New Economics Papers
on Collective Decision-Making
Issue of 2014‒07‒13
fourteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Policy experimentation, political competition, and heterogeneous beliefs. By Antony Millner; Helene Ollivier; Leo Simon
  2. The Reaction of Elites in a Democratization Process: Evidence from Brazil By Raphael Bruce; Rudi Rocha
  3. How Individual Preferences are Aggregated in Groups: An Experimental Study By Attila Ambrus; Ben Greiner; Parag A. Pathak
  4. Ready to Reform: How Popular Initiatives Can Be Successful By Jaronicki, Katharina Eva; Marti, Christian; Bütler, Monika
  5. Risk Taking and Information Aggregation in Groups By Spiros Bougheas; Jeroen Nieboerr; Martin Sefton
  6. A Rationale for Non-Monotonic Group-Size Effect in Repeated Provision of Public Goods By Wang, Chengsi; Zudenkova, Galina
  7. The Effect of Conflict History on Cooperation Within and Between Groups: Evidence from a Laboratory Experiment By Beekman, Gonne; Cheung, Stephen L.; Levely, Ian
  8. Centralized vs. decentralized wage formation: The role of firms' production technology By Hirsch, Boris; Merkl, Christian; Mueller, Steffen; Schnabel, Claus
  9. Mostly Sunny: A Forecast of Tomorrow's Power Index Research By Sascha Kurz; Nicola Maaser; Stefan Napel; and Matthias Weber
  10. Autonomous coalitions. By Stéphane Gonzalez; Michel Grabisch
  11. Bowling for fascism: social capital and the rise of the Nazi Party By Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
  12. The political economy of special needs transfers: Evidence from Bavarian municipalities, 1993-2011 By Baskaran, Thushyanthan
  13. The Cultural Transmission of Environmental Preferences: Evidence from International Migration By Anastasia Litina; Simone Moriconi; Skerdilajda Zanaj
  14. Politik er (næsten) ligegyldigt for demonstrationer By Kurrild-Klitgaard, Peter

  1. By: Antony Millner (London School of Economics and Political Science); Helene Ollivier (Paris School of Economics); Leo Simon (University of California, Berkeley)
    Abstract: We consider a two period model in which an incumbent political party chooses the level of a current policy variable unilaterally, but faces competition from a political opponent in the future. Both parties care about voters' payoffs, but they have different beliefs about how policy choices will map into future economic outcomes. We show that when the incumbent party can endogenously influence whether learning occurs through its policy choices (policy experimentation), future political competition gives it a new incentive to distort its policies – it manipulates them so as to reduce uncertainty and disagreement in the future, thus avoiding the costs of competitive elections with an opponent very different from itself. The model thus demonstrates that all incumbents can find it optimal to ‘over experiment’, relative to a counterfactual in which they are sure to be in power in both periods. We thus identify an incentive for strategic policy manipulation that does not depend on self-serving behavior by political parties, but rather stems from their differing beliefs about the consequences of their actions.
    Keywords: Beliefs, Learning, Political Economy.
    JEL: D72 D83 H40 P48
    Date: 2014–05
  2. By: Raphael Bruce; Rudi Rocha
    Abstract: This paper examines one of the possible channels through which incumbent elites aligned with the Brazilian dictatorship were able to withhold their political power during the democratization in the 1980s. Based on national household survey data and results from legislative elections, we first find that recently franchised illiterate voters who lived in states that were dominated by the elite party during the dictatorship had a higher probability to register to vote than those who lived in other states.We then investigate whether this positive correlation represents a reaction from the incumbent elites in order to keep their political power through voter manipulation or a reaction from these voters in order to remove the power from the oligarchies. We find that, in states dominated by the elite party, illiterates had higher probability of being politically uninterested and uninformed. Our results suggest that a politically motivated reaction from this population is implausible.
