New Economics Papers
on Collective Decision-Making
Issue of 2014‒02‒21
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. On the Challenge to Competitive Authoritarianism and Political Patronage in Malaysia By Johansson, Anders C.
  2. Political Selection in China: the Complementary Roles of Connections and Performance By Jia, Ruixue; Kudamatsu, Masayuki; Seim, David
  3. Biased Perceptions of Income Inequality and Redistribution By Engelhardt, Carina; Wagener, Andreas
  4. Deep Pockets, Extreme Preferences: Explaining Persistent Differences in Electoral Contributions Across Industries By Thomas Bassetti; Filippo Pavesi
  5. Consistent collective decisions under majorities based on differences By Mostapha Diss; Patrizia Pérez-Asurmendi
  6. Leadership and incentives. By Cappelen, Alexander W.; Reme, Bjørn-Atle; Sørensen, Erik Ø.; Tungodden, Bertil
  7. Imitation and Efficient Contagion By Tristan Boyer; Nicolas Jonard
  8. Emergence and Persistence of Extreme Political Systems By Buchheim, Lukas; Ulbricht, Robert
  9. The Formation and Long-run Stability of Cooperative Groups in a Social Dilemma Situation By Maruta, Toshimasa; Okada, Akira
  10. Independent organizations in author-itarian regimes: Contradiction in terms or an effective instrument of developmental states By Ahrens, Joachim; Stark, Manuela
  11. The Relation between Information and Heterogeneous Ability in Joint Projects - An experimental Analysis - By Gerlinde Fellner; Yoshio Iida; Sabine Kröger; Erika Seki
  12. Two Additional Remarks on Conformism By Schlicht, Ekkehart
  13. Linear Transforms, Values and Least Square Approximation for Cooperation Systems. By Ulrich Faigle; Michel Grabisch
  14. Expectation Formation and Social Influence. By Andreas Karpf
  15. Innovation decision of Tunisian service firms: an empirical analysis By Hanen SDIRI; Mohamed AYADI
  16. How Industry Inventors Collaborate with Academic Researchers: The choice between shared and unilateral governance forms. By Bodas Freitas , Isabel Maria; Geuna, Aldo; Lawson, Cornelia; Rossi, Federica

  1. By: Johansson, Anders C. (Stockholm China Economic Research Institute)
    Abstract: In March 2008, Malaysia’s political landscape was shaken by election results showing that the Barisan Nasional had won less than two thirds of the parliamentary seats and lost five states to the opposition. A two-thirds supermajority had been seen as a sacred threshold for the coalition to ensure its continued legitimacy. We conjecture that the 2008 election represented a challenge to the competitive authoritarian regime and that this had direct effects on firms with ties to the ruling coalition. Our empirical results show that firms with political patronage were adversely affected by the electoral outcome. More specifically, firms with close ties to the Barisan Nasional experienced a significant negative value effect. Firms characterized by political patronage also decreased their leverage levels significantly more than other firms after the 2008 election, suggesting that their access to debt capital had become more restricted. Moreover, this effect was mainly driven by changes in long-term debt. These results suggest a significant negative effect on connected firms as the political status quo was challenged in Malaysia.
    Keywords: Competitive authoritarianism; Political patronage; Political connections; Firm performance; Capital structure; Debt maturity; Malaysia
    JEL: D72 G14 G30 G32 G38
    Date: 2014–02–04
  2. By: Jia, Ruixue (University of California San Diego); Kudamatsu, Masayuki (Institute for International Economic Studies); Seim, David (Department of Economics, University of Toronto)
    Abstract: Who becomes a top politician in China? We focus on provincial leaders a pool of candidates for top political office and examine how their chances of promotion depend on their performance in office and connections with top politicians. Our empirical analysis, based on the curriculum vitae of Chinese politicians, shows that connections and performance are complements in the Chinese political selection process. This complementarity is stronger the younger provincial leaders are relative to their connected top leaders. To provide one plausible interpretation of these empirical findings, we propose a simple theory in which the complementarity arises because connections foster loyalty of junior officials to senior ones, thereby allowing incumbent top politicians to select competent provincial leaders without risking being ousted. Auxiliary evidence suggests that the documented promotion pattern does not distort the allocation of talent. Our findings shed some light on why a political system known for patronage can still select competent leaders.
