New Economics Papers
on Collective Decision-Making
Issue of 2014‒06‒22
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Ignorance and bias in collective decision:Theory and experiments By Alexander Elvitar; Andrei Gomberg; César Martinelli; Thomas R. Palfrey
  2. E-lections: Voting Behavior and the Internet By Oliver Falck; Robert Gold; Stephan Heblich
  3. Trust and Manipulation in Social Networks By Manuel Förster; Ana Mauleon; Vincent J. Vannetelbosch
  4. A Note on Values for Markovian Coalition Processes By Ulrich Faigle; Michel Grabisch
  5. Measuring Power and Satisfaction in Societies with Opinion Leaders By René Van Den Brink; Agnieszka Rusinowska; Frank Steffen
  6. Opinion Dynamics and Wisdom under Conformity By Berno Buechel; Tim Hellmann; Stefan Kölßner
  7. Anonymous social influence By Manuel Foerster; Michel Grabisch; Agnieszka Rusinowska
  8. Endogenous party platforms; "Stochastic" Membership By Andrei Gomberg; Francisco Marhuenda; Ignacio Ortuño-Ortín
  9. From Rebellion to Electoral Violence: Evidence from Burundi By Andrea Colombo; Olivia D'Aoust; Olivier Sterck
  10. Strategy-proofness and single-peackedness in bounded distributive lattices By Ernesto Savaglio; Stefano Vannucci
  11. State Formation And Frontier Society: An Empirical Examination By Roberto Foa; Anna Nemirovskaya
  12. Core and Coalitional Fairness: The Case of Information Sharing Rule By Bhowmik, Anuj
  13. Peering into the mist: social learning over an opaque observation network By John Barrdear
  14. Rent Seeking and Power Hierarchies: A Noncooperative Model of Network Formation with Antagonistic Links By Kenan Huremovic
  15. Does Democracy Impact Economic Growth? Exploring the Case of Bangladesh – A Cointegrated VAR Approach By Dasgupta, Shouro; Bhattacharya, Debapriya; Neethi, Dwitiya Jawher
  16. NIMBY or YIMBY? Municipalities' reaction to disaster waste from the Great East Japan Earthquake By Ishimura, Yuichi; Takeuchi, Kenji; Carlsson, Fredrik
  17. Rationality and Beyond: A Critique of the Nature and Task of Economics By Li, Cheng
  18. Sharing R&D Investments in Cleaner Technologies to Mitigate Climate Change By Abeer El-Sayed; Santiago J. Rubio
  19. The core of games on ordered structures and graphs By Michel Grabisch

  1. By: Alexander Elvitar (Centro de Investigación y Docencia Económicas, (CIDE)); Andrei Gomberg (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM)); César Martinelli (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM)); Thomas R. Palfrey (California Institute of Technology)
    Abstract: We consider a committee with common interests. Committee members do not know which of two alternatives is the best, but each member may acquire privately a costly signal before casting a vote under either majority or unanimity rule. In the lab, as predicted by Bayesian equilibrium, voters are more likely to acquire information under majority rule, and attempt to counter the bias built in favor of one alternative under unanimity rule. As opposed to Bayesian equilibrium predictions, however, some committee members vote for either alternative when uninformed. Moreover, uninformed voting is correlated with a lower disposition to acquire information. We show that an equilibrium model of subjective prior beliefs may account for this correlation, and provides a good fit for the observed patterns of behavior both in terms of rational ignorance and biases.
    Keywords: Condorcet jury theorem, rational ignorance, homemade priors
    JEL: D72 D83
    Date: 2014
  2. By: Oliver Falck; Robert Gold; Stephan Heblich
    Abstract: This paper analyses the effects on voting behavior of information disseminated over the Internet. We address endogeneity in Internet availability by exploiting regional and technological peculiarities of the preexisting voice telephony network that hindered the roll-out of fixed-line infrastructure for high-speed Internet. We find negative effects of Internet availability on voter turnout, which we relate to a crowding-out of TV consumption and increased entertainment consumption. We find no evidence that the Internet systematically benefits specific parties, suggesting ideological self-segregation in online information consumption. Robustness tests, including placebo estimations from the pre-Internet period, support a causal interpretation of our results.
