New Economics Papers
on Collective Decision-Making
Issue of 2014‒08‒02
fifteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Germanys housing policy after the general elections of 2013 By Ramón, Sotelo
  2. The Dark Side of Leadership: An Experiment on Religious Heterogeneity and Cooperation in India. By Keuschnigg, Marc; Schikora, Jan
  3. Real Estate-Related Decisions in European Cities By Lausberg, Carsten; Wojewnik-Filipkowska, Anna; Rymarzak, Malgorzata
  4. Women Leaders and Social Performance: Evidence from Financial Cooperatives in Senegal By Anaïs Périlleux; Ariane Szafarz
  5. Do leaders affect ethical conduct? By Giovanna d’Adda; Donja Darai; Roberto A. Weber
  6. Private provision of a public good: cooperation and altruism of internet forum users By Ros-Galvez, Alejandro; Rosa-García, Alfonso
  7. Behavioural Biases on Residential House Purchase Decisions: A Multi-Criteria Decision-Making Approach By Branigan, Clare; Brugha, Cathal
  8. The Role of Stakeholder Awareness in the Sustainable Construction By Maier, Gunther; Sedlacek, Sabine
  9. The indirect effect of monetary incentives on deception By Janna Ter Meer
  10. Politics of Religiously Motivated Lending: An Empirical Analysis of Aid Allocation by the Islamic Development Bank By Hernandez , Diego; Vadlamannati , Krishna Chaitanya
  11. Behavioural Real Estate By Salzman, Diego
  12. The influence of group references in home purchase intention in Thailand By Sangkakoon, Polek
  13. The emergence of reciprocally beneficial cooperation By Sergio Beraldo; Robert Sugden
  14. Climate Change: How to Explain Municipal Decisions in the Real Estate Sector: A Case Study Approach from Germany By Hofmann, Marina; Linke, Hans Joachim; Müller, Nikolas; Pfnür, Andreas
  15. Decision making in local governments - a comparative analysis of investment strategy By Wojewnik-Filipkowska, Anna; Elliot, Colin

  1. By: Ramón, Sotelo
    Abstract: During the electoral campaign for the general elections held on 22nd September 2013 the lobby group representing the tenants proposed a rent regulation in the housing sector concerning also new contracts for existing housing beyond social housing. This proposal was immediately included into their political agenda by the social democrats (SPD) and very shortly afterwards also taken as a position by chancellor Merkel as leader of the Cristian Democratic Party (SPD), although many doubts were expressed within her own party. Only the liberal party opposed to any type of rent control, but did in the end not enter parliament. After elections a coalition between the Social Democrats and the Cristian Democratic Parties was established and the implementation of the rent control fixed. This paper analyses the political reasons for the behavior of Angela Merkel, looks at the expected results from this rent control concerning the allocation of flats, the proportion of home-ownership, the ongoing segregation within cities, and the future construction of new housing.
    Date: 2014
  2. By: Keuschnigg, Marc; Schikora, Jan
    Abstract: We investigate voluntary contribution to public goods in culturally heterogeneous groups with a laboratory experiment conducted among 432 Hindu and Muslim subjects in India. With our specification of 'Leading by example' we test for an interaction effect between leadership and religious heterogeneity in a high stake environment. While cultural diversity does not affect contributions in the standard linear Public Goods Game, it reduces cooperation in the presence of a leader. Furthermore, we show that preferences for conditional cooperation are only prevalent in pure groups. In mixed groups, poor leadership and uncertainty about followers' reciprocity hinders the functionality of leadership as an institutional device to resolve social dilemmas.
    Keywords: leading by example; conditional cooperation; reciprocity; religious diversity; public goods game
    JEL: C92 H41 O12 Z12
    Date: 2014
  3. By: Lausberg, Carsten; Wojewnik-Filipkowska, Anna; Rymarzak, Malgorzata
    Abstract: A considerable part of the European property portfolio is owned by municipalities. In a market economy this raises several important questions, for instance whether the real estate management in public administrations is as efficient and effective as in private institutions. We address this question by looking at one important detail: the ways decisions are made in European cities. Surely this aspect cannot fully answer the question, but it can deliver meaningful hints for further research and for improvements in practice.The first part of our paper contains a review of the literature on decision theory and public real estate management from which we derive a number of current issues in municipal real estate decision making. In the next chapter we analyze the literature on the real estate portfolios of selected European cities which leads to a classification of public properties. Since the data is scarce and not much research has been done in this field we take an in-depth look at three best-practice cities to find out about the decision making processes in practice. For each city we describe the current situation (Example: 'How many properties are managed by how many employees?'), the strategy (Example: 'Is 'creating public value' a strategic objective?'), the organization (Example: 'Is the real estate management centralized?'), and the decision making process (Example: 'When do employees deviate from the defined decision making processes?'). We conclude our paper with a summary of the findings from the case studies and some suggestions for other cities how to improve real estate management by improving the decision making processes and instruments.
