New Economics Papers
on Collective Decision-Making
Issue of 2014‒04‒05
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Group size and decision rules in legislative bargaining By Miller , Luis; Vanberg, Christoph
  2. Predictability and Power in Legislative Bargaining By S. Nageeb Ali; B. Douglas Bernheim; Xiaochen Fan
  3. Elite Influence? Religion, Economics, and the Rise of the Nazis By Spenkuch, Jörg; Tillmann, Philipp
  4. Political selection in the skilled city By Antonio Accetturo
  5. Politicizing Europe: The Challenge of Executive Discretion By Jonathan White
  6. Axiomatic districting By Puppe, Clemens; Tasnádi, Attila
  7. “Let’s do it ourselves”: Individual motivations for investing in renewables at community level By Gabriella Doci; Eleftheria Vasileiadou
  8. Constrained Interactions and Social Coordination By Mathias Staudigl; Simon Weidenholzer
  9. Free and Fair Elections – A New Database By Sylvia Bishop; Anke Hoeffler
  10. Exclude the Bad Actors or Learn About The Group By David Hugh-Jones; David Reinstein
  11. Fear of being left alone drives inefficient exit from partnerships. An experiment By Gaudeul, A.; Crosetto, P.; Riener, G.
  12. Collective Reputation and the Dynamics of Statistical Discrimination By Kim, Young-Chul; Loury, Glenn
  13. Rational blinders: strategic selection of risk models and bank capital regulation By Colliard, Jean-Edouard
  14. Reform or Radicalism: Left Social Movements from the Battle of Seattle to Occupy Wall Street By Rowe, James K; Carroll, Myles
  15. Modeling emergence of the interbank networks By Hałaj, Grzegorz; Kok, Christoffer
  16. What is the role of female labour in Sikkim farming sector? By Dwivedy, Nidhi
  17. Military Spending and Democracy By Jennifer Brauner
  18. Institutions as game theory outcomes: toward a cognitive-experimental inquiry By Ambrosino, Angela

  1. By: Miller , Luis; Vanberg, Christoph
    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
    Date: 2014–03–21
  2. By: S. Nageeb Ali; B. Douglas Bernheim; Xiaochen Fan
    Abstract: This paper examines the relationship between the concentration of political power in legislative bargaining and the predictability of the process governing the recognition of legislators. Our main result establishes that, for a broad class of legislative bargaining games, if the recognition procedure permits the legislators to rule out some minimum number of proposers one round in advance, then irrespective of how patient the individual legislators are, Markovian equilibria necessarily deliver all economic surplus to the first proposer. We also examine the extent to which alternative bargaining protocols can limit the concentration of power.
    JEL: D72 D78
    Date: 2014–03
  3. By: Spenkuch, Jörg; Tillmann, Philipp
    Abstract: Adolf Hitler's seizure of power was one of the most consequential events of the twentieth century. Yet, our understanding of which factors fueled the astonishing rise of the Nazis remains highly incomplete. This paper shows that religion played an important role in the Nazi party's electoral success -- dwarfing all available socioeconomic variables. To obtain the first causal estimates we exploit plausibly exogenous variation in the geographic distribution of Catholics and Protestants due to a peace treaty in the sixteenth century. Even after allowing for sizeable violations of the exclusion restriction, the evidence indicates that Catholics were significantly less likely to vote for the Nazi Party than Protestants. Consistent with the historical record, our results are most naturally rationalized by a model in which the Catholic Church leaned on believers to vote for the democratic Zentrum Party, whereas the Protestant Church remained politically neutral.
    Keywords: religion, fascism, elite influence, Nazis, Weimar Germany
    JEL: D72 N00 N34 N94 Z12
    Date: 2014–03–30
  4. By: Antonio Accetturo (Bank of Italy)
    Abstract: This paper studies the impact of citizens’ human capital on the characteristics of elected politicians in democratic elections for the post of mayor. By using a change in the rules for Italian mayoral elections and a difference-in-differences estimator, I find that cities endowed with a larger amount of human capital tend to elect mayors that have a higher educational attainment and that were previously employed in skill-intensive jobs. This result is quantitatively small but robust to omitted variables or selection issues.
