New Economics Papers
on Collective Decision-Making
Issue of 2014‒03‒30
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Media competition and electoral politics By Amedeo Piolatto; Florian Schuett
  2. Partisan Optimism and Political Bargaining By Thomas Jensen; Andreas Madum
  3. Brothers in alms ? Coordination between nonprofits on markets for donations By Gani Aldashev; Marco A. Marini; Thierry Verdier
  4. Group size and decision rules in legislative bargaining By Vanberg, Christoph; Miller Moya, Luis Miguel
  5. Gender stereotypes in politics: What changes when a woman becomes the local political leader? By Arvate, Paulo; Firpo, Sergio; Pieri, Renan
  6. Impact of Internal Migration on Political Participation in Turkey By Akarca, Ali T.; Tansel, Aysit
  7. Who turned their back on the SPD? Electoral disaffection with the German Social Democratic Party and the Hartz reforms. By Baptiste Françon
  8. Impact of Political Regime Shift on Stock Returns of Oligarch Firms By Zadorozhna Olha; Zaderey Natalia
  9. Guns and Votes By Laurent Bouton; Paola Conconi; Francisco Pino; Maurizio Zanardi
  10. Should I Stay or Should I Go? Public Provision of a Private Good with an Exit Option By Neil Buckley; Katherine Cuff; Jeremiah Hurley; Stuart Mestelman; Stephanie Thomas; David Cameron
  11. Strategic Communication: An Experimental Investigation By Katharina Eckartz; Christiane Ehses-Friedrich
  12. Equilibrium Selection in Sequential Games with Imperfect Information By Jon X. Eguia; Aniol Llorente-Saguer; Rebecca Morton; Antonio Nicolò
  13. Choosing the type of income-contingent loan: risk-sharing versus risk-pooling By Elena Del Rey; María Racionero
  14. Evasive Shareholder Meetings By Yuanzhi Li; David Yermack
  15. Constructing value for culture: The evolution of local cultural industriesÕ policies and governance in North-East Italy By Lorenzo Mizzau
  16. Learning in a community of practice: Complete vs. incomplete information By Widad Guechtouli
  17. Fiscal Federalism and Legislative Malapportionment: Causal Evidence from Independent but Related Natural Experiments By Sebastian Galiani; Iván Torre; Gustavo Torrens
  18. Rage and Protest: The case of the Greek Indignant movement By Marilena Simiti

  1. By: Amedeo Piolatto (Universitat de Barcelona & IEB); Florian Schuett (Tilburg University)
    Abstract: We build a framework linking competition in the media market to political participation. Media outlets report on the ability of candidates running for office and compete for audience through their choice of slant. Citizens consume news only if the expected utility of being informed about candidates' ability is sufficiently large for their group collectively. Our results can reconcile seemingly contradictory empirical evidence showing that entry in the media market can either increase or decrease turnout. While information pushes up independent turnout, partisans adjust their turnout to the ability of their preferred candidate, and on average they vote less when informed.
    Keywords: Demand for news, electoral turnout, group-rule utilitarianism, media bias
    JEL: D72 L82
    Date: 2014
  2. By: Thomas Jensen (Department of Economics, Copenhagen University); Andreas Madum (Department of Economics, Copenhagen University)
    Abstract: Partisan voters are optimistic about electoral outcomes: their estimates of the probability of electoral success for their party or candidate are substantially higher than the average among the electorate. This has large potential implications for political bargaining. Optimism about future electoral outcomes can make costly bargaining delay look more favorable, which may induce partisans to punish their party for agreeing to a compromise rather than waiting, for example by not turning out to vote. Therefore, party decision makers should take optimism among partisans into account when bargaining. In this paper we use game theoretic modeling to explore the implications of partisan optimism for political bargaining. We show that increased optimism among a partisan group leads to a stronger bargaining position for their party, but may hurt its electoral prospects. Another main finding is that even high levels of partisan optimism do not necessarily cause inefficient bargaining delay.
    JEL: D72
    Date: 2014–02–06
  3. By: Gani Aldashev (Department of Economics and CRED, University of Namur); Marco A. Marini (Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza"); 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 nonprofits. We analyze how the interaction between these three features induces (or not) the stability of Pareto-optimal full coordination in fundraising.
    Keywords: nonprofits, charitable giving, coordination, endogenous coalition formation,non-distribution constraint.