    Date: 2013
  4. By: Anaïs Périlleux; Ariane Szafarz
    Abstract: How do women leaders such as board members and top managers influence the social performance of organizations? This paper addresses the issue by exploiting a unique database released by a Senegalese network of 36 financial cooperatives sharing identical governance characteristics and placed under the authority of a central union. We scrutinize the loan-granting decisions, made jointly by the locally elected board and the delegated top manager, whose career is supervised by the central union. Our findings are threefold. First, female-dominated boards favor social orientation in loan-granting. Second, female top managers are not necessarily more socially oriented than their male colleagues. Instead, they tend to align their loan-granting strategy with the preferences of the democratically elected board members. Third, the central union tends to assign male managers to cooperatives with female-dominated boards, probably to curb the social orientation of these boards. Overall, gender is a key factor in considering social performance, but gender interactions appear far more complex than previously thought.
    Keywords: Gender; Leadership; Board; Microfinance; Financial Cooperative; Senegal
    JEL: G20 J54 O16 G34 O55 L31
    Date: 2014–07–08
  5. By: Giovanna d’Adda; Donja Darai; Roberto A. Weber
    Abstract: We study whether leaders influence the unethical conduct of followers. To avoid selection issues present in natural environments, we use a laboratory experiment in which we form groups and assign leadership roles at random. We study an environment in which groups compete, with dishonest behavior enhancing group earnings to the detriment of social welfare. We vary, by treatment, two instruments through which leaders can influence follower conduct—prominent statements to the group and the allocation of monetary incentives. In general, the presence of active group leaders gives rise to significantly more dishonest behavior. Moreover, appointing leaders who are likely to have acted dishonestly in a preliminary stage of the experiment yields groups with significantly more unethical conduct. The analysis of leaders’ strategies reveals that leaders’ statements have a stronger effect on follower behavior than the ability to distribute financial rewards, and that leaders’ propensity to act dishonestly correlates with their use of statements or incentives as a means for encouraging dishonest follower conduct.
    Keywords: Leadership, ethics, dishonesty, experiment
    JEL: C92 C72 D03
    Date: 2014–07
  6. By: Ros-Galvez, Alejandro; Rosa-García, Alfonso
    Abstract: We run an experiment with users of internet message boards. We find that forum users cooperate more with partners of their own forum than with partners from a different forum but they are equally altruistic when they made a gift to a partner of their forum or from another one. We also find that individuals are more active in the forums, the more altruistic they are; however, we find no relation between activity in the forum and cooperation. These results suggest that the public good provided in internet forums is mainly provided by a group of unconditional altruistic group of users, and that the feeling of community supports the cooperation in that provision.
    Keywords: internet forums; public good provision; altruism; cooperation
    JEL: C9 C90 H41 H42 L86
    Date: 2014–07–25
  7. By: Branigan, Clare; Brugha, Cathal
    Abstract: In this study, we examine if behavioural biases, such as framing effects, escalation of commitment, and overconfidence are present when residential property purchasers are choosing between alternative properties. To accomplish same, we use a Multi-Criteria Decision-Making (MCDM) approach to examine the behaviour of property purchasers in Dublin during the property boom of 2005.The study was designed using a case study approach and the participants used a Multi-Criteria Decision-Making analysis tool to aid in their selection between alternative properties. The decision tool that was used is Direct-Interactive: i.e., the Decision-Maker gives scores and weights directly and is able to adjust them during the process. It also uses Structured-Criteria, i.e. it tracks elements of the decision to specific disaggregated criteria of the decision-maker.This research finds that using a decision tool provides better decisions as was expected from the method, however, a subset of property buyers resisted applying the tool to make non-rational choices. This indicates how strong behavioural biases can be and how influencing their affect is, even when making large monetary decisions. In conclusion, when a decision-making tool is introduced to enable property purchasers to improve their decision-making capability, a subset of property buyers may resist applying the tool to let their behavioural biases potentially override rational decision-making.