    Keywords: human capital externalities, political selection, cities
    JEL: D7 I20 H8
    Date: 2014–03
  5. By: Jonathan White
    Abstract: Political decision-making in the Euro-crisis has relied heavily on executive discretion, exercised at speed and rationalised with reference to the pressing demands of emergency. This paper explores the challenges raised for political opposition, notably challenges of a temporal kind. With its deviations from policy and procedural norms, discretionary politics tends towards a politics without rhythm, leading to major asymmetries between decision-makers and voices of opposition. These centre on issues of timing and the ability to identify authorship and content of decisions. Such asymmetries arguably correspond to an underlying one between the temporality of political decision-making and of contemporary finance capitalism, with agents of the former increasingly inclined to pursue ‘fast policy’ as a means to keep pace. A democratic response is likely to involve strengthening and synchronising the rhythms of parliamentary politics, as well as being receptive to forms of opposition less reliant on the rhythms that discretion subverts.
    Keywords: democracy
    Date: 2014–02–21
  6. By: Puppe, Clemens; Tasnádi, Attila
    Abstract: In a framework with two parties, deterministic voter preferences and a type of geographical constraints, we propose a set of simple axioms and show that they jointly characterize the districting rule that maximizes the number of districts one party can win, given the distribution of individual votes (the "optimal gerrymandering rule"). As a corollary, we obtain that no districting rule can satisfy our axioms and treat parties symmetrically. (character testing: ú ü ű ó ö Å‘ á é)
    Keywords: districting, gerrymandering
    Date: 2014
  7. By: Gabriella Doci; Eleftheria Vasileiadou
    Abstract: The paper analyses individual motivations for partaking in local renewable projects and generating energy jointly in an investment community. To do so, we applied a socio-psychological approach for studying renewable energy communities in Germany and the Netherlands. Our results show that mainly gain and normative considerations played a role in the decision, but in the background hedonic motivations were also present. Although, these considerations were driven mostly from the individual’s perspective we also found group motivations, such as strengthening the local community and improving the neighborhood’s condition. Each of the groups examined were formed in already existing strong communities, where trust was relatively high, which seems to be an important condition for the realization of local energy projects. Consequently, we argue that tailor-made incentives addressing the dominant motivations can help the most effectively the operation and spread of renewable energy communities.
    Keywords: renewable energy communities, motivations, goal-framing theory, joint investment
    Date: 2014–03
  8. By: Mathias Staudigl; Simon Weidenholzer
    Abstract: We consider a co-evolutionary model of social coordination and network formation where agents may decide on an action in a 2x2 - coordination game and on whom to establish costly links to. We find that a payoff domination convention is selected for a wider parameter range when agents may only support a limited number of links as compared to a scenario where agents are not constrained in their linking choice. The main reason behind this result is that whenever there is a small cluster of agents playing the efficient strategy other players want to link up to those layers and choose the efficient action.
    Date: 2014–02–01
  9. By: Sylvia Bishop; Anke Hoeffler
    Abstract: The holding of elections has become universal but only about half of all elections have been free and fair. Electoral malpractice not only distorts the quality of representation but has implications for political, social and economic outcomes. Existing datasets either provide broad information on election quality for large panels or they provide very detailed information on electoral processes and events for a small number of elections. Our data collection effort closes this gap. We provide an assessment of elections that is closely tied to the commonly used term ‘free and fair’ and base this proxy on ten variables for a global panel. Our preliminary results suggest that there are a number of elections that are unfree but fair. Most observer organisations concentrate on the election as an event, i.e. whether the election was fair. We therefore recommend that international organisations should put more emphasis on monitoring the run up to the elections, i.e. whether the elections were free.
