New Economics Papers
on Collective Decision-Making
Issue of 2014‒04‒18
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Strategic voting in proportional representation systems By Stan Veuger; Tim Ganser
  2. What Happens When a Woman Wins an Election? Evidence from Close Races in Brazil By Brollo, Fernanda; Troiano, Ugo
  3. Does Money Make People Right-Wing and Inegalitarian? A Longitudinal Study of Lottery Winners By Powdthavee, Nattavudh; Oswald, Andrew J.
  4. A Concise Axiomatization of a Shapley-type Value for Stochastic Coalition Processes By Ulrich Faigle; Michel Grabisch
  5. A Culture Based Theory of Fiscal Union Desirability By Guiso, Luigi; Herrera, Helios; Morelli, Massimo
  6. Equilibrium Selection in Sequential Games with Imperfect Information By Jon X. Eguia; Aniol Llorente-Saguer; Rebecca Morton; Antonio Nicolò
  7. The unsolved contradictions of the modernists. Economic policy expectations and political crisis in France 1978-2012 By Bruno Amable
  8. Economic Growth and the Politics of Intergenerational Redistribution By Tetsuo Ono
  9. Fear of being left alone drives inefficient exit from partnerships. An experiment By Alexia Gaudeul; Paolo Crosetto; Gerhard Riener
  10. Trajectories and outcomes of the 'Arab Spring' : comparing Tunisia, Egypt, Libya and Syria By Darwisheh, Housam
  11. Institution Building and Political Economy By Majumdar, Sumon; Mukand, Sharun W
  12. The role of expectations in the provision of public goods under the influence of social identity By Lankau, Matthias; Bicskei, Marianna; Bizer, Kilian
  13. How peer-punishment affects cooperativeness in homogeneous and heterogeneous groups: A public goods experiment with social identity By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
  14. Leadership, power and negotiation: the impossible triad? By Claude Alavoine
  15. Social environment and forms of governance: Monetary and non-monetary punishment and the role of emotions By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
  16. An Empirical Analysis of Trade-Related Redistribution and the Political Viability of Free Trade By Lake, James; Millimet, Daniel L.
  17. Rich man and Lazarus – Asymmetric Endowments in Public-Good Experiments By Claudia Keser; Andreas Markstädter; Martin Schmidt; Cornelius Schnitzler
  18. Does the Nomination Scheme of the City Manager Matter for Urban Development Policies? By Sebastian Garmann
  19. Negative reciprocity and its relation to anger-like emotions in homogeneous and heterogeneous groups By Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian

  1. By: Stan Veuger (American Enterprise Institute); Tim Ganser
    Abstract: We propose a model of voter decision-making in proportional representation systems: ultra-rational strategic voters construct expectations of coalitions and policy outcomes based on expected seat distributions and vote to maximize their expected utility from the implemented policy.
    Keywords: voting,proportional representation
    JEL: A
    Date: 2014–02
  2. By: Brollo, Fernanda (University of Warwick); Troiano, Ugo (University of Michigan)
    Abstract: This paper analyzes the eect of the gender of local policymakers on policy outcomes. Analyzing a rich dataset from Brazilian municipalities and using a regression discon- tinuity design, we nd that municipalities ruled by female mayors have better health outcomes, receive more federal discretionary transfers, and have lower corruption. Addi- tionally, male mayors hire more temporary public employees than their female counter- parts when they are allowed to run for re-election, and when municipal elections are approaching. These ndings suggest that male mayors may promote more political pa- tronage than female mayors and that men and women may respond dierently to local election incentives.
    Keywords: election incentives, Brazil
    Date: 2013
  3. 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
  4. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (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: The classical Shapley value is the average marginal contribution of a player, taken over all possible ways to form the grand coalition $N$ when one starts from the empty coalition and adds players one by one. In a previous paper, the authors have introduced an allocation scheme for a general coalition formation model where the evolution of the coalition of active players is ruled by a Markov chain and need not finish with the grand coalition. This note provides an axiomatization which is only slightly weaker than the original one but allows a much more transparent proof. Moreover, the logical independence of the axioms is exhibited.