    Date: 2013
  8. By: Maier, Gunther; Sedlacek, Sabine
    Abstract: When it comes to sustainable construction the question of quality comes into the discussion since sustainability can be defined as a quality criterion of a building. The real estate market is complex and shaped by different stakeholders (i.e. developers, investors, etc.) with their individual interests. Building performance assessment depends on those different interests who vary between economic performance as the prime focus of investors and comfort as well as health factors on the side of occupants which can be categorized as potential and actual performance (Cole 1998). Because of the number of actors being involved the sector seems to be fragmented which opens the door for principal–agent problems since decision making and information are dispersed. While the literature maintains that an agent is defined as a third party who acts for, on behalf of, or as representative of the principal will act in the best interest of the principal when the incentive structure is such that the agent is rewarded for outcomes favoring the principal (Arrow 1985) the question of defining the agents in a real estate transaction becomes crucial. This might be specifically important for sustainable constructions since we can found assumptions in the literature that designers and clients are active agents since certification standards are applied during the planning and design phases and decisions regarding green building practices are driven by clients' commitment to sustainability whereas constructors have been seen as passive agents. With new evidence about negative impacts of the construction phase on sustainability a shift towards a more active role of constructors happened. This goes hand in hand with the different actors' perceptions of sustainable construction and the level of knowledge about sustainable construction and its benefits. The argument follows the lines that environmental assessment requires more communication between the stakeholders throughout the whole process. Thus coordination to enhance trust, communication, commitment, and a clear understanding of roles becomes more relevant to manage the transition of the building sector to sustainability. Consequently new modes of governance are needed that take into account the long-term orientation, the uncertainties and complexities and the multitude of actors and interests involved. The paper is designed as a review of the literature including a few cases of green building certification projects.
    Date: 2013
  9. By: Janna Ter Meer (University of Cologne)
    Abstract: This paper investigates whether working under competitive or cooperative incentives affects deception in a subsequent, unrelated task. I use a laboratory study with two stages. First, participants work under a piece rate, tournament or team incentive in a real effort task. The second part consists of a sender-receiver game where the sender can gain financially at the expense of the receiver by sending a deceptive message. I find that senders who worked under tournament incentives are less honest than those who worked under a piece rate. I find no increase in honesty for those who performed under team incentives relative to the piece rate. Interestingly, this only holds when participants are not informed about their relative performance during the work task. When such feedback is provided I find that relative performance affects honesty across all incentive conditions. In particular, honesty decreases as relative performance differences become small.
    JEL: M52 C92 D02 D03
    Date: 2014–07–07
  10. By: Hernandez , Diego; Vadlamannati , Krishna Chaitanya
    Abstract: We investigate whether lending by the Islamic Development Bank mirrors Saudi Arabia’s political interests based on religious affinity using panel data for its 56 member countries over the 1970 to 2007 period. Our results indicate that Sunni regime countries receive favorable treatment in terms of loan allocation, as well as Shia majority populated countries in exceptional occasions of conflict with other religious minority groups, while non-Muslim countries are the least favored. There is also evidence that lending by the World Bank to the same group of countries and over the same time frame does not respond to the political stance of Saudi Arabia founded on religion. These findings reveal the advantage that Saudi Arabia gains by assuming the leadership of a Regional Development Bank in contrast to coordinating common strategies in a global International Financial Institution with other large shareholders for whom religion might not be essential for political alliances.
    Keywords: Development aid; Arab aid; Islamic Development Bank; Sunni-Shia politics.
    Date: 2014–07–17
  11. By: Salzman, Diego
    Abstract: The behavioural approach to decision making under uncertainty combines insights from psychology and sociology into economic decision making. It steps away from the normative homo economicus and introduces a positive approach to human decision making under uncertainty. The aim of this paper is to provide an overview of the main themes in the behavioural real estate literature from the perspective of different market participants. It can be concluded that there seems to be general agreement that behavioural studies can help explain the inefficiency of real estate markets, but a large component of behavioural decision making in the property markets seems to be undiscovered.