    Keywords: Democratization; Elites; Rural Oligarchy
    JEL: D72 D78 I25
    Date: 2014–06–26
  3. By: Attila Ambrus (Department of Economics, Duke University); Ben Greiner (School of Economics, Australian School of Business, the University of New South Wales); Parag A. Pathak (Department of Economics, MIT)
    Abstract: This paper experimentally investigates how individual preferences, through unrestricted deliberation, are aggregated into a group decision in two contexts: reciprocating gifts and choosing between lotteries. In both contexts, we find that median group members have a significant impact on the group decision, but the median is not the only influential group member. Non-median members closer to the median tend to have more influence than other members. By investigating the same individual’s influence in different groups, we find evidence for relative position in the group having a direct effect on influence. These results are consistent with predictions from a spatial model of dynamic bargaining determining group choices. We also find that group deliberation involves bargaining and compromise as well as persuasion: preferences tend to shift towards the choice of the individual’s previous group, especially for those with extreme individual preferences.
    Keywords: group decision-making, role of deliberation, social influence
    JEL: C72 C92 H41
    Date: 2014–06
  4. By: Jaronicki, Katharina Eva; Marti, Christian; Bütler, Monika
    Abstract: We study how direct democratic popular initiatives can break the politicians' agenda setting monopoly and allow for more reforms. The initiative process is modelled as a sequential game under uncertainty: petitioners collect signatures to qualify the initiative, politicians decide about a political compromise - a counter proposal - then petitioners have the option to withdraw the initiative before the popular vote. In the model counter proposals are key to amending the status quo. We explore the likelihood of changing the status quo based on the data set of all Swiss constitutional initiatives at federal level between 1891 and 2010. We test our model by using major institutional changes to the initiative process and comparing empirical outcomes to model predictions. We find that reforms are most likely once a far-reaching counter proposal is issued such that the initiative is withdrawn. Moreover, we find a significant but quantitatively modest effect of collecting more signatures than required to qualify the initiative on the probability of achieving a compromise. So while political compromises indeed facilitate reform, they also prevent strong initiatives from being implemented in their original form.
    Keywords: Direct Democracy; Popular Initiative; Status Quo Bias; Voting
    JEL: D72 P16
    Date: 2014–07
  5. By: Spiros Bougheas (School of Economics, University of Nottingham); Jeroen Nieboerr (Department of Social Policy, London School of Economics and Political Science); Martin Sefton (School of Economics, University of Nottingham)
    Abstract: We report an experiment examining risk taking and information aggregation in groups. Group members come to the table with an individual preference for a choice under risk, based on privately received information, and can share this information with fellow group members. They then make a decision under risk on behalf of the group using a random dictatorship mechanism, as well as an individual decision. Our analysis reveals that, while the behavior of many subjects is consistent with Bayesian rationality, a considerable number of subjects exhibited ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also observe a striking degree of consensus: in most groups all members made the same choice on behalf of the group. The pattern of individual choices after group deliberation suggests that the high degree of group consensus is due to persuasive arguments of other group members.
    Keywords: Group behavior; Teams; Decision Making; Risk; Experiment
  6. By: Wang, Chengsi; Zudenkova, Galina
    Abstract: This paper analyzes the impact of a group-size change on contributing incentives in repeated provision of pure public goods. We develop a model in which the group members interact repeatedly and might be temporarily constrained to contribute to the public goods production. We show that an increase in the group size generates two opposite effects - the standard free-riding effect and the novel large-scale effect, which enhances cooperative incentives. Our results indicate that the former effect dominates in relatively large groups whilethe latter in relatively small groups. We provide therefore a rationale for nonmonotonic group-size effect which is consistent with the previous empirical and experimental findings.