    Keywords: Coalitional game; coalition formation process; Shapley value
    Date: 2013
  5. By: Guiso, Luigi (EIEF & CEPR); Herrera, Helios (HEC Montreal); Morelli, Massimo (Columbia University)
    Abstract: If voters of different countries adhere to different and deeply rooted cultural norms, the country leaders may fi…nd it impossible to agree on efficient policies especially in hard times. The conformity constraint -political leaders unwillingness or impossibility to depart from these norms - has resulted in lack of timely intervention which has ampli…ed an initially manageable debt crisis for some European countries to the point of threatening the Euro as a single currency. We show the conditions under which the introduction of a fi…scal union can be obtained with consensus and be bene…cial. Perhaps counter- intuitively, cultural diversity makes a fi…scal union even more desirable. Some general lessons can also be drawn on the interaction of cultural evolution and institutional choice.
    Keywords: Conformity constraint, culture, debt crisis, …fiscal union.
    Date: 2013
  6. By: Jon X. Eguia (University of Bristol); Aniol Llorente-Saguer (Queen Mary University of London); Rebecca Morton (New York University); Antonio Nicolò (University 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 profile 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 find that our selection criterion outperforms the other selection criteria.
    Keywords: Equilibrium selection, Passive beliefs, Symmetric beliefs, Vertical contracting, Multiple equilibria, Imperfect information
    JEL: C72 D86 H41 D72
    Date: 2014–04
  7. By: Bruno Amable (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris 1 - Panthéon-Sorbonne, CEPREMAP - Centre pour la recherche économique et ses applications, IUF - Institut Universitaire de France - Ministère de l'Enseignement Supérieur et de la Recherche Scientifique)
    Abstract: This paper analyses the French political crisis since the late 1970s by investigating the links between the social structure and the economic policy expectations of the electorate. To this end, data on post-electoral survey are used to estimate structural models of political support to political parties for 1978 and 2012, and the estimation results are used to propose an analysis of the French crisis. The enduring French political crisis is found to be the expression of contradictions between the economic policies implemented by the successive governments and the existence of a dominant social bloc, i.e. a coalition of social groups that would politically support the dominant political strategy. Since 1978, both the right and the left have failed to find a solution to the contradictions between the policies they implemented and the expectations of their social bases, which are themselves inhabited by tensions and contradictions that evolve with the structure of French capitalism. The failure of all governing coalitions so far is a new expression of that of the "modernists" to take into account the expectations of the popular classes.
    Keywords: France; political crisis; political economy; social base
    Date: 2014–03
  8. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This paper presents an overlapping-generation model featuring probabilistic vot- ing over two policy issues, namely, pension and public goods. To capture the forward-looking behavior of voters, we characterize a Markov-perfect political equi- librium in which the two policy variables are conditioned on a payoff-relevant state variable, that is, capital. It is shown that (i) as the population ages, the pension- to-GDP ratio and the growth rate of capital increase, but the public goods-to-GDP ratio decreases and (ii) the pension-to-GDP and public goods-to-GDP ratios are too high and the growth rate too low from the standpoint of social welfare.
    Keywords: Economic Growth; Population Aging; Probabilistic Voting; Public Pension; Public Goods Provision
    JEL: D70 E24 H55
    Date: 2014–04
  9. By: Alexia Gaudeul (DFG RTG 1411, Friedrich-Schiller-Universität Jena); Paolo Crosetto (UMR GAEL INRA, Universite Pierre Mendes France, Grenoble); Gerhard Riener (DICE, Heinrich-Heine-Universität Düsseldorf)
    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.
    Keywords: breakup, collaboration, cooperation, exit, imperfect public monitoring, moral hazard, partnerships, punishment, public good, repeated game, social risk, teams
    JEL: C23 C92 H41
    Date: 2014–04–08
  10. By: Darwisheh, Housam
    Abstract: Almost three years have passed since the 'Arab Spring' began in late 2010. In the major sites of popular uprisings, political conditions remain unsettled or violent. Despite similarities in their original opposition to authoritarian rule, the outcomes differed from country to country. In Tunisia and Egypt, processes of transiting from authoritarian rule produced contrasting consequences for democratic politics. Uprisings led to armed rebellion in Libya and Syria, but whereas Gaddafi was overthrown, Asad was not. What explains the different trajectories and outcomes of the Arab Spring? How were these shaped by the power structure and levels of social control of the pre-uprising regimes and their state institutions, on the one hand, and by the character of the societies and oppositional forces that rose against them? Comparing Tunisia with Egypt, and Libya with Syria, this paper discusses various factors that account for variations in the trajectories and outcomes of the Arab Spring, namely, the legacy of the previous regime, institutional and constitutional choices during "transition" from authoritarian rule, socioeconomic conditions, and the presence of absence of ethnic, sectarian and geographic diversity.