    Keywords: Elections, Mass Media, Internet.
    JEL: D72 L82 L86
    Date: 2014–06
  3. By: Manuel Förster (CES, Université Paris 1 Panthéon-Sorbonne, France, and CORE, University of Louvain Louvain-la-Neuve, Belgium); Ana Mauleon (CEREC, Saint-Louis University, Brussels, CORE, University of Louvain, Louvain-la-Neuve, Belgium); Vincent J. Vannetelbosch (CORE, University of Louvain, Louvain-la-Neuve, CEREC, Saint-Louis University, Brussels, Belgium)
    Abstract: We investigate the role of manipulation in a model of opinion formation. Agents repeatedly communicate with their neighbors in the social network, can exert effort to manipulate the trust of others, and update their opinions about some common issue by taking weighted averages of neighbors' opinions. The incentives to manipulate are given by the agents' preferences. We show that manipulation can modify the trust structure and lead to a connected society. Manipulation fosters opinion leadership, but the manipulated agent may even gain influence on the long-run opinions. Finally, we investigate the tension between information aggregation and spread of misinformation.
    Keywords: Social networks, Trust, Manipulation, Opinion leadership, Consensus, Wisdom of Crowds
    JEL: D83 D85 Z13
    Date: 2014–04
  4. By: Ulrich Faigle (Universität zu Köln - Mathematisches Institut); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The Shapley value is defined as 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. The authors have proposed in a previous paper an allocation scheme for a general model of coalition formation where the evolution of the coalition of active players is ruled by a Markov chain, and need not finish at the grand coalition. The aim of this note is to develop some explanations in the general context of time discrete stochastic processes, exhibit new properties of the model, correct some inaccuracies in the original paper, and give a new version of the axiomatization.
    Keywords: coalitional game; coalition formation process; Shapley value
    Date: 2013
  5. By: René Van Den Brink (Department of Econometrics and Tinbergen Institute - VU University); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Frank Steffen (University of Liverpool Management School (ULMS) - University of Liverpool Management School)
    Abstract: Opinion leaders are actors who have some power over their followers as they are able to influence their followers' choice of action in certain instances. In van den Brink et al. (2011) we proposed a two-action model for societies with opinion leaders. We introduced a power and a satisfaction score and studied some common properties. In this paper we strengthen two of these properties and present two further properties, which allows us to axiomatize both scores for the case that followers require unanimous action inclinations of their opinion leaders to follow them independently from their own action inclinations.
    Keywords: Collective choice ; follower ; opinion leader ; power ; satisfaction ; axiomatization
    Date: 2013–09
  6. By: Berno Buechel (Department of Economics, University of Hamburg); Tim Hellmann (Institute of Mathematical Economics, Bielefeld University); Stefan Kölßner (Statistics and Econometrics, Saarland University)
    Abstract: We study a dynamic model of opinion formation in social networks. In our model, boundedly rational agents update opinions by averaging over their neighbors' expressed opinions, but may misrepresent their own opinion by conforming or counter-conforming with their neighbors. We show that an agent's social influence on the long-run group opinion is increasing in network centrality and decreasing in conformity. Concerning efficiency of information aggregation or “wisdom" of the society, it turns out that misrepresentation of opinions need not undermine wisdom, but may even enhance it. Given the network, we provide the optimal distribution of conformity levels in the society and show which agents should be more conforming in order to increase wisdom.