    Date: 2014
  4. By: Vanberg, Christoph; Miller Moya, Luis Miguel
    Abstract: We conduct experiments to investigate the effects of different majority requirements on bargaining outcomes in small and large groups. In particular, we use a Baron-Ferejohn protocol and investigate the effects of decision rules on delay (number of bargaining rounds needed to reach agreement) and measures of "fairness" (inclusiveness of coalitions, equality of the distribution within a coalition). We find that larger groups and unanimity rule are associated with significantly larger decision making costs in the sense that first round proposals more often fail, leading to more costly delay. The higher rate of failure under unanimity rule and in large groups is a combination of three facts: (1) in these conditions, a larger number of individuals must agree, (2) an important fraction of individuals reject offers below the equal share, and (3) proposers demand more (relative to the equal share) in large groups.
    Keywords: majority rule, unanimity rule, legislative bargaining
    JEL: C78 D71 D72 C92
  5. By: Arvate, Paulo; Firpo, Sergio; Pieri, Renan
    Abstract: This study documents how the presence of a woman in an executive political role affects the gender stereotype of women in politics. We use Brazilian electoral data and restrict our focus to close mayoral races (using an RDD design) in which the top two candidates are of opposite sexes. Our most important result was a reduction in the number of candidates and votes for female mayoral candidates after a woman is elected, regardless of her eligibility status for reelection. This negative result is linked only to the position of mayor and not to other political positions (councilor, state or federal deputy). In addition, our results may be interpreted as evidence that voters do not use their update on women as local leaders to change their beliefs on women’s ability to run for other political positions. Finally, female mayors do not appear to have a role model effect on younger cohorts of women. We also note that our results are not influenced by differences in mayoral policies (generally and specifically for women), which could influence voters’ gender stereotypes.
    Date: 2014–02–12
  6. By: Akarca, Ali T. (University of Illinois at Chicago); Tansel, Aysit (Middle East Technical University)
    Abstract: During last sixty years, Turkish population moved from one province to another at the rate of about 7-8 percent per five-year interval. As a consequence of this massive internal migration, population residing in a province other than the one they were born in increased from 12 percent in 1950 to 39 percent in 2011. Impact of this population instability on provincial turnout rates in 2011 parliamentary election is studied, controlling for the effects of other socio-economic, demographic, political and institutional factors. Consequences of migration both at destinations and origins are considered. According to robust regressions estimated, the relationship between turnout and education is inverse U-shaped, and between turnout and age, U-shaped. The latter reflects generational differences as well. Large population, large number parliament members to be elected from a constituency, participation by large number of parties, and existence of a dominant party depress the turnout rate. A percentage increase in the proportion of emigrants among the people born in a province reduces turnout rate in that province by 0.13 percentage points, while a percentage increase in the ratio of immigrants in the population of a province reduces it by 0.06 percentage points. However, at destinations where large numbers of immigrants from different regions are concentrated, the opportunity afforded to immigrants to elect one of their own, reduces the latter adverse impact significantly and in some cases turns it to positive.
    Keywords: election turnout, internal migration, political participation, Turkey, voter behavior
    JEL: D72 J61
    Date: 2014–03
  7. By: Baptiste Françon (Centre d'Economie de la Sorbonne)
    Abstract: This paper proposes an empirical analysis of the declining support for the German Social Democratic Party (SPD) during Schröder government's second term of office, which was marked by major reforms in the fields of unemployment insurance and labour market policy (Hartz reforms). Drawing on a panel of West Germans, we provide evidence that this disaffection was strongly related to a worker's occupation and that it involved electoral backlash from core blue-collar constituencies of the SPD. In comparison, the impact of other socio-economic characteristics such as the labour market status or the income was less pronounced. We further show that discontent grew stronger among occupations where the risk of unemployment was more prevalent. This suggests that opposition to specific measures that weakened status-securing principles of the unemployment insurance substantially drove electoral disaffection with the SPD during this period.
    Keywords: Political economy, economics of voting, social policy preferences, unemployment insurance, social-democracy, Germany.
    JEL: D01 D12 E26 C81
    Date: 2013–03
  8. By: Zadorozhna Olha; Zaderey Natalia
    Abstract: We study the evolution of the stock prices of 17 politically connected firms around the time of the Orange revolution and two other crucial political events (2010 Presidential elections and the arrest of Yuliya Tymoshenko) in Ukraine. Using an event-study approach we find that political connections do matter in Ukraine. Companies that are strongly linked with the two major Ukrainian parties (Orange coalition and Party of Regions) are sensitive to shifts of the political regime.