    Keywords: Middle East & Norht Africa, Tunisia, Egypt, Libya, Syria, Revolutions, Internal politics, Democratization, People's movement, Institutions, Transition, Islamists
    JEL: N15 N17 P16
    Date: 2014–03
  11. By: Majumdar, Sumon (Queens University); Mukand, Sharun W (University of Warwick)
    Abstract: The paper examines the role of policy intervention in engendering institutional change. We show that first order changes in the political structure (e.g. introduction of democracy) may be undermined by local political interests and result in persistence in institutions and the (poor) quality of governance. The paper identifies two effects of development policy as a tool for institutional change. One, by increasing political accountability, it may encourage nascent democratic governments to invest in good institutions – the incentive effect. However, we show that it also increases the incentive of the rentier elite to tighten their grip on political institutions – the political control effect. Which of these dominate determine the overall impact on institutional quality. Under some conditions, by getting the elite to align their economic interests with that of the majority, development policy can lead to democratic consolidation and economic improvement. However if elite entrenchment is pervasive, then comprehensive change may require more coercive means.
    Keywords: political structure
    Date: 2013
  12. By: Lankau, Matthias; Bicskei, Marianna; Bizer, Kilian
    Abstract: Individuals who share a common identity show persistently elevated contributions to public goods. Yet, so far the factors that actually trigger this welfare enhancement are not precisely understood. We investigate two channels: (1) subjects' expectations on group members' cooperativeness and (2) the degree to which they reciprocate these expectations by own contributions' i.e. their conditional cooperation. To this purpose we induce identity in the lab and implement an in-group, out-group and partner matching protocol in a ten-period public good game. Our results yield that comparatively higher expectations on in-group than on outgroup members' cooperativeness are the main driver for welfare enhancements in identity homogeneous groups. The degree of conditional cooperation is, however, similar in all matching protocols. Merely individuals initially identified as free-riders seem to reciprocate a limited range of expectations by higher own contributions when matched with in-group than with out-group members. Nevertheless, our findings clearly underline the paramount importance of expectations in determining cooperation under social identity. --
    Date: 2014
  13. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: This article analyzes how the anticipation of peer-punishment affects cooperativeness in the provision of public goods under social identity. For this purpose we conduct one-shot public good games with induced social identity and implement in-group, out-group and random matching protocols. Our measure of cooperativeness is subjects' conditional contribution elicited via the strategy method, which allows for observing behavior contingent on every possible level of group members' cooperation. We demonstrate, firstly, that the social environment is a determinant of how the threat of peer-punishment influences cooperation. The strongest increase is clearly evident when subjects interact with members of different identities, which is especially the case for individuals who were initially categorized as freeriders. Secondly, anticipation of peer-punishment clearly eliminates the typically existing ingroup bias without punishment and renders out-group members to be as cooperative as ingroups members. Lastly, the results indicate that the institutions of peer-punishment and social identity may be complemented in order to raise subjects' cooperativeness. --
    JEL: C92 D03 D73 H41
    Date: 2014
  14. By: Claude Alavoine
    Abstract: Leadership theory has evolved through changing conceptions, from the trait theories to the identification of behavioural styles, the contingency theories matching adapted behaviours with situational factors and eventually new theories focusing on the articulation of a vision. From charismatic and rational, the leader has become transformational, has learned how to use emotional intelligence in order to be inspirational, and eventually post-heroic in an ever changing environment. Instead of being simply commanders, leaders must be acting as facilitators, negotiators in relational processes more than controlling systems in order to solve or prevent many arising conflicts. While managing conflict can now be recognised as part of any leader plan, negotiation remains a specific activity in which participants go beyond a simple problem solving approach. They engage in a voluntary joint decision making process with conflicting interests and expectations leading to different phases of cooperation and competition with, in the end, an outcome that can never be predicted.
    Keywords: leadership, power, negotiation, conflict, interests.