    Date: 2014
  10. By: David Hugh-Jones; David Reinstein
    Abstract: In public goods environments, the threat to punish non-contributors may increase contributions. However, this threat may make players' contributions less informative about their true social preferences. This lack of information may lead to lower contributions after the threat disappears, as we show in a two stage model with selfish and conditionally cooperatives types. Under specified conditions welfare may be improved by committing not to punish or exclude. Our laboratory evidence supports this. Contributions under the threat of targeted punishment were less informative of subjects' later choices than contributions made anonymously. Subjects also realised that these were less informative, and their incentivized predictions reflected this understanding. We find evidence of conditional cooperation driven by beliefs over other's contributions. Overall, our anonymous treatment led to lower first-stage contributions but significantly higher second-stage contributions than our revealed treatment. Our model and evidence may help explain why anonymous contributions are often encouraged in the real world.
    Date: 2014–03–01
  11. By: Gaudeul, A.; Crosetto, P.; Riener, G.
    Abstract: We explore in an experiment what leads to the breakdown of partnerships. Subjects are assigned a partner and participate in a repeated public good game with stochastic outcomes. They can choose each period between staying in the public project or working on their own. There is excessive exit as subjects overestimate the likelihood their partner will leave. High barriers to exit thus improve welfare. We observe that exit is driven by failure within the common project but also by pay-off comparisons across options and beliefs about being exploited. Those considerations increasingly matter as we lower exit costs across treatments.
    JEL: C23 C92 H41
    Date: 2014
  12. By: Kim, Young-Chul; Loury, Glenn
    Abstract: Economists have developed theoretical models identifying self-fulfilling expectations as an important source of statistical discrimination in labor markets (Arrow, 1973). The static models dominating the literature of statistical discrimination, however, may leave the false impression that a bad equilibrium is as fragile as a "bubble" and can burst at any moment when expectations flip. Such models thus understate the adversity that disadvantaged groups face in seeking to escape bad equilibria. By developing a dynamic version of a statistical discrimination model based on Coate and Loury's (1993) original setup, we clarify the limits of expectations-related fragility. We show that when a group is strongly affected by negative reputational externalities, the group cannot escape a low skill investment trap, regardless of how expectations are formed. By examining the evolution of stereotypes in this way, we also provide new insights into egalitarian policies.
    Keywords: Statistical Discrimination, Collective Reputation, Reputation Trap, Forward-Looking Behavior
    JEL: D63 D82 J15 J7
    Date: 2012–08–12
  13. By: Colliard, Jean-Edouard
    Abstract: The regulatory use of banks' internal models aims at making capital requirements more accurate and reducing regulatory arbitrage, but may also give banks incentives to choose their risk models strategically. Current policy answers to this problem include the use of risk-weight floors and leverage ratios. I show that banks for which those are binding reduce their credit supply, which drives interest rates up, invites other banks to adopt optimistic models and possibly increases aggregate risk in the banking sector. Instead, the strategic use of risk models can be avoided by imposing penalties on banks with low risk-weights when they suffer abnormal losses or bailing out defaulting banks that truthfully reported high risk measures. If such selective bail-outs are not desirable, second-best capital requirements still rely on internal models, but less than in the first-best. JEL Classification: D82, D84, G21, G32, G38
    Keywords: Basel risk-weights, internal risk models, leverage ratio, tail risk
    Date: 2014–02
  14. By: Rowe, James K; Carroll, Myles
    Abstract: We examine two recent cases of relative Left success—the Battle of Seattle and Occupy Wall Street—and argue that in each case an effective dynamism between radical and reform wings drove gains. This analysis is not meant to deny political difference and hawk false unity. Instead we want to challenge the luxury of mutual dismissal with the actually existing benefits of movement dynamism. By dynamism we mean contributions arising from different activist wings and productively interacting to increase overall movement power. Our ultimate claim is that the North American Left will yield greater success by becoming more self-conscious about the concrete benefits of movement dynamism.