    Keywords: pure public goods , repeated game , non-monotonic group-size effect
    JEL: H40 D73
    Date: 2014
  7. By: Beekman, Gonne (Wageningen University); Cheung, Stephen L. (University of Sydney); Levely, Ian (Charles University, Prague)
    Abstract: We study cooperation within and between groups in the laboratory, comparing treatments in which two groups have previously been (i) in conflict with one another, (ii) in conflict with a different group, or (iii) not previously exposed to conflict. We model conflict using an inter-group Tullock contest, and measure its effects upon cooperation using a multi-level public good game. We demonstrate that conflict increases cooperation within groups, while decreasing cooperation between groups. Moreover, we find that cooperation between groups increases in response to an increase in the efficiency gains from cooperation only when the two groups have not previously interacted.
    Keywords: within- and between-group cooperation, inter-group conflict, group identity, multi-level public good experiment, Tullock contest, other-regarding preferences
    JEL: C92 D64 D74 H41
    Date: 2014–06
  8. By: Hirsch, Boris; Merkl, Christian; Mueller, Steffen; Schnabel, Claus
    Abstract: This paper is the first to show theoretically and empirically how firms' production technology affects the choice of their preferred wage formation regime. Our theoretical framework predicts, first, that the larger the total factor productivity of a firm, the more likely it is to opt for centralized wage formation where it can hide behind less productive firms. Second, the larger a firm's scale elasticity, the higher its incentive to choose centralized rather than decentralized wage setting due to labor cost and straitjacket effects. As firms in Germany are allowed to choose their wage formation regime, we test these two hypotheses with representative establishment data for West Germany. We find that establishments with centralized bargaining agreements indeed have economically and statistically significantly larger total factor productivities and scale elasticities than comparable establishments outside the centralized bargaining regime. -- Diese Studie zeigt erstmals theoretisch und empirisch, wie die Produktionstechnologie die betriebliche Wahl des Lohnfindungssystems beeinflusst. Unser theoretisches Modell erlaubt zwei Vorhersagen: Erstens, je höher die totale Faktorproduktivität einer Firma ist, desto wahrscheinlicher entscheidet sie sich für eine zentralisierte Lohnfindung auf Branchenebene, wo sie sich hinter weniger produktiven Firmen verstecken kann. Zweitens, je höher die Skalenelastizität einer Firma, desto höher ist aufgrund von Arbeitskosten- und Zwangsjacken-Effekten ihr Anreiz, eine zentralisierte statt einer dezentralisierten Lohnfindung zu wählen. Da Arbeitgeber in Deutschland das Lohnfindungsregime frei wählen können, überprüfen wir diese Hypothesen mit repräsentativen Betriebsdaten für Westdeutschland. Es zeigt sich, dass Betriebe mit zentralisierten (Branchen-)Tarifverträgen tatsächlich ökonomisch und statistisch signifikant höhere totale Faktorproduktivitäten und Skalenelastizitäten aufweisen als vergleichbare Betriebe mit dezentraler Lohfindung.
    Keywords: collective bargaining,bargaining coverage,Germany
    JEL: J50
    Date: 2014
  9. By: Sascha Kurz (University of Bayreuth, Germany); Nicola Maaser (University of Bremen, Germany); Stefan Napel (University of Bayreuth, Germany, and University of Turku, Finland); and Matthias Weber (University of Amsterdam)
    Abstract: wer index research has been a very active field in the last decades. Will this continue or are all the important questions solved? We argue that there are still many opportunities to conduct useful research with and on power indices. Positive and normative questions keep calling for theoretical and empirical attention. Technical and technological improvements are likely to boost applicability
    Keywords: power index analysis, economic perspectives and methodology, committee voting, optimal voting rule
    JEL: B40 D71 D72
    Date: 2014–05–09
  10. By: Stéphane Gonzalez (Centre d'Economie de la Sorbonne - Paris School of Economics); Michel Grabisch (Centre d'Economie de la Sorbonne - Paris School of Economics)
    Abstract: We consider in this paper solutions for TU-games where it is not assumed that the grand coalition is necessarily the final state of cooperation. Partitions of the grand coalition, or balanced collections together with a system of balancing weights interpreted as a time allocation vector are considered as possible states of cooperation. The former case corresponds to the c-core, while the latter corresponds to the aspiration core or d-core, where in both case, the best configuration (called a maximising collection) is sought. We study maximising collections and characterize them with autonomous coalitions, that is, coalitions for which any solution of the d-core yields a payment for that coalition equal to its worht. In particular we show that the collection of autonomous coalitions is balanced, and that one cannot have at the same time a single possible payment (core element) and a single possible configuration. We also introduce the notion of inescapable coalitions, that is, those present in every maximising collection. We characterize the class of games for which the sets of autonomous coalitions, vital coalitions (in the sense of Shellshear and Sudhölter), and inescapable coalitions coincide, and prove that the set of games having a unique maximising coalition is dense in the set of games.