    Date: 2013
  12. By: Sangkakoon, Polek
    Abstract: PurposeThe purpose of this paper is to study the importance of various reference groups which influence the intention to buy a house for the family living in Thailand. Since a house is a durable asset with a high price compared to earned income of the Thai citizens. Moreover, Thai style living is still more of an extended family. Therefore the decision made on acquiring such asset by a decision maker is normally came from many influences, which may include several generations in a family. methodology​The study adopted the well known theory of planned behavior (TPB) of Ajzen. A survey was conducted with the selected target group under the condition that a decision maker on home buying, are likely to be influenced by many reference groups. A total of 180 samples was collected through the online questionnaire, placing in the Google Doc.FindingsAnalysis tools are factor analysis and regression analysis. The hypothesized dimensions of influencing groups, subjective norm of TPB, are the decision maker’s spouse, their children, their elderly and friends. Factor analysis supports the 4 dimensions of subjective norm variables: spouse, children, elderly parents and friends. When all influential groups are combined into subjective norm construct together with other two important constructs of TPB which are attitude towards behavior and perceived behavioral control, the linear regression analysis shows that all 3 latent variables statistically influence change in home purchase intention. However, children seem to be the most influential dimension under subjective norm, followed by spouse. While elderly parents and friends reveal less Influence under subjective norm.ImplicationsThis study helps identifying influential groups affecting the intention to purchase a house of working age decision makers where those influences are associated with designing the product to suit consumer buying power. Marketers should take these findings into consideration while designing and implementing their marketing strategies.OriginalityThis paper proposes a concept relating to Thai culture where a family often stays in a large family home. It is believed that the parents will have an influence on the intention to buy a house. However, when the idea of ​​creating your own family comes, the influence of the reference group is evolving. This study divided the influential group into 4 dimensions according to the clarity of educational reference group effects of the subject
    Date: 2014
  13. By: Sergio Beraldo (Università di Napoli Federico II and CSEF); Robert Sugden (School of Economics and Centre for Behavioural and Experimental Social Science, University of East Anglia)
    Abstract: This paper offers a new and robust model of the emergence and persistence of cooperation when interactions are anonymous, the population is well-mixed, and the evolutionary process selects strategies according to material payoffs. The model has a Prisoner’s Dilemma structure, but with an outside option of non-participation. The payoff to mutual cooperation is stochastic; with positive probability, it exceeds that from cheating against a cooperator. Under mild conditions, mutually beneficial cooperation occurs in equilibrium. This is possible because the non-participation option holds down the equilibrium frequency of cheating. The dynamics of the model are investigated both theoretically and through simulations.
    Keywords: Cooperation; voluntary participation; random payoffs
    JEL: C73
    Date: 2014–07–18
  14. By: Hofmann, Marina; Linke, Hans Joachim; Müller, Nikolas; Pfnür, Andreas
    Abstract: The German cities Frankfurt, Munich and Stuttgart approach their climate protection initiatives in the real estate sector with different measures although their goals are nearly the same. This paper examines the underlying efficiency understanding and further limitation factors in the municipal decision-making process. The focus is on the requirements and promotion of energy efficiency and greenhouse gas reduction in real estate.As a part of a research group supported by the Deutsche Forschungsgemeinschaft (DFG) we have an interdisciplinary look at these cities and make use of the Institutional Analysis Framework by Elinor Ostrom (1990) to collect and to aggregate decision-making impacts. Therefore, qualitative as well as quantitative data analyses based on a document analysis and interviews with representatives from the municipalities and the real estate sector are used to model the exogenous constraints of a city as well as the local decision-making arena.There seems to be evidence that cities take into account different efficiency approaches to legitimate their climate protection decisions. First results show that the decision-making process is characterized by an owner-, user-, or producer-oriented real estate management perspective. This fact heavily influences the measures taken, first and foremost the financial impact on the respective stakeholder.This paper categorizes urban strategies to reduce greenhouse gas emissions in the real estate business by identifying influencing factors in the municipal decision-making process. These findings will help to make use of the enormous greenhouse gas reduction potential existing in the metropolitan real estate sector.
    Date: 2013
  15. By: Wojewnik-Filipkowska, Anna; Elliot, Colin
    Abstract: Local governments manage various investment projects which determine development potential and capabilities of both cities and enterprises. Managing in the twenty-first century is a great challenge for managers because of changing operating conditions, changing market economy as a whole, and economic recession. Therefore, investment management becomes so important, and the issue of making effective investment decisions becomes one of the most vital questions. The aim of the research is then recognizing and comparing the methods of the investment planning process and decision making in two local governments – Gdansk in Poland, and Edinburgh in United Kingdom. Planning, which contributes to decision-making, is the first function of management, which every organization must face and which is realized under certain conditions. The concept of deciding (synonymous with the concept of problem solving) involves a series of steps in addition to the act of choice itself, and goes beyond the definition of deciding in the strict sense. Deciding in the broad sense (sensu largo) include the analysis of policies, review and evaluation criteria for decision-making, the use of selected criteria and finally a choice based on the course of action. The research covers these aspects. The research uses the following methods: analysis of the literature, analysis and logical design. Research tools include, in particular: observation, survey and interview. Survey covers two selected local governments. The pool research and interviews have been addressed to directors (general managers) responsible for investment management. Interviewees have answered the questions, which focus on: organisation of investment management, investment strategy, investment management and decision-making in investment management. The project limitation is connected with selected local governments, therefore results cannot be transferred to general economy, however the research can be useful for public investment managers and private investors, too. The research results can improve communication, raise efficiency, precision and common approval of the process within public administration and in public-private cooperation.
    Date: 2014

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