New Economics Papers
on Collective Decision-Making
Issue of 2014‒08‒09
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. The Political Economy of Dynamic Elections: A Survey and Some New Results By César Martinelli; John Duggan
  2. Axiomatic districting By Puppe, Clemens; Tasnádi, Attila
  3. Collective Action and Armed Group Presence in Colombia By Margarita Gáfaro; Ana Maria Ibáñez; Patricia Justino
  4. Ideological Polarization and the Media By Mickael Melki; Andrew Pickering
  5. Contagious Synchronization and Endogenous Network Formation in Financial Networks By Christoph Aymanns; Co-Pierre Georg
  6. How to share it out: The value of information in teams By Alex Gershkov; Jianpei Li; Paul Schweinzer
  7. Not Just Like Starting Over: Leadership and Revivification of Cooperation in Groups By Jordi Brandts; Christina Rott; Carles Solà
  8. Group strategy-proofness in private good economies without money: matching, division and house allocation By Salvador Barberà; Dolors Berga; Bernardo Moreno
  9. Communication effects, ethnicity, and support for secessionism in stateless nations: results from a survey experiment in Catalonia By Yannis Karagiannis
  10. Surprise me if you can: influence of newspaper endorsements in US Presidential elections By Agustin Casas; Yarine Fawaz; Andre Trindade
  11. Opinion Dynamics and Price Formation: a Nonlinear Network Model By Marco D'Errico; Gulnur Muradoglu; Silvana Stefani; Giovanni Zambruno
  12. Democratic representation and religion. Differences and convergences between the European Parliament and the US House of Representatives By François Foret
  13. Polarization and Government Debt By Mickael Melki; Andrew Pickering
  14. The Dynamics of Personal Norms and the Emergence of Cultural Diversity By Vicente Calabuig; Gonzalo Olcina; Fabrizio Panebianco
  15. Developing alliance formation process capabilities: replication, adaptation and flexibility in creating research and development consortia By James Hayton; Paul Olk
  16. Constructing regionalism in South America: the cases of transport infrastructure and energy within UNASUR By Giovanni Agostinis
  17. Explaining Political Leadership: Germany’s Role in Shaping the Fiscal Compact By Magnus G. Schoeller
  18. A game theoretic approach to group centrality By Ramon Jesus Flores Diaz; Elisenda Molina Ferragut; Juan Tejada

  1. By: César Martinelli (Centro de Investigacion Economica (CIE), Instituto Tecnológico Autónomo de México (ITAM)); John Duggan (University of Rochester)
    Abstract: We survey and synthesize the political economy literature on dynamic elections in the two traditional settings, spatial preferences and rent-seeking, under perfect and imperfect monitoring of politicians actions. We define the notion of stationary electoral equilibrium, which encompasses previous approaches to equilibrium in dynamic elections since the pioneering work of Barro (1973), Ferejohn (1986), and Banks and Sundaram (1998). We show that repeated elections mitigate the commitment problems of both politicians and voters, so that a responsive democracy result holds in a variety of circumstances; thus, elections can serve as mechanisms of accountability that successfully align the incentives of politicians with those of voters. In the presence of term limits, however, the possibilities for responsiveness are limited. We also touch on related applied work, and we point to areas for areas for fruitful future research, including the connection between dynamic models of politics and dynamic models of the economy.
    Keywords: dynamic elections, electoral accountability, median voter, political agency, responsiveness
    Date: 2014
  2. 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.
    Keywords: districting, gerrymandering
    JEL: D72
    Date: 2014
  3. By: Margarita Gáfaro; Ana Maria Ibáñez; Patricia Justino
    Abstract: The main objective of this paper is to provide empirical evidence on the mechanisms that shape the relationship between violent conflict and collective action. Conflict dynamics in Colombia allow us to exploit rich variation in armed group presence and individual participation in local organizations. Our identification strategy is based on the construction of contiguous-pairs of rural communities that share common socio-economic characteristics but differ in armed group presence. This allows us to control for unobservable variables that may affect local participation and conflict dynamics simultaneously. The results show that the presence of armed groups increases overall participation in local organizations, with a particularly strong effect on political organizations. Contrary to existing results, we find that stronger individual participation may arise from coercion exercised by armed groups and not from a more vibrant civil society.
