New Economics Papers
on Collective Decision-Making
Issue of 2014‒03‒22
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Political Awareness, Microtargeting of Voters, and Negative Electoral Campaigning By Burkhard S; Hee Yeul Woo
  2. Does Secular Education Impact Religiosity, Electoral Participation and the Propensity to Vote for Islamic Parties? Evidence from an Education Reform in a Muslim Country By Cesur, Resul; Mocan, Naci
  3. Competence versus Trustworthiness: What Do Voters Care About? By Fabio Galeotti; Daniel John Zizzo
  4. Fairness and Persuasion. How Stakeholder Communication Affects Impartial Decision Making By Marco Kleine; Pascal Langenbach; Lilia Zhurakhovska
  5. Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners By Powdthavee, Nattavudh; Oswald, Andrew J.
  6. God does not play dice, but people should: random selection in politics, science and society By Bruno S. Frey; Lasse Steiner
  7. Legitimacy, Communication and Leadership in the Turnaround Game By Jordi Brandts; David J. Cooper; Roberto A. Weber
  8. Political Competition and the Limits of Political Compromise By Alexandre B. Cunha; Emanuel Ornelas
  9. Endogenous Preferences and Conformity: Evidence From a Pilot Experiment By Sergio Beraldo; Valerio Filoso; Marco Stimolo
  10. Decentralization, Vertical Fiscal Imbalance, and Political Selection By Massimo Bordignon; Matteo Gamalerio; Gilberto Turati
  11. Allocating value among farsighted players in network formation By CARAYOL, Nicolas; DELILLE, Rémy; VANNETELBOSCH, Vincent
  12. Preferences for redistribution and social structure By SCHOKKAERT, Erik; TRUYTS, Tom
  13. US Aid for Israel – A Historical Overview By Konstantin Yanovskiy
  14. Other-regarding behavior under collective action By Katerina Sherstyuk; Nori Tarui; Melinda Podor Wengrin; Jay Viloria; Tatsuyoshi Saijo
  15. The nexus between gender, collective action for public goods, and agriculture : evidence from Malawi By McCarthy, Nancy; Kilic, Talip
  16. Constitutions and social networks By MAULEON, Ana; ROEHL, Nils; VANNETELBOSCH, Vincent
  17. Bowling for fascism: social capital and the rise of the Nazi Party By Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
  18. The State Independent from voters: Rent Revenue Incomes and the Resource Curse By Vladimir Mau; Ilia Zatcovecky; Konstantin Yanovskiy

  1. By: Burkhard S; Hee Yeul Woo (Department of Economics, University of California Davis)
    Abstract: In modern elections, ideologically motivated candidates with a wealth of information about individual voters and sophisticated campaign strategies are faced by voters who lack awareness of some political issues and are uncertain about the exact political positions of candidates. We study to what extent electoral campaigns can raise awareness of issues and unravel information about candidates' political positions. We allow for microtargeting in which candidates target messages to subsets of voters. A candidate's message consists of a subset of issues and some information on her political position in the multi-dimensional policy subspace spanned by this subset of issues. The information provided can be vague, it can be even silent on some issues, but candidates are not allowed to bluntly lie about their ideology. Every voter votes for the candidate she expects to be closest to her but takes into account only the subspace spanned by the issues that come up during the campaign. We show that any prudent rationalizable election outcome is the same as if voters have full awareness of issues and complete information of policy points, both in parliamentary and presidential elections. We show by examples that these results may break down when there is lack of electoral competition, when candidates are unable to use microtargeting, or when voters have limited abilities of political reasoning. Allowing for negative campaigning restores the positive results if voters' political reasoning abilities are limited. It can even be achieved with just public campaign message in the presidential elections while parliamentary elections still require microtargeting of voters.