    Keywords: Political turnover; Economic performance; Personnel control; Social networks
    JEL: H11 H70 J63 P30
    Date: 2014–02–07
  3. By: Engelhardt, Carina; Wagener, Andreas
    Abstract: When based on perceived rather than o n objective income distributions, the Meltzer- Richards hypothesis and the POUM hypothesis work quite well empirically: there exists a positive link between perceived inequality or perceived upward mobility and the extent of redistribution in democratic regimes - though such a link does not exist when objective measures of inequality and social mobility are used. These observations highlight that political preferences and choices might depend more on perceptions than on factual data.
    Keywords: Biased Perception, Majority Voting, Redistribution
    JEL: H53 D72 D31
    Date: 2014–02
  4. By: Thomas Bassetti (University of Padova); Filippo Pavesi (Department of Economics (University of Verona))
    Abstract: When considering contributions to electoral campaigns in the U.S., a puzzling regularity is that some industries tend to spend significantly more than others. To explain this evidence, we present a simple theoretical model in which interest groups finance politicians that require funding for campaign advertising in exchange for policy favors. Our model predicts that interest groups with more extreme preferences will devote a greater amount of resources to campaign financing. The empirical evidence, based on data from the U.S. House elections between 2000 and 2004, strongly supports this finding.
    Keywords: Campaign Finance, Interest Groups, Elections, Extreme Preferences
    JEL: D72 P16
    Date: 2014–02
  5. By: Mostapha Diss (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 - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I); Patrizia Pérez-Asurmendi (PRESAD - PReferencias, Elección Social y Ayuda a la Decisión - Universidad de Valladolid, SEED - Social Equilibrium and Economic Decisions - Universidad Pública de Navarra)
    Abstract: The main criticism to the aggregation of individual preferences under majority rules refers to the possibility of reaching inconsistent collective decisions from the election process. In these cases, the collective preference includes cycles and even could prevent the election of any alternative as the collective choice. The likelihood of consistent outcomes under two classes of majority rules constitutes the aim of this paper. Specifically, we focus on majority rules that require certain consensus in individual preferences to declare an alternative as the winner. In the case of majorities based on difference of votes, such requirement asks to the winner alternative to obtain a difference in votes with respect to the loser alternative taken into account that individuals are endowed with weak preference orderings. Same requirement is asked to the restriction of these rules to individual linear preferences, whereas in the case of majorities based on difference in support, the requirement has to do with the difference in the sum of the intensities for the alternatives in contest.
    Keywords: Majorities based on di fference of votes; Majorities based on diff erence in support; Probability Transitivity; Triple-acyclicity
    Date: 2014–02–11
  6. By: Cappelen, Alexander W. (Dept. of Economics, Norwegian School of Economics and Business Administration); Reme, Bjørn-Atle (Dept. of Economics, Norwegian School of Economics and Business Administration); Sørensen, Erik Ø. (Dept. of Economics, Norwegian School of Economics and Business Administration); Tungodden, Bertil (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: We study how leader compensation affects public goods provision. We report from a lab experiment with four treatments, where the base treatment was a standard public goods game with simultaneous contribution decisions, while the three other treatments allowed participants to volunteer to be the leader in their group and make their contribution before the others. In the three leader treatments, we manipulate the level of compensation given to the leader. Our main finding is that a moderate compensation to the leader is highly beneficial, it increases the average contribution by 63% relative to a situation where the leader is not compensated and by more than 90% relative to a situation without a leader. A further increase in the leader compensation, however, is detrimental to public goods provision; it attracts less morally motivated leaders and creates a social crowding-out effect that makes it harder to lead by example. Finally, we report from a survey showing that the social crowding-out effect is also present in the population at large. We argue that the main findings of the paper are important in many real life settings where we would like to use economic incentives to encourage people to lead by example.
    Keywords: Lab experiment; leadership; compensation.