    Keywords: collective action, political organizations, armed groups, violent shocks
    Date: 2014–07–11
  4. By: Mickael Melki; Andrew Pickering
    Abstract: Greater media presence may facilitate information transmission and consensus, or amplify existing political differences. In the OECD greater media penetration is strongly correlated with reduced ideological polarization in the electorate. Observed increases in media penetration lead observed reductions in measured polarization, suggesting that this relationship is causal
    Keywords: Ideological Polarization, Media
    JEL: D72
    Date: 2014–06
  5. By: Christoph Aymanns; Co-Pierre Georg
    Abstract: When banks choose similar investment strategies the financial system becomes vulnerable to common shocks. We model a simple financial system in which banks decide about their investment strategy based on a private belief about the state of the world and a social belief formed from observing the actions of peers. Observing a larger group of peers conveys more information and thus leads to a stronger social belief. Extending the standard model of Bayesian updating in social networks, we show that the probability that banks synchronize their investment strategy on a state non-matching action critically depends on the weighting between private and social belief. This effect is alleviated when banks choose their peers endogenously in a network formation process, internalizing the externalities arising from social learning.
    Date: 2014–08
  6. By: Alex Gershkov; Jianpei Li; Paul Schweinzer
    Abstract: We study the role of information exchange, leadership and coordination in team or partnership structures. For this purpose, we view individuals jointly engaging in productive processes -- a 'team' -- as endowed with individual and privately held information on the joint production process. Once individual information is shared, team members decide individually on the effort they exert in the joint production process. This effort, however, is not contractible; only the joint output (or profit) of the team can be observed. Our central question is whether or not incentives can be provided to a team in this environment such that team members communicate their private information and exert efficient productive efforts on the basis of this communication. Our main result shows that there exists a simple ranking-based contract which implements both desiderata in a wide set of situations.
    Keywords: Moral hazard, Adverse selection, Leadership, Teams
    JEL: C7 D7 D8 L2
    Date: 2014–07
  7. By: Jordi Brandts; Christina Rott; Carles Solà
    Abstract: We conduct a laboratory experiment to study how, after a history of decay, cooperation in a repeated voluntary contribution game can be revived in an enduring way. Simply starting the repeated game over - a simple fresh start - leads to an initial increase of cooperation, but to a subsequent new decay. Motivated by cooperation decay in organizations we study the potential of three interventions of triggering higher and sustained cooperation taking place at the same time as a restart. Surprisingly, we find that the detailed explanation of the causes of the decay in cooperation from Fischbacher and Gaechter (2010) combined with an advice on how to prevent decay do not have an effect beyond that of just starting over. In contrast, a one-way free form communication message sent by the leader to the followers strongly revives cooperation. Repeated free form communication by the leader further strengthens the reviving effect on cooperation. Combining the two previous interventions does not outperform the pure effect of communication. Our content analysis reveals that leader communication is more people oriented and less formal than the expert advice.
    Keywords: leadership, cooperation, communication
    JEL: C71 C73 C92 D83 J63 L20
  8. By: Salvador Barberà; Dolors Berga; Bernardo Moreno
    Abstract: We observe that three salient solutions to matching, division and house allocation problems are not only (partially) strategy-proof, but (partially) group strategy-proof as well, in appropriate domains of definition. That is the case for the Gale-Shapley mechanism, the uniform rule and the top trading cycle solution, respectively. We embed these three types of problems into a general framework. We then notice that the three rules, as well as many others, do share a common set of properties, which together imply their (partial) group strategy-proofness. This proves that the equivalence between individual and group strategy-proofness in all these cases is not a fortuitous event, but results from the structure of the functions under consideration.
    Keywords: matching, division, house allocation, strategy-proofness, group strategy-proofness, group monotonicity, non-bossiness
    JEL: C78 D71 D78
    Date: 2014–02
  9. By: Yannis Karagiannis
    Abstract: Over the past twenty years or so, economic and cultural interdependence has gone hand in hand with the rise of nationalism, particularly in stateless nations. For example, Catalan politics has increasingly focused on the issue of secession from the rest of Spain. As in Flanders, Quebec, Scotland, and elsewhere, the ensuing polarization of opinion creates two questions of paramount importance for social scientists: (a) How strong are individual preferences? and (b) what determines these preferences? To answer these questions, we use a custom-designed survey experiment (N = 913) which allows us to estimate the effect of frames net of confounding effects, and to determine other determinants of preferences. We find that frames matter even in polarized political times and when voters have had enough time to form their judgement on a given issue. We also detect a strong role for ethnicity, measured as the number of Catalan-speaking grandparents and language spoken at home, as well as for the geographical scope of professional activity. Our findings help challenge the economic approach to politics, whereby agents hold well-defined and constant preferences, and give support to the view that both short- and long-run constructivist elements play a crucial role in centrifugal political movements.