    Keywords: electoral competition, multidimensional policy space, microtargeting, dog-whistle politics, negative campaigning, ideological candidates, presidential elections, parliamentary elections, persuasion games, verifiable information, unawareness, framing, prudent rationalizability, forward-induction
    JEL: C72 D71 P16
    Date: 2014–03–11
  2. By: Cesur, Resul (University of Connecticut); Mocan, Naci (Louisiana State University)
    Abstract: Using a unique survey of adults in Turkey, we find that an increase in educational attainment, due to an exogenous secular education reform, decreases women's propensity to identify themselves as religious, lowers their tendency to wear a religious head cover (head scarf, turban or burka) and increases the tendency for modernity. Education reduces women's propensity to vote for Islamic parties. There is no statistically significant impact of education on men's religiosity or their tendency to vote for Islamic parties and education does not influence the propensity to cast a vote in national elections for men or women. The impact of education on religiosity and voting preference is not working through migration, residential location or labor force participation.
    Keywords: education, religion, Islam, Muslim, voting, modernity, head scarf, burka, Islamic party
    JEL: I2 Z12 D72
    Date: 2014–03
  3. By: Fabio Galeotti (University of East Anglia); Daniel John Zizzo (University of East Anglia)
    Abstract: Appointing public officials is an important feature of modern democracies. Citizens are periodically asked to select amongst different candidates whom they want to appoint as public officials in central or local governments. There may be a trade-off on the extent to which candidates are seen as competent versus the extent to which they are seen as trustworthy. In our experiment, we ask voters to select a public official, on the competence and trustworthiness of which their final payoffs depend. We measure the competence of candidates in a real effort task and their trustworthiness in a trust game, and provide this information to voters when they make their voting decision. By looking at cases where there is a competence-trustworthiness trade-off, we can then measure the extent to which competence and trustworthiness matter in electoral decisions. We find that, in general, most voters tend to select the candidate rationally, based on who provides the highest expected profit irrespectively of trustworthiness and competence, but there is a bias towards caring about trustworthiness when the difference in expected profits between the two candidates is small enough.
    Date: 2014–03
  4. By: Marco Kleine (Max Planck Institute for Research on Collective Goods, Bonn); Pascal Langenbach (Max Planck Institute for Research on Collective Goods, Bonn); Lilia Zhurakhovska (University of Erlangen-Nuremberg & Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: We study experimentally whether and to what extent impartial decision makers are influenced by stakeholders’ fairness opinions in an allocation decision. The setting allows for different focal fairness rules to be considered. We compare communication treatments, in which one of the stakeholders states his or her opinion prior to the allocation decision, to a baseline without communication opportunities. We find that stakeholders who state their opinion in the communication treatments are allocated significantly less money than their counterparts in the baseline. Asymmetric reactions to the statements appear to be the driving force behind this result: impartial decision makers deviate from their initial fairness judgment and follow stakeholders’ opinions only if the requests are moderate; they largely ignore high monetary claims. Our results contribute to understanding the underlying processes that may affect the decisions of judges, juries, arbitrators, referees, or other impartial decision makers in interaction with stakeholders.
    Keywords: fairness, Norms, Communication, impartial decision maker, laboratory experiment, influence, persuasion
    JEL: D63 D02 K40 C91 D03
    Date: 2014–03
  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.
    Date: 2014
  6. By: Bruno S. Frey; Lasse Steiner
    Abstract: This paper discusses and proposes random selection as a component in decision-making in society. Random procedures have played a significant role in history, especially in classical Greece and the medieval city-states of Italy. We examine the important positive features of decisions by random Mechanisms. Random processes allow representativeness with respect to individuals and groups. They significantly reduce opportunities to influence political decisions by means of bribery and corruption and decrease the large expenses associated with today’s democratic election campaigns. Random mechanisms can be applied fruitfully to a wide range of fields, including politics, the judiciary, the economy, science and the cultural sector. However, it is important that random selection processes are embedded in appropriately designed institutions.