    JEL: C91 C92 D63
    Date: 2014–02–11
  7. By: Tristan Boyer; Nicolas Jonard
    Abstract: This paper is about the diffusion of cooperation in an infinite population of networked individuals repeatedly playing a Prisoner’s Dilemma. We formulate conditions on payoffs and network structure such that, starting from an initial seed group, imitative learning results in the overall adoption of cooperation — efficient contagion. Key to this result is the pattern of interaction among players who are at the same distance from the initial seed group. We find that the more these agents interact among themselves rather than with players who are closer to or further away from the initial seed group, the easier it is for efficient contagion to take place. We highlight the importance of cycles for efficient contagion, and show that the presence of critical edges prevents it. We also find that networks organized as dense clusters sparsely connected to one another tend to resist efficient contagion. Finally, we find that the likelihood of efficient contagion in a network increases when information neighborhoods extend beyond interaction neighborhoods.
    Keywords: networks, imitation, contagion
    JEL: C7 D8
    Date: 2014–01–06
  8. By: Buchheim, Lukas; Ulbricht, Robert
    Abstract: We investigate the dynamics of political systems in a framework where transitions are driven by reforms and revolts, and where political systems are a priori unconstrained, ranging continuously from single-man dictatorships to full-scale democracies. The dynamics are governed by the likelihood of transitions and their outcome, which are both determined endogenously. We find that reforms and revolts result in extreme political systems|reforms by enfranchising the majority of the population leading to democracies, and revolts by installing autocracies. Reinforcing this polarization, extreme political systems are persistent across time: Democracies are intrinsically stable, leading to long episodes without political change. Autocracies, in contrast, are subject to frequent regime changes. Nevertheless they are persistent, since ensuing revolts lead to autocracies comparable to their predecessors. Taken together, our results suggest that the long-run distribution of political systems is bimodal with mass concentrated on the extremes. The dynamics are consistent with cross-country data.
    Keywords: Endogenous dynamics of political systems, invariant distribution, persistence of regime types, polarization, transition paths, unrestricted polity space.
    JEL: D74 D78 P16
    Date: 2014–02–01
  9. By: Maruta, Toshimasa; Okada, Akira
    Abstract: Abstract: We consider the formation and long-run stability of cooperative groups in a social dilemma situation where the pursuit of individual interests conflicts with the maximization of social welfare. The adaptive play model of Young (1993) is applied to a game of group formation where voluntary participants negotiate for an institution to enforce them to cooperate. For a class of group formation games with two types, the stochastically stable equilibrium can be characterized in terms of the Nash products of the associated hawk-dove games, which summarize the strategic interaction among the individuals in the game.
    Keywords: Adaptive play, cooperation, evolution, group formation, hawk-dove game, social dilemma, stochastic stability, voluntary participation
    JEL: C70 C72
    Date: 2014–02
  10. By: Ahrens, Joachim; Stark, Manuela
    Abstract: This contribution explores the importance of independent organizations in authoritarian regimes. While some authoritarian governments delegate policy tasks to (relatively) autonomous agencies simply in order to improve their domestic or international image as modern political leaders or to build up democratic facades to conceal the actual nature of their regime, other political leaders do so in order to make their genuine commitment to economic growth and development more credible. This relates to the central questions of this paper: Why do political elites in authoritarian regimes craft, or accept the emergence of, (relatively) independent organizations? Which specific forms and functions of these organizations can be identified? The main observation of this paper is that authoritarian governments of so-called developmental states have effectively used (relatively) independent organizations in order to implement market-oriented reforms, to improve private-sector coordination, and to foster economic growth and development in the long run. --
    Keywords: Political Economy of Authoritarianism,Governance of State Capitalist Systems
    Date: 2014
  11. By: Gerlinde Fellner; Yoshio Iida; Sabine Kröger; Erika Seki
    Abstract: We study voluntary contribution behavior of individuals who vary in their ability to contribute to a joint project under different information scenarios. We investigate a situation with two types who vary only in their external marginal return (low and high). Results of a laboratory experiment suggest that, when group members are not aware of the heterogeneity in their group, both types make the same nominal contributions. When agents are informed about the heterogeneity, contributions increase but differently by type. High types contribute only more with sufficient social exposure, i.e., when information on the type of the contributor is available. Low types, on the other hand, contribute only more when they are aware of the distribution of types, but have no information on the type of the contributor.