    JEL: G14 P16 P34 D72 D73
    Date: 2013–07–05
  9. By: Laurent Bouton; Paola Conconi; Francisco Pino; Maurizio Zanardi
    Keywords: elections; pandering; vocal minority; gun-control regulations
    JEL: D72 I18
    Date: 2013–11
  10. By: Neil Buckley; Katherine Cuff; Jeremiah Hurley; Stuart Mestelman; Stephanie Thomas; David Cameron
    Abstract: In this paper, we adapt the standard political economy models of mixed financing of private goods to allow for an exit option in which individuals can choose to neither consume nor finance the publicly provided private good. Using a controlled laboratory experiment, we empirically investigate the predictions of this model when all individuals are allow to exit (universal-exit) and when only individuals with an income at or above a threshold income level are allowed to exit (conditional-exit). Even though the incentives for high-income individuals to exit are identical under both exit schemes, high-income individuals are less likely to exit when the exit option is universal. Sensitivity treatments suggests that a number of factors may be at play in explaining this result, including learning effects and a type of endowment effect, but that other-regarding preferences do not appear to be an important factor.
    Keywords: publicly provided private good, mixed financing, voting experiment
    JEL: H42 H44 C91 D7
    Date: 2014–03
  11. By: Katharina Eckartz (Friedrich-Schiller-University Jena, International Max Planck Research School on Adapting Behavior in a Fundamentally Uncertain World); Christiane Ehses-Friedrich (Max Planck Institute of Economics, Jena, International Max Planck Research School on Adapting Behavior in a Fundamentally Uncertain World, and Paris School of Economics (University Paris I).)
    Abstract: In this paper we attempt to compare theoretically and experimentally three models of strategic information transmission. In particular we focus on the models by Crawford & Sobel (1982), Lai (2010) and Ehses-Friedrich (2011). These three models differ in the information that the receiver possesses and the sender's knowledge about these information. Lai, 2010 introduce a partially informed decision maker into Crawford & Sobel's model. Ehses-Friedrich (2011) makes the decision maker's knowledge public knowledge. The experiment replicates the results of earlier experimental studies (Dickhaut et al., 1995, Cai & Wang, 2006, Wang et al., 2010): on the one hand experts usually give a too truthful advice, they overcommunicate. On the other hand the decision makers rely too much on the received information. Moreover, communication as well as payoffs decrease with increasing preference differences. We find that when decision makers are privately informed the messages from the expert to the decision maker are less precise than in the baseline setting. In the public information treatment, the communication is less biased. In all treatments, however, the messages are more precise than theoretically predicted.
    Keywords: Experiment, Strategic Information Transmission, Cheap talk, Communication
    JEL: C92 C72 D82 D83
    Date: 2014–03–17
  12. By: Jon X. Eguia (Department of Economics, Univ. of Bristol. and Department of Politics, New York Univ.); Aniol Llorente-Saguer (School of Economics and Finance, Queen Mary, Univ. of London); Rebecca Morton (Department of Politics, NYU-NYC and NYU-Abu Dhabi.); Antonio Nicolò (School of Social Sciences, Univ. of Manchester)
    Abstract: Games with imperfect information often feature multiple equilibria, which depend on beliefs off the equilibrium path. Standard selection criteria such as passive beliefs, symmetric beliefs or wary beliefs rest on ad hoc restrictions on beliefs. We propose a new selection criterion that imposes no restrictions on beliefs: we select the action profi?le that is supported in equilibrium by the largest set of beliefs. We conduct experiments to test the predictive power of the existing and our novel selection criteria in two applications: a game of vertical multi-lateral contracting, and a game of electoral competition. We fi?nd that our selection criterion outperforms the other selection criteria.
    Keywords: imperfect information, equilibrium selection, passive beliefs, symmetric beliefs, vertical contract- ing, multiple equilibria
    JEL: H41 C72 D86 D72
    Date: 2014–03
  13. By: Elena Del Rey (Universitat de Girona); María Racionero (Australian National University)
    Abstract: This paper analyses the choice between risk-sharing and risk-pooling income-contingent loans for higher education of risk-averse individuals who differ in their ability to benefit from education and inherited wealth. The paper identifies the possible outcomes of a majority vote between the two income-contingent schemes and provides several examples where the risk-pooling income-contingent loan is preferred. The paper then discusses the implications on participation and voting outcomes if successful graduates are mobile and provides examples where the riskpooling income-contingent loan remains being preferred. Risk-pooling schemes can however be prone to adverse selection problems, particularly if students are mobile. The paper explores the implications of allowing students to opt out of the riskpooling income-contingent loan for a pure loan. It shows that risk-pooling income-contingent loans can be sustained even when some students opt out.