    Date: 2014–06–30
  10. By: Agustin Casas; Yarine Fawaz; Andre Trindade
    Abstract: Using the daily trade of futures from the prediction markets site Intrade, we pin down the effect of printed newspapers endorsements (announcement of an explicit support for a political candidate) on the candidates' likelihood of winning. It is established that unexpected endorsements have a large impact on voters' behavior. However, we show that this effect is only true when the endorsement is a coherent one: if a newspaper that praises conservative (liberal) policies endorses a candidate with liberal (conservative) ideas, the endorsement does not impact the candidate's probability of winning, as it is regarded as incoherent. Our measure for coherence comes from Gentzkow and Shapiro (2005), but we also use Ansolabehere and Snyder (2004)'s \propensity to endorse Democrats" to show that a surprise endorsement has a large and potentially tipping effect in a tied contest
    JEL: L82 D7
    Date: 2014–07
  11. By: Marco D'Errico; Gulnur Muradoglu; Silvana Stefani; Giovanni Zambruno
    Abstract: Opinions and beliefs determine the evolution of social systems. This is of particular interest in finance, as the increasing complexity of financial systems is coupled with information overload. Opinion formation, therefore, is not always the result of optimal information processing. On the contrary, agents are boundedly rational and naturally tend to observe and imitate others in order to gain further insights. Hence, a certain degree of interaction, which can be envisioned as a network, occurs within the system. Opinions, the interaction network and prices in financial markets are then heavily intertwined and influence one another. We build on previous contributions on adaptive systems, where agents have hetereogenous beliefs, and introduce a dynamic confidence network that captures the interaction and shapes the opinion patterns. The analytical framework we adopt for modeling the interaction is rooted in the opinion dynamics problem. This will allow us to introduce a nonlinear model where the confidence network, opinion dynamics and price formation coevolve in time. A key aspect of the model is the classification of agents according to their topological role in the network, therefore showing that topology matters in determining how of opinions and prices will coevolve. We illustrate the dynamics via simulations, discussing the stylized facts in finance that the model is able to capture. Last, we propose an empirical validation and calibration scheme that makes use of social network data.
    Date: 2014–08
  12. By: François Foret
    Abstract: It is common to oppose a secular Europe to a religious America. As representatives of cultural diversity and popular sovereignty, Parliaments are the best illustrations of mutual arrangements between politics and religion. Little data is available on religion at the EP, in contrast to the rich scholarship on the Congress. Relying on the first survey of its kind on members of the European Parliament (MEPs), the article analyses what they believe and what they do with these beliefs. The purpose is to understand how religion interacts with representation and political socialization of MEPs within and outside the assembly. The American House of Representatives is used as a reference case study. Overall, there are significant differences between European and American legislators, mainly due to their distinct social, cultural, political and institutional environments. However, several common logics may also be seen at work, suggesting that the EU is not as exceptional as is often thought.
    Keywords: European Parliament
    Date: 2014–05–15
  13. By: Mickael Melki; Andrew Pickering
    Abstract: When voters discount the future there is pressure on governments to increase debt. Governments are more able to resist this temptation if voters are polarized ideologically. Policy contrasts starkly with models of ‘strategic debt’ wherein debt is predicted to increase with polarization. Using time-varying polarization measures generated from ideology data from party manifestos we …find a sizable and statistically significant negative association between ideological polarization and debt levels in OECD countries.
    Keywords: Public Debt, Ideological Polarization
    JEL: H63
    Date: 2014–07
  14. By: Vicente Calabuig (ERICES, Universidad de Valencia); Gonzalo Olcina (ERICES, Universidad de Valencia); Fabrizio Panebianco (Paris School of Economics)
    Abstract: In this paper we study cultural diversity in values or personal norms concerning effort or work ethics, the related and observable diversity in behavior and its economic consequences. Our goal is to investigate the impact on this type of cultural diversity of primitive economic and behavioral parameters of the group such as the distribution of skills in the group population, the sharing rule on total income that determines income distribution and the levels of materialism, conformism and consistency in the group. Agents participate each period in a team production game by choosing their level of costly effort. We analyze the emergence and evolution of a culture in a group in which members are guided by economic incentives and also follow personal norms of behavior. We take materialism, skills and the income distribution rule as given, but personal norms evolve along the life-cycle of the individuals according to two psychological forces: cognitive dissonance or consistency and informational conformity. We characterize the long-run outcomes of the group and study how the levels of diversity, both in personal norms and in behavior and the level of incoherence between both variables are determined by the primitives of the model. We also analyze how these parameters affect group aggregate production and social welfare.