    Keywords: Public goods, Voluntary contribution mechanism, Heterogeneity, Information, Norms
    JEL: C9 H41
    Date: 2014
  12. By: Schlicht, Ekkehart
    Abstract: Abstract This note offers two comments on the article “Social Influences towards Conformism in Economic Experiments” by Hargreaves Heap that is to appear in the Economics e-Journal. One relates to the concept of conformism, the other lines out some phenomena where an explicit recognition of group processes, such as conformism, may be analytically helpful.
    Keywords: Conformism; relative income hypothesis; reference group behavior; social multiplier; social preferences; self-classification; group polarization
    JEL: C91 C92 D43 H41 J41 D1
    Date: 2014–02–13
  13. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We study linear properties of TU-games, revisiting well-known issues like interaction transforms, the inverse Shapley value problem and the concept of semivalues and least square values. We embed TU-games into the model of cooperation systems and influence patterns, which allows us to introduce linear operators on games in a natural way. We focus on transforms, which are linear invertible maps, relate them to bases and investigate many examples (Möbius transform, interaction transform, walsh transform, etc.). In particular, we present a simple solution to the inverse problem in its general form: Given a linear value ? and a game v, find all games v? such that ?(v) = ?(v?). Generalizing Hart and Mas-Colell's concept of a potential, we introduce general potentials and show that every linear value is induced by an appropriate potential. We furthermore develop a general theory of allocations with a quadratic optimality criterion under linear constraints, obtaining results of Charnes et al., and Ruiz et al., and others as special cases. We prove that this class of allocations coincides exactly with the class of all linear values.
    Keywords: Cooperation system, cooperative game, basis, transform, inverse problem, potential, linear value, semivalue.
    JEL: C71
    Date: 2014–01
  14. By: Andreas Karpf (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: This article investigate the role of social influence for the expectation formation of economic agents. Using self-organizing Kohonen maps the repeated cross-section data set of the University of Michigan consumer survey is transformed into a pseudo panel allowing to monitor the expectation formation of cohorts with regard to business confidence over the whole available time span (January 1978 - June 2013). Subsequently the information theoretic concept of transfer entropy is used to reveal the role of social influence on the expectation formation as well as the underlying network structure. It is shown that social influence strongly depends on socio-demographic characteristics and also coincides with a high degree of connectivity. The social network estimated in this way follows a power-law and thus exhibits similar structure as networks observed in other contexts.
    Keywords: Social networks, expectations, household survey.
    JEL: D12 D83 D84 D85
    Date: 2014–02
  15. By: Hanen SDIRI; Mohamed AYADI
    Abstract: Innovation is widely recognized as a key driver of economic growth and competitiveness. Previous works dealing with it has specially focused on its effect on the economic performance of innovators. In this context, the literature distinguishes between four kinds of innovation: product, process, radical and incremental. Indeed, despite their importance, the innovation determinants and the innovation making-decision are less studied. Based on a sample of 108 Tunisian service firms, the purpose of this paper is to find out the way by which firms make their decision to innovate: simultaneously (one-stage model) or sequentially (twostage model). We obtain that the two-stage model has a statistically significant advantage in predicting innovation. In practice, we argue that the sequential model illustrates well the innovation making-decision procedures.
    Keywords: Innovation, Decision making, Service sector
    JEL: L80 O31 O32
    Date: 2014–02–12
  16. By: Bodas Freitas , Isabel Maria; Geuna, Aldo; Lawson, Cornelia; Rossi, Federica (University of Turin)
    Abstract: We investigate under what circumstances firms (industry inventors) are more likely to engage in interactions where governance of the relationship is shared between the firm and the university, as opposed to interactions where the relationship is governed unilaterally by the firm. Using PIEMINV, an original dataset of European industry patents in the Italian region of Piedmont, we analyse the characteristics of inventors with diverse experience in projects involving interactions with universities, governed by institutional contracts or personal contracts. Our results suggest that reliance among inventors of the two forms of governance is almost equal, and that unilateral governance forms are preferred when there are high levels of trust among the parties based on embeddedness in local social and education networks. This is likely because it involves less cumbersome and more direct interactions. We find also that knowledge characteristics are not particularly important discriminants of the choice between governance forms: the advantage of shared governance seems to reside mainly in the possibility to mitigate monitoring and asymmetric information problems in contexts of relatively low levels of mutual knowledge and trust.
    Date: 2014–01

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