New Economics Papers
on Collective Decision-Making
Issue of 2014‒03‒08
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Public Goods, Voting, and Growth By Kirill Borissov; Joseph Hanna; Stephane Lambrecht
  2. Brothers in Alms? Coordination Betwen Nonprofits on Markets for Donations By Gani Aldashev; Marco Marini; Thierry Verdier
  3. Divided We Reform? Evidence from US Welfare Policies By Andreas Bernecker
  4. Comparing Generalized Median Voter Schemes According to their Manipulability By R. Pablo Arribillaga; Jordi Massó
  5. Are groups 'less behavioral'? The case of anchoring By Meub, Lukas; Proeger, Till
  6. Behavioral public choice: A survey By Schnellenbach, Jan; Schubert, Christian
  7. Expectation Formation and Social Influence By Andreas Karpf
  8. The Political Economy of Inclusive Rural Growth By Michael Carter; John Morrow
  9. The Dynamics of Firm Lobbying By William R. Kerr; William F. Lincoln; Prachi Mishra
  10. Uncovering the "Will of the People": Heterogeneity and Polarization within electorates By Roy, Sunanda; Wu, Kuan Chuen; Chandra, Abhijit
  11. Beware of Popular Kids Bearing Gifts: A Framed Field Experiment By Jingnan Chen; Daniel Houser; Natalia Montinari; Marco Piovesan
  12. Evidence of Adverse Selection in the Group Insurance Market By Eling, Martin; Jia, Ruo; Yao, Yi
  13. Mergers and the Incentives to Undertake Product Innovation Oriented R&D: First Steps Towards an Assessment Approach By Benjamin Rene Kern; Juan Manuel Mantilla Contreras
  14. Power and interests in information and communication technologies and development: exogenous and endogenous discourses in contention By Robin Mansell
  15. Culture and Household Decision Making: Balance of Power and Labor Supply Choices of US-born and Foreign-born Couples By Oreffice, Sonia
  16. On the Optimal Social Contract: Agency Costs of Self-Government By Sang-Hyun Kim
  17. Anatomy of Public-Private Partnerships: Their Creation, Financing, and Renegotiations By Miranda Sarmento, J.; Renneboog, L.D.R.
  18. Four facets of critical news literacy in a non-democratic regime: how young Russians navigate their news By Florian Toepfl
  19. On the relationship between individual and group decisions By Joel Sobel

  1. By: Kirill Borissov; Joseph Hanna (Laboratoire IDP, Universite de Valenciennes et du Hainaut-Cambresis); Stephane Lambrecht
    Abstract: We study a parametric politico-economic model of economic growth with productive public goods and public consumption goods. The provision of public goods is funded by a proportional tax on consumers' income. Agents are heterogeneous in their initial capital endowments, discount factors and the relative weights of public consumption in overall private utility. They vote on the shares of public goods in GDP. We propose a definition of voting equilibrium, prove the existence and provide a characterization of voting equilibria, and obtain a closed-form solution for the voting outcomes.
    Keywords: : intertemporal choice, growth, public goods, voting
    JEL: D91 O41 H41 D72
    Date: 2014–02–23
  2. By: Gani Aldashev (Department of Economics and CRED, University of Namur); Marco Marini (University of Rome "La Sapienza" and CREI); Thierry Verdier (Paris School of Economics and CEPR)
    Abstract: Mission-driven nonprofit organizations compete for donations through fundraising activities. Such competition can lead to inefficient outcomes, if nonprofits impose externalities on each others' output. This paper studies the sustainability of fundraising coordination agreements, using a game-theoretic model of coalition formation. Three key characteristics determine the stability of cooperation: (i) the alliance formation rule, (ii) the extent to which fundraising efforts are strategic complements/substitutes, and (iii) whether deviation from the agreements is by an individual or by a group of nonprots. We also characterize necessary and su¢ cient conditions for the stability of Pareto-optimal full coordination in fundraising.