    Keywords: Life Sciences, Social and Behavioral Sciences, Reform, Revolution, Battle of Seattle, Occupy Wall Street, Social Movements, Left politics
    Date: 2014–03–01
  15. By: Hałaj, Grzegorz; Kok, Christoffer
    Abstract: Interbank contagion has become a buzzword in the aftermath of the financial crisis that led to a series of shocks to the interbank market and to periods of pronounced market disruptions. However, little is known about how interbank networks are formed and about their sensitivity to changes in key bank parameters (for example, induced by common exogenous shocks or by regulatory initiatives). This paper aims to shed light on these issues by modelling endogenously the formation of interbank networks, which in turn allows for checking the sensitivity of interbank network structures and hence their underlying contagion risk to changes in market-driven parameters as well as to changes in regulatory measures such as large exposures limits. The sequential network formation mechanism presented in the paper is based on a portfolio optimisation model whereby banks allocate their interbank exposures while balancing the return and risk of counterparty default risk and the placements are accepted taking into account funding diversification benefits. The model offers some interesting insights into how key parameters may affect interbank network structures and can be a valuable tool for analysing the impact of various regulatory policy measures relating to banks' incentives to operate in the interbank market. JEL Classification: G21, C63, C78
    Keywords: counterparty risk, interbank network, nancial contagion, nancial regulation
    Date: 2014–03
  16. By: Dwivedy, Nidhi
    Abstract: The present work has analyzed the existing information about the role of female labour in farming sector in the rural area of Sikkim in North- Eastern India, which covers broadly- gender participation/decision making in crop production and animal husbandry & related activities, possession & gender-wise ownership of domestic animals/land and the extent of accessibility to production resources of sample female farmers. Social science research in the state of Sikkim is inadequate despite several incentives provided by the state government. Nowadays, with voluminous amount of public expenditure on women empowerment schemes, we cannot ignore this issue thus making it unavoidable to empower them also with the intention to fully utilize their caliber in this field. Keeping this in mind, data was collected from 230 female farmers through interviews using a pre-designed schedule from 24 circles from all the four districts of Sikkim State. Based on their subjective judgments, female farmer’s role in farming has been measured and analyzed using the Statistical Package for the Social Science (SPSS). Some descriptive statistics, such as percentage as well as one sample t-test of inferential statistics is used to interpret the data.Results pertaining to these findings have been discussed in this PPT.
    Keywords: Gender participation, Decision making, Access, Production Resources,Production Inputs, Farming Females, Crop production, Animal Husbandry, Gender-Wise Farm Land Status, Cultivators, Agriculture Labourers, Traditional Knowledge, Integrated Farming, Sikkim.
    JEL: J71
    Date: 2014–01–17
  17. By: Jennifer Brauner (Department of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: This paper examines empirically whether democracies allocate fewer resources to the military than dictatorships do. It employs a panel of up to 112 countries over the period 1960-2000 to estimate a standard demand for military spending model. While papers on the determinants of military spending generally include democracy as a control variable, with a few exceptions, it is not the focus of their enquiry. This paper addresses resulting problems in the existing literature concerning data quality and the appropriate measurement of key variables, as well as the question of causality between military spending and democracy. It finds that democracies spend less on the military as a percentage of GDP than autocracies do and that causality runs from regime type to military spending.
    Keywords: Military expenditure, regime type, political economy, defence economics, democracy.
    Date: 2014–03
  18. By: Ambrosino, Angela
    Abstract: The paper investigates two different approaches to the analysis of institutions using game theory and discusses their methodological and theoretical implications for further research. Starting from von Neumann and Morgenstern’s theory, we investigate how game theory has been applied to the analysis of institutions, these being considered, as in Hayek (1967, 1988a) as the unplanned outcomes of self-interested individual behavior. We focus on Schotter’s (1981) and Schelling’s (1960) alternative approaches. The different ways in which these authors use von Neumann and Morgenstern’s concepts of coalition and indeterminacy of solutions play an important role in explaining the spontaneous emergence of institutions from interaction. We argue that this issue is also of importance in explaining how Schotter and Schelling’s theories fit with the main features of Hayek's theory of institutions.
    Keywords: Institutions, Game Theory, Cognition, Hayek, Schotter, Schelling
    JEL: B40 B31 B52 B20
    Date: 2009

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