    Keywords: Opinion Leadership, Wisdom Of Crowds, Consensus, Social Networks, Conformity, Eigenvector Centrality
    JEL: C72 D83 D85 Z13
    Date: 2014–05
  7. By: Manuel Foerster (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique); Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: We study a stochastic model of influence where agents have "yes" or "no" inclinations on some issue, and opinions may change due to mutual influence among the agents. Each agent independently aggregates the opinions of the other agents and possibly herself. We study influence processes modeled by ordered weighted averaging operators, which are anonymous: they only depend on how many agents share an opinion. For instance, this allows to study situations where the influence process is based on majorities, which are not covered by the classical approach of weighted averaging aggregation. We find a necessary and sufficient condition for convergence to consensus and characterize outcomes where the society ends up polarized. Our results can also be used to understand more general situations, where ordered weighted averages are only used to some extent. Furthermore, we apply our results to fuzzy linguistic quantifiers, i.e., expressions like "most" or "at least a few".
    Keywords: Influence; Anonymity; Ordered weighted averaging operator; Convergence; Consensus; Fuzzy linguistic quantifier
    Date: 2013
  8. By: Andrei Gomberg (Centro de Investigación Económica (CIE), Instituto Tecnológico Autónomo de México (ITAM)); Francisco Marhuenda (Department of Economics, Universidad Carlos III); Ignacio Ortuño-Ortín (Department of Economics, Universidad Carlos III)
    Abstract: We analyze existence of divergent equilibria in a model of endogenous party platforms with stochastic membership, while the membership depends bothon the proposals of the parties and the unobserved idiosyncratic preferecnces of citizens over parties. It is shown that when citizens view the parties as similar, apart from their policy proposals (i.e., the party platform is a good predictor of individual membership decision). the divergent equilibria exist. We analyze the relationship between parties policy proposals and the unobserved idiosyncratic characteristics of parties and we obtain conclusions different from the ones prvovided in existing literature.
    Date: 2013
  9. By: Andrea Colombo; Olivia D'Aoust; Olivier Sterck
    Abstract: We aim at understanding the triggers of electoral violence, which spoiled 80% of elections in Africa during the last decades. We focus on Burundi, a country which experienced polls in 2010, only few months after the end of a long-lasting civil war. Our results suggest that higher polarization between ex-rebels’ groups increases the risk of electoral violence at the municipal level. However, neither ethnic nor political cleavages significantly determine such electoral malpractices. These results are robust to numerous specifications. We therefore argue that policies supporting the transition of ex-rebel groups from warfare to the political arena should be reinforced.
    Keywords: Civil war, Electoral violence, Polarization, Demobilization, Burundi
    JEL: D74 O11 O17 O55
    Date: 2014
  10. By: Ernesto Savaglio; Stefano Vannucci
    Abstract: Two distinct specifications of single peakedness as currently met in the relevant literature are singled out and discussed. Then, it is shown that, under both of those specifications, a voting rule as defined on a bounded distributive lattice is strategy-proof on the set of all profiles of single peaked total preorders if and only if it can be represented as an iterated median of projections and constants, or equivalently as the behaviour of a certain median tree-automaton. The equivalence of individual and coalitional strategy-proofness that is known to hold for single peaked domains in bounded linear orders fails in such a general setting. A related impossibility result on anonymous coalitionally strategy-proof voting rules is also obtained.
    Date: 2014–06
  11. By: Roberto Foa (Harvard University); Anna Nemirovskaya (National Research University Higher School of Economics)
    Abstract: How is state capacity consolidated? While there is a growing literature on state formation and the long-term rise of state capacity, this literature typically deals with differences between countries, neglecting the fact that state formation also occurs differentially within a country over time. This article examines legacies of state formation spatially, by looking at variation within "frontier" states - countries which in recent centuries have extended rule over new territories adjacent to their core regions. Frontier zones within such countries are found to have ongoing lower levels of public order and deficient public goods provision. Several theories are examined to explain this discrepancy, including internal resettlement, costs of monitoring and enforcement, and the relationship between settlers and the indigenous population. It is argued that the formation of strong social institutions among settlers leads to resistance to attempts to impose governance over frontier regions, and to `select for' lower fiscal capacity and lower provision of public goods.