    Keywords: Voting, higher education, income-contingent loans, risk, mobility
    JEL: H52 I22 D72
    Date: 2014
  14. By: Yuanzhi Li; David Yermack
    Abstract: We study the location and timing of annual shareholder meetings. When companies move their annual meetings a great distance from headquarters, they tend to announce disappointing earnings results and experience pronounced stock market underperformance in the months after the meeting. Companies appear to schedule meetings in remote locations when the managers have private, adverse information about future performance and wish to discourage scrutiny by shareholders, activists, and the media. However, shareholders do not appear to decode this signal, since the disclosure of meeting locations leads to little immediate stock price reaction. We find that voter participation drops when meetings are held at unusual hours, even though most voting is done electronically during a period of weeks before the meeting convenes.
    JEL: G34 K22
    Date: 2014–03
  15. By: Lorenzo Mizzau (Dept. of Management, Università Ca' Foscari Venice)
    Abstract: The purpose of this paper is to delve into the processes whereby cultural industries are interpreted by cultural, political and administrative actors, generating diverse and often unpredictable cultural, economic and social effects. By drawing evidence from a field project on the movie and audiovisual sector in North-East Italy, I explore the actual practices and micro-dynamics of local audiovisual policies formation, examining how they emerge from a continuous and complex interaction between (purposive) cultural actors and (interactive) policymakers and institutions through time. The results from a comparative case study analysis show how different patterns of interaction lead to different outcomes in terms of the effective functioning of the local cultural industry sector, and how this relationship Ð albeit a complex, multifaceted one Ð is mediated by the internal networking capability and proactivity of cultural actors. In the two patterns found, in fact, local actors were differently capable to influence institutions and by consequence to act upon the local audiovisual and movie sectors.
    Keywords: cultural industries, cultural policy formation, film and audiovisual industry, governance
    JEL: L82 M13 R38 Z10
    Date: 2014–03
  16. By: Widad Guechtouli
    Abstract: This paper is a contribution to the modelling of interactions within social networks. We use an agentbased model to explore the learning process, in a particular form of social network: a community of practice. It is based on an empirical study, made in a research centre in France. We shed light on the importance of two parameters in learning in communities: the availability of the community members, and the information they have about their neighbourhood. The first parameter represents their willingness and engagement in the development of their community, whereas the second one gives us an idea on agents’ ability to build a correct shared representation of the competencies of the other agents. We lead two sets of simulations, simulations with complete information and simulations with incomplete information.
    Keywords: learning, interaction, competencies, community of practice, agent-based model.
    Date: 2014–02–25
  17. By: Sebastian Galiani; Iván Torre; Gustavo Torrens
    Abstract: We exploit three natural experiments in Argentina in order to determine if legislative malapportionment is the cause of the biases existing in the country’s federal tax sharing scheme. We find that legislative malapportionment has had no significant effect on the federal tax sharing scheme during periods when democratic governments were in place; nor did we find any evidence that the tax sharing distribution pattern became less biased under centralized military governments. We argue that these results are attributable to two of Argentina’s institutional characteristics: first, the predominance of the executive branch over the legislature; and, second, the lack of any significant difference in the pattern of geographic representation in the executive branch under democratic and autocratic governments. Thus, the observed biases in the distribution of tax revenues among the Argentine provinces are not caused by legislative malapportionment, but are instead the result of a more structural political equilibrium that transcends the geographic distribution of legislative representation and even the nature of the political regime.
    JEL: D72 D78 H3
    Date: 2014–03
  18. By: Marilena Simiti
    Abstract: In Greece a mass movement known as the Aganaktismeni (the Indignant) became the main agent of social resistance to the memorandum signed by the Greek government, the European Union and the International Monetary Fund. The Greek movement did not take the form of a social movement sharing a minimum collective identity. Left-wing protestors played a prominent role. Protestors embracing right-wing populist frames also participated actively in collective mobilizations, while segments of the extreme right attempted to manipulate rage to their advantage. This unique feature of the Greek movement posed a completely different challenge to the principles of diversity and inclusiveness than the one debated within the Spanish Indignados and the Occupy protests. Furthermore, it illustrates that rage and indignation may spark dissimilar, even conflicting forms of political contention.
    Keywords: Protest; Austerity; Emotions; Frames; Collective Identity
    Date: 2014–02

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