    Keywords: Cultural Diversity, Personal Norms, Consistency, Conformity JEL
    JEL: C72 C69 D03
    Date: 2014–07
  15. By: James Hayton (University of Warwick Business School); Paul Olk (Daniels College of Business, University of Denver)
    Abstract: Our study draws from learning theory and path dependence research to hypothesize how companies build the capability for managing strategic alliance formation processes. Specifically, we focus on firms’ patterns of R&D consortia formation processes in the United States. Prior research identified two different consortium formation processes: emergent and engineered processes. This study explores the sequences of these processes for 1063 companies entering into alliances with 737 US-based consortia between 1984-2005, resulting in 3767 independent consortium joining events. Our results suggest that companies build alliance formation capabilities through a combination of replication, adaptability and flexibility. In showing these results, our study contributes to the alliance capability literature, the alliance formation process literature and research into organizational learning and path dependence.
    Keywords: alliance capability, formation process, R&D consortia, organizational learning, path dependence
    Date: 2013–11–02
  16. By: Giovanni Agostinis
    Abstract: This paper seeks to contribute to the study of contemporary South American regionalism focusing on the emergence and development of sectoral cooperation and policy coordination within the Union of South American Countries (UNASUR). To do so the paper analyzes two policy areas ?transport infrastructure and energy integration? from the inception of cooperation in 2000 until 2014, addressing two questions: (i) why regional cooperation has emerged despite the absence of economic interdependence and market-driven demand for economic integration, and (ii) why policy outcomes are evident in some areas (i.e., transport infrastructure) while limited in others (i.e., energy). Bringing together insights from rationalist and constructivist approaches in IR and IPE, it is argued that the emergence of regional cooperation as well as the sharp variation in policy outcomes between areas can be largely explained by the articulation of a regional leadership and its effect on the convergence of state preferences. The paper shows how the Brazilian leadership, incentivized by the effects of the US-led FTAA negotiations and the financial crises that hit the region in the late 1990s, made state preferences converge towards a regionalist project encompassing all South American countries by making visible the mutual benefits of cooperation on transport infrastructure and energy. Furthermore, the paper illustrates how in spite of significant changes in South American states’ cooperation preferences the Brazilian leadership was able to adapt the cooperation process in the transport infrastructure sector to the new circumstances of regional politics permitting not only the institutionalization of sectoral cooperation, but also the implementation of several infrastructure transnational projects. In the case of energy, instead, the emergence of a second regional leadership project –pursued by Chávez’s Venezuela – and the deep divergence of state preferences led energy cooperation into a gridlock.
    Date: 2014–06–24
  17. By: Magnus G. Schoeller
    Abstract: This paper explores the origins and the impact of political leadership: Why and how do political leaders emerge? And, once in charge, how do these leaders influence outcomes? What determines their success or failure? In order to answer these questions, the paper presents a theory of political leadership which takes into account both the structural and the behavioral aspects of the concept. More precisely, it argues that the emergence and the impact of leadership represent two different analytical steps. A leader emerges if there is a supply of and demand for leadership. While the supply depends on a leader’s expected benefits, the demand is determined by the followers’ status quo costs. Both demand and supply are also influenced by the relevant institutions’ capacity to manage situational challenges. The second step, in contrast, concerns a leader’s impact. Since leadership as a process consists in the use of strategies, there can be an impact only if the intensity of the strategies employed by the leader is greater than the intensity of the strategies required by the situational circumstances. While a leader’s capacity to employ strategies is determined by the material, institutional and ‘soft’ power resources at disposal, the intensity of strategies actually needed to influence outcomes depends on the heterogeneity of preferences and on the adaptability of the institutional setting to be changed. The theory is applied within the scope of the current Euro-crisis by conducting a qualitative analysis of Germany’s role in shaping the European Fiscal Compact. Although the empirical findings corroborate the theory, the case study reveals that further comparative research on political leadership is needed.
    Date: 2014–07–15
  18. By: Ramon Jesus Flores Diaz; Elisenda Molina Ferragut; Juan Tejada
    Abstract: This paper is centered in the valuation of the centrality of groups following aproblem-specific approach (Friedkin, 1991). Assuming a TU-game that reflects theinterests which motivate the interactions among individuals in a network, we extend thegame theoretic centrality measure of Gomez et al. (2003) to the case of groups, anddefine the game theoretic group centrality of a group as the variation of its value orpower due to their social relations. We rely on the Shapley group value (Flores et al.,2014) for measuring the value of a group in a game without any restriction, and weintroduce the Myerson group value in order to measure the value when the socialstructure is considered
    Keywords: Centrality, Social capital, Shapley group value, Myerson value
    Date: 2014–07

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