    Keywords: State formation, settlement patterns, historical institutionalism, frontier thesis, public goods, rule of law, governance.
    JEL: Z13 N90 R23 H41
    Date: 2014
  12. By: Bhowmik, Anuj
    Abstract: We investigate two of the most extensively studied cooperative notions in a pure exchange economy with asymmetric information. One of them is the core and the other is known as coalitional fairness. The set of agents is modelled by a mixed market consisting of some large agents and an ocean of small agents; and the commodity space is an ordered Banach space whose positive cone has an interior point. The information system in our framework is the one introduced by Allen in [1]. Thus, the same agent can have common, private or pooled information when she becomes member of different coalitions. It is shown that the main results in Grodal [20], Schmeidler [26] and Vind [31] can be established when the economy consists of a continuum of small agents. We also focus on the information mechanism based on size of coalitions introduced in [18] and obtain a result similar to the main result in [18]. Finally, we examine the concept of coalitional fairness proposed in [21]. We prove that the core is contained in the set of coalitionally fair allocations under some assumptions. This result provides extensions of Theorem 2 in [21] to an economy with asymmetric information as well as a deterministic economy with infinitely many commodities. Although we consider a general commodity space, all our results were so far unsolved to the case of information sharing rule with finitely many commodities.
    Keywords: Asymmetric information economy; coalitional fairness; core; information sharing rule.
    JEL: D51 D82
    Date: 2014–06–13
  13. By: John Barrdear (Bank of England; Centre for Macroeconomics (CFM))
    Abstract: I present a model of social learning over an exogenous, directed network that may be readily nested within broader macroeconomic models with dispersed information and combines the attributes that agents (a) act repeatedly and simultaneously; (b) are Bayes-rational; and (c) have strategic interaction in their decision rules. To overcome the challenges imposed by these requirements, I suppose that the network is opaque: agents do not know the full structure of the network, but do know the link distribution. I derive a specific law of motion for the hierarchy of aggregate expectations, which includes a role for network shocks (weighted sums of agents’ idiosyncratic shocks). The network causes agents’ beliefs to exhibit increased persistence, so that average expectations overshoot the truth following an aggregate shock. When the network is sufficiently (and plausibly) irregular, transitory idiosyncratic shocks cause persistent aggregate effects, even when agents are identically sized and do not trade.
    Keywords: dispersed information, network learning, heterogeneous agents, aggregate volatility
    JEL: C72 D82 D83 D84
    Date: 2014–06
  14. By: Kenan Huremovic (Department of Economics, European University Institute, Italy)
    Abstract: Network structure has a significant role in determining the outcomes of many socioeconomic relationships, including the antagonistic ones. In this paper we study a situation in which agents, embedded in a network, simultaneously play interrelated bilateral contest games with their neighbors. Interrelatedness of contests induces complex local and global network effects. We first characterize the equilibrium of a game on an arbitrary fixed network. Then we study a dynamic network formation model, introducing a novel but intuitive link formation protocol. As links represent antagonistic relationships, link formation is unilateral while link destruction is bilateral. A complete k-partite network is the unique stable network topology. As a result, the model provides a micro-foundation for the structural balance concept in social psychology, and the main results go in line with theoretical and empirical findings from other disciplines, including international relations, sociology and biology.
    Keywords: Network Formation, Structural Balance, Contest
    JEL: D85 D74
    Date: 2014–04
  15. By: Dasgupta, Shouro; Bhattacharya, Debapriya; Neethi, Dwitiya Jawher
    Abstract: The key socioeconomic indicators of Bangladesh have apparently experienced improvement since the advent of a new phase of democracy in 1991. This paper examines the impact of democracy on economic growth in Bangladesh using a cointegrated Vector Autoregressive model. Results suggest that democracy as practiced in Bangladesh does not seem to have a significantly positive impact on economic growth, and at the same time authoritarian regimes tend to have a significantly negative impact on economic growth. Inadequate democratic decision making practices, ineffective policy designs and weak policy making institutions are some of the likely causes behind this relationship. The situation is aggravated by the fact that the institutions do not positively alter the decision making behaviour even under democratically elected regimes.