    Keywords: Random selection, lot, democracy, representativeness, corruption
    JEL: D72 D73 P16 H10
    Date: 2014–03
  7. By: Jordi Brandts; David J. Cooper; Roberto A. Weber
    Abstract: We study the effectiveness of leaders for inducing coordinated organizational change to a more efficient equilibrium, i.e., a turnaround. We compare communication from leaders to incentive increases and also compare the effectiveness of randomly selected and elected leaders. While all interventions yield shifts to more efficient equilibria, communication from leaders has a greater effect than incentives. Moreover, leaders who are elected by followers are significantly better at improving their group’s outcome than randomly selected ones. The improved effectiveness of elected leaders results from sending more performance-relevant messages. Our results are evidence that the way in which leaders are selected affects their legitimacy and the degree to which they influence followers. Finally, we observed that a combination of factors— incentive increases and elected leaders—yield near universal turnarounds to full efficiency.
    Keywords: leadership, job selection, coordination failure, experiments, communication
    JEL: C72 C92 D83
    Date: 2014–03
  8. By: Alexandre B. Cunha; Emanuel Ornelas
    Abstract: We consider an economy where competing political parties alternate in office. Due to rent-seeking motives, incumbents have an incentive to set public expenditures above the socially optimum level. Parties cannot commit to future policies, but they can forge a political compromise where each party curbs excessive spending when in office if they expect future governments to do the same. We find that, if the government cannot manipulate state variables, more intense political competition fosters a compromise that yields better outcomes, potentially even the first best. By contrast, if the government can issue debt, vigorous political competition can render a compromise unsustainable and drive the economy to a low-welfare, high-debt, long-run trap. Our analysis thus suggests a legislative trade-off between restricting political competition and constraining the ability of governments to issue debt.
    Keywords: Political turnover, efficient policies, public debt
    JEL: E61 E62 H30 H63
    Date: 2014–03
  9. By: Sergio Beraldo (Department of Economics, University of Napoli, Italy); Valerio Filoso (Department of Law, University of Napoli, Italy); Marco Stimolo (Department of Law, University of Napoli, Italy)
    Abstract: Conformity behavior, i.e., the agreement between an individual’s choices and the prevailing behavior of a reference group, is a commonly observed phenomenon. Though some types of social interactions may give raise to specific incentives to adopt either a majoritarian or a contrarian behavior, we want to investigate whether the same behavioral pattern emerges even when no economic motivator is present. To accomplish this task, we employ an experimental Vickrey median price auction designed to provide incentives to reveal individual preferences truthfully. Whereas we feed the control group with just the median price, we give out additional information on other players’ bids for those in the treated groups. These informations are designed to provide hints at revising individual bids. Our main results point to a strong tendency of the individuals to adapt their behavior to those of the individuals which can be observed. Moreover, although a clear shaping effect (a regression toward the median price) does emerge for the control group, the provision of information about the actual behavior of a sample of the relevant group is able to minimize or neutralize the shaping effect. Specifically, we find that players adjust to a divergence between their bids and the average bid of a reference group by a factor of 47.4%—87.3%. These figures point to a relevant role for conformity in group behavior.
    Keywords: Endogenous preferences, shaping effect, social conformity, Vickrey auction
    JEL: C91 C92 D44
    Date: 2014–03
  10. By: Massimo Bordignon (Department of Economics and Public Finance, Catholic University, Milano, Italy); Matteo Gamalerio (Department of Economics, University of Warwick, Coventry, UK); Gilberto Turati (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)
    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 ?scal imbalance, quality of politicians
    JEL: D72 D78
    Date: 2014–03
  11. By: CARAYOL, Nicolas (GREThA, Université de Bordeaux IV, France); DELILLE, Rémy (GREThA, Université de Bordeaux IV, France); VANNETELBOSCH, Vincent (CEREC, Saint Louis University; Université catholique de Louvain, CORE, Belgium)
    Abstract: We propose a concept to study the stability of social and economic networks when players are farsighted and allocations are determined endogenously. A set of networks is a von Neumann-Morgenstern farsightedly stable set with bargaining if there exists an allocation rule and a bargaining threat such that (i) there is no farsighted improving path from one network inside the set to another network inside the set, (ii) from any network outside the set there is a farsighted improving path to some network inside the set, (iii) the value of each network is allocated among players so that players suffer or benefit equally from being linked to each other compared to the allocation they would obtain at their respective credible bargaining threat. We show that the set of strongly efficient networks is the unique von Neumann-Morgenstern farsightedly stable set with bargaining if the allocation rule is anonymous and component efficient and the value function is top convex. Moreover, the componentwise egalitarian allocation rule emerges endogenously.