    Keywords: nonprofits, charitable giving, coordination, endogenous coalition formation, non-distribution constraint
    JEL: L31 D74 L44 C72
    Date: 2014–01
  3. By: Andreas Bernecker
    Abstract: Divided government is often thought of as causing legislative deadlock. I investigate the link between divided government and economic reforms using a novel data set on welfare reforms in US states between 1978 and 2010. Panel data regressions show that under divided government a US state is around 25% more likely to adopt a welfare reform than under unified government. An analysis of close elections providing quasi-random variation in the form of government and other robustness checks confirm this counter-intuitive finding. The empirical evidence is consistent with an explanation based on policy competition between governor, senate, and house.
    Keywords: divided government, legislative deadlock, policy innovation, US welfare reform, policy competition
    JEL: D72 D78 H11 H75
    Date: 2014
  4. By: R. Pablo Arribillaga; Jordi Massó
    Abstract: We propose a simple criterion to compare generalized median voter schemes according to their manipulability. We identify three necessary and sufficient conditions for the comparability of two generalized median voter schemes in terms of their vulnerability to manipulation. The three conditions are stated using the two associated families of monotonic fixed ballots and depend very much on the power each agent has to unilaterally change the outcomes of the two generalized median voter schemes. We perform a specific analysis of all median voter schemes, the anonymous subfamily of generalized median voter schemes.
    Keywords: generalized median voting schemes, strategy-proofness, anonymity
    JEL: C78 D78
    Date: 2014–02
  5. By: Meub, Lukas; Proeger, Till
    Abstract: Economic small group research points to groups as more rational decision-makers in numerous economic situations. However, no attempts have been made to investigate whether groups are affected similarly by behavioral biases that are pervasive for individuals. If groups were also able to more effectively avoid these biases, the relevance of biases in actual economic contexts dominated by group decision-making might be questioned. We consider the case of anchoring as a prime example of a well-established, robust bias. Individual and group biasedness in three economically relevant domains are compared: factual knowledge, probability estimates and price estimates. In contrast to previous anchoring studies, we find groups to successfully reduce, albeit not eliminate, anchoring in factual knowledge tasks. For the other domains, groups and individuals are equally biased by external anchors. We thus suggest that group cooperation reduces biases prevalent on the individual level for predominantly intellective tasks, yet fails to improve decision-making when judgmental aspects are involved. --
    Keywords: anchoring bias,group decision-making,heuristics and biases,incentives,laboratory experiment
    JEL: C91 C92 D8
    Date: 2014
  6. By: Schnellenbach, Jan; Schubert, Christian
    Abstract: Public choice theory has originally been motivated by the need to correct the asymmetry, widespread in traditional welfare economics, between the motivational assumptions of market participants and policymakers: Those who played the game of politics should also be considered rational and self-interested. History repeats itself with the rise of behavioral economics: Cognitive biases discovered in market participants often induce a call for rational governments to intervene. Recently, however, behavioral economics has also been applied to the explanatory analysis of the political process. This paper surveys the current state of the emerging field of 'behavioral public choice' and considers the scope for further research. --
    Keywords: Behavioral Public Choice,Behavioral Economics,Rational Irrationality,Cognitive Biases,Social Norms,Voting,Paternalism
    JEL: D78 D03 A12 D72
    Date: 2014
  7. By: Andreas Karpf (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    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
    Date: 2014–02
  8. By: Michael Carter; John Morrow
    Abstract: Abstract Commentators on the `East Asian Miracle' of inclusive growth have often pointed toward shared rural growth policies. But why were these policies not chosen elsewhere? This paper models voters who invest in either subsistence or a complex technology in which public goods complement private capital. Investment and technology choices vary with wealth and the level of public goods enforced by political lobbies. Outcomes depend on the strength of the incipient middle class who bolster political incentives through contributions. Economies with a stronger middle class due to lower inequality or lower risk may thereby sustain higher productivity through public good provision.