    Keywords: Democracy, Economic Growth. Cointegration, VAR, and Polity IV
    JEL: C10 C12 C51 E13 O43
    Date: 2013–09
  16. By: Ishimura, Yuichi (Graduate School of Economics, Kobe University); Takeuchi, Kenji (Graduate School of Economics, Kobe University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This study investigates the determinants of transfer of waste between the affected areas and other municipalities that resulted from the Great East Japan Earthquake. In particular, we investigate to what extent economic factors, but also social factors such as reciprocity and pro-social concerns, affect municipalities’ decision to accept disaster waste. We find some evidence that economic factors affect the decision, but the main factors that explain the decision are related to concerns about radiation and social concerns about the affected area. Our results suggest that it is primarily social concerns, both about the own municipality but also about the affected municipalities that explain behavior.
    Keywords: disaster waste; social preferences; wide area treatment
    JEL: Q53 R50
    Date: 2014–06
  17. By: Li, Cheng
    Abstract: This paper shows that the means-end rationality principle, as an ‘ultimate given’ of economics, delimits the faculty of economists to observe, describe and understand the manifold human behavior. Given such epistemological limitations, as a descriptive science, the main task of economics is to incorporate appropriate empirical content into the a priori analytical framework with the aim of better explaining and predicting some aspect of human behavior. As a normative science, economists should draw on their persuasion and communication skills whereby changing the means and end of the decision makers to the extent that the real world decision-making can be improved.
    Keywords: Rationality; Constrained maximization model; Methodology; Epistemology
    JEL: A11 A12 B41
    Date: 2014–06–18
  18. By: Abeer El-Sayed (Department of Economic Analysis and ERICES, University of Valencia, Spain); Santiago J. Rubio (Department of Economic Analysis and ERICES, University of Valencia, Spain)
    Abstract: This paper examines international cooperation on technological development as an alternative to international cooperation on GHG emission reductions. It is assumed that when countries cooperate they coordinate their investments so as to minimize the agreement costs of controlling emissions and that they also pool their R&D efforts so as to fully internalize the spillover effects of their investments in R&D. In order to analyze the scope of cooperation, an agreement formation game is solved in three stages. First, countries decide whether or not to sign the agreement. Then, in the second stage, signatories (playing together) and non-signatories (playing individually) select their investment in R&D. Finally, in the third stage, each country decides its level of emissions non-cooperatively. For linear environmental damages and quadratic investment costs, our findings show that the maximum participation in a R&D agreement consists of six countries and that participation decreases as the coalition information exchange decreases until a minimum participation consisting of three countries is reached. We also find that the grand coalition is stable if the countries sign an international research joint venture but in this case the effectiveness of the agreement is very low.
    Keywords: International Environmental Agreements, R&D Investment, Technology Spillovers, Coalition Information Exchange, Research Joint Ventures
    JEL: D74 F53 H41 Q54 Q55
    Date: 2014–04
  19. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: In cooperative games, the core is the most popular solution concept, and its properties are well known. In the classical setting of cooperative games, it is generally assumed that all coalitions can form, i.e., they are all feasible. In many situations, this assumption is too strong and one has to deal with some unfeasible coalitions. Defining a game on a subcollection of the power set of the set of players has many implications on the mathematical structure of the core, depending on the precise structure of the subcollection of feasible coalitions. Many authors have contributed to this topic, and we give a unified view of these different results.
    Keywords: TU-game; Solution concept; Core; Feasible coalition; Communication graph; Partially ordered set
    Date: 2013

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