    Keywords: farsighted players, stability, equal bargaining power
    JEL: A14 C70 D20
    Date: 2014–02–12
  12. By: SCHOKKAERT, Erik (Department of Economics, KU Leuven; Université catholique de Louvain, CORE, Belgium); TRUYTS, Tom (CEREC, Saint Louis University; Université catholique de Louvain, CORE, Belgium)
    Abstract: We model inter-individual differences in preferences for redistribution as a function of (a) self-interest; (b) stable ideological traits; (c) subjective perceptions of the relative importance of the main determinants of income differences (luck, effort, talent). Individuals base the latter on information obtained from their reference group. We analyse the consequences for redistributive preferences of homophilous reference group formation based on talent. We argue that our theoretical results make it possible to understand and integrate some of the main insights from the empirical literature. We illustrate with GSS data from 1987 how our model may help in structuring empirical work.
    Keywords: D30, D63, D70
    Date: 2014–02–12
  13. By: Konstantin Yanovskiy (Gaidar Institute for Economic Policy)
    Abstract: Historical data on US aid to Israel illustrates incentives of political leaders and special interests, first and foremost in Israel. As on the early stages of Alliance Israel military capabilities could provide valuable services to USA, undermining USSR influence in the Middle East, the current relations are hard to explain by mutual national interests. The paper focus on the political actors' personal incentives, provides explanation for growing exploitation of US Aid by the special interests in Israel, while significance of the aid is approaching to insignificant level and contributes negatively to the country Defense capacity because of political conditionality imposed. The data presented could support a new vision of US-Israel alliance: ceasing of the US Aid programs for Middle East could contribute both countries Defense needs.
    Keywords: Political conditionality; Special interests; political leverage
    JEL: D74 D78 D72 F35
    Date: 2014
  14. By: Katerina Sherstyuk (Department of Economics, University of Hawaii at Manoa); Nori Tarui (Department of Economics, University of Hawaii at Manoa); Melinda Podor Wengrin (University of Hawaii at Manoa); Jay Viloria (California Institute of Technology); Tatsuyoshi Saijo (Kochi University of Technology)
    Abstract: In many collective action settings, such as decisions on public education or climate change mitigation, actions of a group have welfare consequences for themselves as well as their followers. We conduct laboratory experiments with two-stage predecessor-follower prisoners' dilemma and coordination games with dynamic externalities to study whether concerns for the followers' welfare affect the predecessors' behavior. We find that predecessors often give up own payoffs to avoid imposing negative externalities on the followers, but not to generate positive externalities for the followers. A concern for the followers aligned with own group payoff maximization motive helps to resolve socialdilemma and coordination problems; yet, a conffict in motives greatly exacerbates both free-riding and coordination on the payoff-inferior equilibrium. We also find strong evidence of social learning: the followers tend to blindly mimic their own predecessor, but act opposite to their match's predecessor, no matter whether these actions are welfare-improving or not.
    Keywords: economic experiments; other-regarding behavior; collective action
    JEL: C90 C73
    Date: 2014–03
  15. By: McCarthy, Nancy; Kilic, Talip
    Abstract: Across the developing world, public goods exert significant impacts on the local rural economy in general and agricultural productivity and welfare outcomes in particular. Economic and social-cultural heterogeneity have, however, long been documented as detrimental to collective capacity to provide public goods. In particular, women are often under-represented in local leadership and decision-making processes, as are young adults and minority ethnic groups. While democratic principles dictate that broad civic engagement by women and other groups could improve the efficiency and effectiveness of local governance and increase public goods provision, the empirical evidence on these hypotheses is scant. This paper develops a theoretical model highlighting the complexity of constructing a"fair"schedule of individual contributions, given heterogeneity in costs and benefits that accrue to people depending, for instance, on their gender, age, ethnicity, and education. The model demonstrates that representative leadership and broad participation in community organizations can mitigate the negative impacts of heterogeneity on collective capacity to provide public goods. Nationally-representative household survey data from Malawi, combined with geospatial and administrative information, are used to test this hypothesis and estimate the relationship between collective capacity for public goods provision and community median estimates of maize yields and household consumption expenditures per capita. The analysis shows that similarities between the leadership and the general population, in terms of gender and age, and active participation by women and young adults in community groups alleviate the negative effects of heterogeneity and increase collective capacity, which in turn improves agricultural productivity and welfare.