    Keywords: Poverty traps, political economy, inequality, lobby formation
    JEL: O1 D2 H4 Q1
    Date: 2014–02
  9. By: William R. Kerr; William F. Lincoln; Prachi Mishra
    Abstract: How is economic policy made? In this paper we study a key determinant of the answer to the question: lobbying by fi…rms. Estimating a binary choice model of …firm behavior, we fi…nd signifi…cant evidence for the idea that barriers to entry induce persistence in lobbying. The existence of these costs is further confi…rmed in studying how fi…rms responded to a particular policy change: the expiration of legislation relating to the H-1B visa. Due to its influence on fi…rm behavior, we argue that this persistence fundamentally changes the environment in which legislation is made.
    Keywords: lobbying, political economy, immigration, H-1B.
    JEL: D72 D73 D78 F22 F23 J61 O31 O38
    Date: 2014–01–01
  10. By: Roy, Sunanda; Wu, Kuan Chuen; Chandra, Abhijit
    JEL: D70 D71 D72
    Date: 2014–02–26
  11. By: Jingnan Chen (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); Natalia Montinari (Lund School of Economics and Management, Lund University); Marco Piovesan (Department of Economics, University of Copenhagen)
    Abstract: The literature on pro-social behavior shows that older children are more generous than younger children; however, the level of individual generosity is heterogeneous even between children of the same age. This paper investigates whether a child’s popularity affects a child’s generosity. Our participants – 231 children, six to twelve years old – decide how many of their four colored wristbands they want to share with another anonymous child. We manipulate the visibility of this decision: in treatment Public, the decisions are revealed to the entire class at the end of the game, whereas in treatment Private children’s decisions remain secret. In addition, we elicited each child’s network of friends using an innovative “seating map†mechanism. Our results reveal that more popular children are more generous in Public than Private decision environments, while less popular children behave similarly in both cases. Moreover, older children in Public display greater generosity than (i) older children in Private and (ii) younger children in either Public or Private. Finally, in Public, older and more popular children share more than less popular older children, and more than younger children regardless of popularity; whereas, in Private there is no effect of popularity on children of any age. Length: 34
    Keywords: popularity, children, field experiment, public decision making, pro-social behavior
    JEL: C93 J13
    Date: 2014–02
  12. By: Eling, Martin; Jia, Ruo; Yao, Yi
    Abstract: This paper demonstrates the existence of adverse selection in the group insurance market with no individual choice. We provide evidence against the “conventional wisdom” that group insurance mitigates adverse selection because of the mixture of high risks and low risks. We show, however, that asymmetric learning effects mitigate the group adverse selection after a few policy periods.
    Keywords: Information Asymmetry, Asymmetric Learning, Insurance Decision, Group Health Insurance, Critical Illness Insurance
  13. By: Benjamin Rene Kern (University of Marburg); Juan Manuel Mantilla Contreras
    Abstract: The firms that compete with one another in terms of innovation do not necessarily coincide with the relevant competitors on pre-innovation product markets. As a consequence, the findings about the ambiguous interrelation between (product) market concentration and innovation cannot be transferred one-to-one to the interrelationship between innovation competition and innovation. By identifying and classifying the most relevant effects, which are decisive for the impact of mergers on the incentives to invest in product innovation oriented R&D, we will demonstrate that the interrelation between innovation competition and innovation is not always as unclear as it seems. Hence, by analyzing the model-theoretic industrial organization literature, this article aims to contribute to the discussion about the development of a decision theoretic assessment framework for analyzing the impact of mergers on innovation and is therefore also in line with the idea of a rule-based competition policy which is, from a law and economics perspective, ought to reduce error costs, give legal guidance and reduce legal uncertainty.
    JEL: K21 L12 L41 O31
    Date: 2014
  14. By: Robin Mansell
    Abstract: This paper illustrates the persistence of an exogenous model of development that underpins many interventions aimed at employing information and communication technologies (ICTs) to meet development goals. The analysis is based on a sample of texts from reports produced by United Nations agencies and the World Bank. The aim is to show how the discourse on ICT interventions invariably is reminiscent of a dominant exogenous model even when alternative models with respect to development are seen to influence policy and practice. It is argued that practice-based, emergence approaches offer an attractive, although insufficient, way forward.