    Date: 2014–04–10
  15. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: The question to what extent social environment affects how individuals govern their groups, has received no special academic attention, yet. Within the framework of a ten-period public goods experi&ment we analyse how social identity affects subjects' choice of punishment: They may either sanction group members by monetary and/or by non-monetary sanctions bearing differentconsequences on welfare. What is more, we are also the first to address how emotions influence the effectiveness of punishment in terms of maintaining contributions. Our results show that under the threat of both punishments identity-heterogeneous (out-) groups tend to contribute more to the public good than identity-homogenous (in-) groups. Nevertheless, subjects of out-groups are more likely to govern their group via monetary, in-group members rather via non-monetary punishment. What is more, we demonstrate that emotions of guilt and anger differently affect subsequent contributions dependent on the social environment. --
    Keywords: public goods,social identity,monetary and non-monetary peer-punishment,emotions
    Date: 2014
  16. By: Lake, James (Southern Methodist University); Millimet, Daniel L. (Southern Methodist University)
    Abstract: Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution increases the political viability of free trade in the US. We do so by assessing the causal effect of expected redistribution associated with the US Trade Adjustment Assistance program on US Congressional voting behavior on eleven Free Trade Agreements (FTAs) between 2003 and 2011. We find that a one standard deviation increase in redistribution leads to more than a 3% point increase in the probability of voting in favor of an FTA for the median representative. In addition, a one standard deviation decrease in redistribution across the entire US would have precluded passage of two of the eleven FTAs in our sample.
    Keywords: free trade agreements, trade adjustment assistance, political economy, redistribution
    JEL: F13 H50 J65
    Date: 2014–03
  17. By: Claudia Keser; Andreas Markstädter; Martin Schmidt; Cornelius Schnitzler
    Abstract: We compare voluntary contributions to a public good in a symmetric setting to those in a weakly and a strongly asymmetric setting, where the players have different, randomly allocated endowments. We observe that the group-contribution levels are not significantly different between the symmetric and the weakly asymmetric setting. In both situations, participants tend to contribute the same proportion of their respective endowment. In the strongly asymmetric situation, where one of the players has a higher endowment than the three other players together, we observe a significantly lower group contribution than in the other situations. The rich player in this situation does not contribute significantly more than the average contribution of the poor players and thus contributes a significantly lower proportion of the endowment. This player is not as greedy as the rich man in the parable but leaves not more than breadcrumbs to the poor players.
    Keywords: Experimental economics, public goods, asymmetries,
    Date: 2013–09–01
  18. By: Sebastian Garmann
    Abstract: This paper examines the causal effect of a change in the nomination scheme of the city manager from appointment by the local council to election by the citizens on urban development policies. Using the fact that the timing of the reform was as good as random in municipalities of the German state Hesse, I can utilize a difference-in-difference framework to estimate this causal effect. I find that when the city manager is elected by the voters, there is significantly less urban development than when the city manager is appointed by the municipal council.
    Keywords: Urban development policies; form of local government; land use regulations; building licenses; difference-in-difference estimation; natural experiment
    JEL: H7 Q15 R52
    Date: 2014–03
  19. By: Bicskei, Marianna; Lankau, Matthias; Bizer, Kilian
    Abstract: Several studies have shown that social identity fosters the provision of public goods and enhances the willingness to reciprocate cooperative behavior of group members dependent on the social environment. Yet, the question of how social identity affects negative reciprocity in identityhomogeneous and -heterogeneous groups has received only little attention. Consequently, we seek to fill this gap by examining whether social identity affects individuals' willingness to sanction deviating group members in a public good context. Moreover, we devote particular attention to the role of anger-like emotions in negative reciprocity. To test our hypotheses we employ one-shot public good games in strategy method with induced social identity. Our results indicate that members of identity homogeneous groups punish much less often and in smaller amounts than of identity heterogeneous groups when they face contributions smaller than their own. We also find that anger-like emotions influence punishment behavior much stronger when individuals are matched with members of different identities than in identity homogenous groups. These findings contribute to the better understanding of the nature of social identity and its impact on reciprocity, improving economists ability to predict behavior taking emotions also into consideration. --
    Keywords: social identity,emotions,experiment,public goods,negative reciprocity
    Date: 2014

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