    Keywords: Economic Theory&Research,Housing&Human Habitats,Civil Society,Debt Markets,Community Development and Empowerment
    Date: 2014–03–01
  16. By: MAULEON, Ana (CEREC, Saint Louis University; Université catholique de Louvain, CORE, Belgium); ROEHL, Nils (Department of Economics, University of Paderborn; BiGSEM, Bielefeld University, Germany); VANNETELBOSCH, Vincent (CEREC, Saint Louis University; Université catholique de Louvain, CORE, Belgium)
    Abstract: The objective of the paper is to analyze the formation of social networks where individuals are allowed to engage in several groups at the same time. These group structures are interpreted here as social networks. Each group is supposed to have specific rules or constitutions governing which members may join or leave it. Given these constitutions, we consider a social network to be stable if no group is modified any more. We provide requirements on constitutions and players’ preferences under which stable social networks are induced for sure. Furthermore, by embedding many-to-many matchings into our setting, we apply our model to job markets with labor unions. To some extent the unions may provide job guarantees and, therefore, have influence on the stability of the job market.
    Keywords: social networks, constitutions, stability, many-to-many matchings
    JEL: C72 C78 D85
    Date: 2014–02–12
  17. By: Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
    Abstract: Social capital is often associated with desirable political and economic outcomes. This paper contributes to a growing literature on its "dark side". We examine the role of social capital in the downfall of democracy in interwar Germany. We analyze Nazi Party entry in a cross-section of cities, and show that dense networks of civic associations such as bowling clubs, choirs, and animal breeders went hand-in-hand with a rapid rise of the Nazi Party. Towns with one standard deviation higher association density saw at least one-third faster entry. All types of associations – veteran associations and non-military clubs, “bridging” and “bonding” associations – positively predict NS Party entry. Party membership, in turn, predicts electoral success. These results suggest that social capital aided the rise of the Nazi movement that ultimately destroyed Germany’s first democracy. We also show that the effects of social capital were more important in the starting phase of the Nazi movement, and in towns less sympathetic to its message.
    Keywords: Social capital, democracy, institutions, associations, networks
    JEL: D72 N34 N44 P16 Z10
    Date: 2014–03
  18. By: Vladimir Mau (RANEPA); Ilia Zatcovecky (Samuel Neaman Institute for Advanced Studies in Science and Technology); Konstantin Yanovskiy (Gaidar Institute for Economic Policy)
    Abstract: If the authorities have the opportunity to receive incomes uncontrolled by society, this gives them great freedom of action. Such incomes do not depend on the quality of the public goods delivered, nor on the investment climate. Given a certain minimal level of organization, taxpayers can try to impose on the government, which needs their money, their own terms for using the resources received (and history has shown that this can often be done successfully). The history of many modern parliaments began with gatherings convened by the people whose money and armed forces made up the might of the state. The absence of a need for the regime in power to ask its subjects for financial support in return for guarantees and privileges makes the regime’s forces, which are far superior in comparison with any individual market agent’s capacity, practically uncompensated for in any way. And if the government’s incomes enable it to offer bribes to citizens, then the authorities’ uncontrollability can weaken or even destroy the democratic institutions already in existence. Under such conditions, there can be no talk of constraints capable of providing universal secure guarantees for business independently of the will of the ruler..
    Keywords: Rent revenue, voters' corruption, voters bribe, demand for institutions
    JEL: D72 D73 P16 O33
    Date: 2014

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