    Keywords: Cooperative game, core, balancedness, c-core, aspiration core, coalition formation, autonomous coalitions.
    JEL: C71
    Date: 2014–05
  11. By: Shanker Satyanath; Nico Voigtländer; Hans-Joachim Voth
    Abstract: Social capital is often associated with desirable political and economic outcomes. This paper connects a growing literature on the “dark side” of social capital with institutional change. We examine the downfall of democracy in interwar Germany. Using new data on Nazi Party entry in a cross-section of cities, we show that dense networks of civic associations such as bowling clubs, choirs, and animal breeders went hand-in-hand with a more 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: N44 P16 Z10
    Date: 2014–06
  12. By: Baskaran, Thushyanthan
    Abstract: This paper studies whether higher level governments treat politically aligned municipalities differently than unaligned ones when they provide special discretionary transfers to resolve acute fiscal problems (special needs transfers). By implementing a regression discontinuity design with a sample of municipalities in the German federal state of Bavaria over the period 1993-2011, I show that among the group of municipalities that receive special needs transfers of more than 10,000 Euros, those that are barely aligned with the state government have discontinuously higher debt, higher revenues from user fees and contributions, and higher local tax rates. Before the state government grants special needs transfers to aligned municipalities, they must evidently raise more own source revenues and experience worse fiscal difficulties than unaligned municipalities. Hence, aligned municipalities are treated less leniently. --
    Keywords: special needs transfers,political alignment,state and local governments
    JEL: H30 H71 H77
    Date: 2014
  13. By: Anastasia Litina (CREA, Université de Luxembourg); Simone Moriconi (Università Cattolica di Milano, Italy); Skerdilajda Zanaj (CREA, Université de Luxembourg)
    Abstract: This paper theoretically and empirically advances the hypothesis that differences in environmental preferences can be traced to cultural differences. In particular, we argue that environmental attitudes such as the willingness to pay for the environment are not solely the effect of local environmental conditions on individual attitudes. On the contrary, we establish that they can also be accounted for by cultural differences accross countries. To establish our hypothesis we exploit the natural experiment of international migration flows and establish that the environmental culture of migrants, as has been formed in their country of origin and transmitted accross generations, is still prevalent in the host country. Interestingly these culture differences with respect to environmental awareness are prevalent despite the fact that all migrants in a host country are exposed to the same local environment. In the presence of multiple environmental problems that require collective action, comprehending the driving forces behind the formation of an environmental culture, a potential driver of environmental policies, is critical.
    Keywords: Cultural Transmission, Migration, Environmental Preferences
    JEL: Q50 Q58 R23
    Date: 2014
  14. By: Kurrild-Klitgaard, Peter
    Abstract: The paper communicates the essence of the findings of a study influencing participation in May Day demonstrations in Copenhagen 1980-2013. Political factors seem irrelevant for predicting the level of turn-out at May Day demonstrations. The most important factors are the weather conditions.
    Keywords: collective action; public choice; demonstrations
    JEL: H4 Z1
    Date: 2014

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