communication, the least efficient state is still the unique stochastically stable one for many parameter values. Simulations show that this is not just a long run phenomena, the stochastically stable state is the most frequent outcome also in the short run. Making communication mandatory induces efficient coordination, whereas letting a team leader handle communication increases efficiency when the leader expects others to follow and has enough credibility. The results are broadly consistent with recent experimental evidence of communication in weakest-link games.
    Keywords: Organizational coordination; Commmunication; Stochastic stability; Bounded rationality; Simulation
    JEL: C73 D23 L22 L23
    Date: 2014–02–03
  17. By: Bevelander, Pieter (Malmö University); Spång, Mikael (Malmö University)
    Abstract: This is a draft chapter for the Handbook on Economics of International Migration (Eds. B. R. Chiswick and P. W. Miller) and deals with the political incorporation of immigrants in host societies. Political incorporation is discussed with regard to the regulation of legal status, rights, opportunities, and acquisition of citizenship. We give examples of the legal regulation and policies from several countries in the world, showing thereby the diversity of approaches to political incorporation but also similarities to the regulation of access to residence, rights, and citizenship. We highlight changes in this regard since the Second World War and discuss more recent trends. Moreover, we discuss different factors explaining the variation in incorporation policies. Also, this chapter traces different dimensions of political participation of immigrants, and, finally, we address the expected effects on wider integration of citizenship acquisition.
    Keywords: political participation, minorities, immigration, political incorporation, naturalization, citizenship, non-citizens, rights
    JEL: D72 J15 J61
    Date: 2014–01
  18. By: Maria Teresa Balaguer-Coll (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); María Isabel Brun-Martos (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Anabel Forte (Department of Economics, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE @ Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: This paper analyzes the effect of public spending on the probability of municipal reelection of Spanish local governments during the 2000–2007 period, using Bayesian techniques. The results indicate that, in general, increases in local government spending positively impact on the chances of reelection of local governments. Moreover, the capital expenditure over the whole period affects positively to the reelection probability, although the pre-electoral one is preferred, and the electorate rewards increases in current expenditures only in the period before elections. The use of Bayesian techniques is particularly interesting, since results are not boiled down to a summary effect such as the average; on the contrary, it shows exactly how a given covariate affects the probability of being reelected.
    Keywords: Bayesian, election, local government, opportunistic policies
    JEL: D60 H71 H72 H74 H75
    Date: 2014

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