    Keywords: development models; ICT policy; emergence
    JEL: L91 L96
    Date: 2014–07–10
  15. By: Oreffice, Sonia (University of Surrey)
    Abstract: This study investigates how spouses' cultural backgrounds mediate the role of intra-household bargaining in the labor supply decisions of foreign-born and US-born couples, in a collective-household framework. Using data from the 2000 US Census, I show that the hours worked by US-born couples, and by those foreign-born coming from countries with gender roles similar to the US, are significantly related to common bargaining power forces such as differences between spouses in age and non-labor income, controlling for both spouses' demographic and socioeconomic characteristics. Households whose culture of origin supports strict and unequal gender roles do not exhibit any association of these power factors with their labor supply decisions. This cultural asymmetry suggests that spousal attributes are assessed differently across couples within the US, and that how spouses make use of their outside opportunities and economic and institutional environment may depend on their ethnicities.
    Keywords: culture, gender roles, household bargaining power, labor supply
    JEL: D1 J15 J22
    Date: 2014–02
  16. By: Sang-Hyun Kim (University of East Anglia)
    Abstract: In a typical study of political economy, citizens are regarded as principals, and government as agent. This is a modern way of thinking in the sense that classical theorists of democracy such as Jean-Jacques Rousseau and James Madison were more interested in the dual nature of people; they are principals (citizens sharing the sovereign power) and, at the same time, agents (subjects under the laws). Government, in their framework, is an intermediate body which helps people solve their self-control problem. Equipped with tools of modern economics, this paper explores the classical problem to see how economic development and political institutionalization relate to the structure of government and the quality of public sector. In particular, I consider repeated games with a large population and incomplete information, in which players decide whether to sacrifice private consumption to provide public goods. Because both people and the executive of public projects are subject to moral hazard, the people spend resources to monitor the executive and the people themselves. The optimal self-enforcing contract, which can be interpreted as an efficiency upper bound of political systems, is characterized. The analysis of the contract shows that as a country gets more economically developed and politically institutionalized, the agency problem on the people's side becomes negligible, and the citizens' demand for accountable government becomes stronger, in which case the standard principal-agent framework is good enough to describe the political reality.
    Date: 2014–02
  17. By: Miranda Sarmento, J.; Renneboog, L.D.R. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: This paper presents the main reasons why public-private partnerships (PPPs) are adopted as well as the possible disadvantages for the public and private sectors. By means of two case studies on bridge construction and railway infrastructure (Fertagus and Lusoponte), we elucidate how a PPP is structured and financed. Furthermore, the two case studies illustrate how the renegotiation processes are conducted when the public-private contracts have to be altered and what determines (un)successful renegotiations.
    Keywords: Public–Private Partnerships;Concessions;Renegotiations;Public Procurement;Project Risk
    JEL: G32 H54 L91
    Date: 2014
  18. By: Florian Toepfl
    Abstract: Fueled by the Arab spring, the question of how the rise of internet-mediated communication affects authoritarian regimes has received unprecedented attention within the discipline of communications. However, in this debate, scholars have not yet turned to the concept of literacy and addressed the role of citizens’ knowledge about political media in any greater depth. This is surprising since the concept of literacy as ‘emancipatory knowledge’ has a ‘long and proud history’ (Livingstone, 2008: 60) of being linked with processes of enlightenment, political empowerment, and democratization. The present study contributes to filling this gap by suggesting four highly consequential facets of critical news literacy in contemporary Russia, a high-profile hybrid regime. Conceptual development is grounded in western literature and 20 in-depth interviews with young, urban, and educated Russians.
    Keywords: audience reception; global media and social change; literacy; non-democratic regimes; political communication; Russia
    JEL: L91 L96
    Date: 2014–02
  19. By: Joel Sobel
    Date: 2014–02–24

This issue is ©2014 by Stan C. Weeber. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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