New Economics Papers
on Collective Decision-Making
Issue of 2014‒08‒16
fifteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Providing global public goods: Electoral delegation and cooperation By Kocher, Martin G.; Tan, Fangfang; Yu, Jing
  2. You Can Go Your Own Way: Explaining Partisan Support for Independence By Tim Willems
  3. Are Teams Less Inequality Averse than Individuals? By He, Haoran; Villeval, Marie Claire
  4. Influence Vs. Utility in the Evaluation of Voting Rules: A New Look at the Penrose Formula By Le Breton, Michel; Van Der Straeten, Karine
  5. Politically Sustainable Probabilistic Minority Targeting By De Donder, Philippe; Peluso, Eugenio
  6. The Contractarian Constitutional Political Economy of James Buchanan By Roger D. Congleton
  7. Ties that Bind:How business connections affect mutual fund activism By Dragana Cvijanovic; Amil Dasgupta; Konstantinos Zachariadis
  8. Assessing urban logistics pooling sustainability via a hierarchic dashboard from a group decision perspective By Jesus Gonzalez-Feliu; Joelle Morana
  9. Evolutionary Games with Group Selection By Martin Kaae Jensen; Alexandros Rigos
  10. Political Determinants of the Extensive and Intensive Margins of International Arms Transfers By Florian Johannsen; Inmaculada Martínez-Zarzoso
  11. Political Budget Cycles Revisited, the Case for Social Capital By Kouvavas, Omiros
  12. Private Agenda and Re-Election Incentives By Rivas, Javier
  13. An Experimental Study of Network Formation with Limited Observation By Michael Caldara; Michael McBride
  14. Accessibility and the choice of network investments in the London Underground By David Levinson; David Giacomin; Antony Badsey-Ellis
  15. A Framework for Sustainable Real Estate Decision-Making and Assessment By Christensen, Pernille

  1. By: Kocher, Martin G.; Tan, Fangfang; Yu, Jing
    Abstract: This paper experimentally examines the effect of electoral delegation on providing global public goods shared by several groups. Each group elects a delegate who can freely decide on each group member’s contribution (including the contribution of herself) to the global public good. Our results show that people mostly vote for delegates who assign equal contributions for every group member. However, in contrast to standard theoretical predictions, unequal contributions across groups drive cooperation down over time, and it decreases efficiency by almost 50% compared to the benchmark. This pattern is not driven by delegates trying to exploit their fellow group members, as indicated by the theory – quite to the opposite, other-regarding preferences and a re-election incentives guarantee that delegates assign equal contributions for all group members. Since the source of the resulting inefficiency is the polycentric nature of global public goods provision together with other-regarding preferences, we use the term Pinefficiency to describe our finding.
    Keywords: Global Public Goods; Delegation; Cooperation; Experiment
    JEL: C92 D72 H41
    Date: 2014–07–24
  2. By: Tim Willems
    Abstract: This paper analyzes secessions through the lens of representative democratic institutions and considers the incentives of partisan political parties to support independence movements.� It points out that, if anything, separatists should expect to receive support from exactly the "unlike-minded" political party - the reason being that this party might see a break-up as an opportunity to reshape the electorate towards its own preferences.� By doing so, a party could increase its future probability of being elected, while it is also able to shift the entire political spectrum towards its own partisan ideal.� The model is able to explain much of what is currently going on in the debate on Scottish independence, while it can also be applied to issues of political integration (the European Union) and territorial conflicts (think of Ukraine and Russia in relation to Crimea, as well as the situation in Israel).
    Keywords: Nations, Secession, Territorial conflict, Probabilistic voting
    JEL: D72 H77
    Date: 2014–08–07
  3. By: He, Haoran (Beijing Normal University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We compare inequality aversion in individuals and teams by means of both within- and between-subject experimental designs, and we investigate how teams aggregate individual preferences. We find that team decisions reveal less inequality aversion than individual initial proposals in team decision-making. However, teams are no more selfish than individuals who decide in isolation. Individuals express strategically more inequality aversion in their initial proposals in team decision-making because they anticipate the selfishness of other members. Members with median social preferences drive team decisions. Finally, we show that social image has little influence because guilt and envy are almost similar in anonymous and non-anonymous interactions.
    Keywords: team, inequity aversion, preference aggregation, social image, experiment
    JEL: C91 C92 D03 D63 D72
    Date: 2014–05
  4. By: Le Breton, Michel; Van Der Straeten, Karine
    Abstract: In this paper, we clarify the relationship between influence/power measurement and utility measurement, the most popular two social objective criteria used when evaluating voting mechanisms. For one particular probabilistic model describing the preferences of the electorate, the so-called Impartial Culture (IC) model used by Banzhaf, the Penrose formula show that the two objectives coincide. The IC probabilistic model assumes that voter preferences are independent. In this article, we prove a general version of the Penrose formula, allowing for correlations in the electorate. We show that in that case, the two social objectives no longer coincide, and qualitative conclusions can be very different.
    Keywords: Power measurement, Voting, Random electorates
    JEL: D71 D72
    Date: 2014–07
  5. By: De Donder, Philippe; Peluso, Eugenio
    Abstract: We show that a transfer targeting a minority of the population is sustained by majority voting, however small the minority targeted, when the probability to receive the transfer is decreasing and concave in income. We apply our framework to the French social housing program and obtain that empirically observed departures from these assumptions are small enough that a majority of French voters should support a positive size of this program. We also provide a su¢ cient condition on this probability function under which more targeting results in a lower equilibrium size of the transfer system.
    Keywords: Paradox of redistribution, A program for the poor is a poor program, majority voting, social housing in France.
    JEL: D72 H53 I38
    Date: 2014–07–18
  6. By: Roger D. Congleton (West Virginia University, College of Business and Economics)
    Abstract: This paper attempts to outline and summarize the main body of work on one strand of James Buchanan's work, constitutional political economy. The grounding ideas and inferences of Buchanan's approach can be summarized as follows: (a) The appropriate method for analyzing and understanding social phenomena is the individual. (b) There are often mutual gains that can only be realized through collective action. (c) Collective action produces both property right systems (civil law) and collective decision-making systems (political constitutions). (d) One cannot know beforehand the ex-act consequences of rules, nor can one read the minds of those affected by those rules. (e) Every individual counts, so the legitimacy of collective action can only be assured by decision procedures grounded in unanimity. (f) Every agreement that meets the unanimity criteria is, by definition, an improvement. (g) However, the legitimacy of collective action in general and constitutional governance in particular requires that individuals be fundamentally equal in their roles as citizens, both at the constitutional level of choice and in the civil society framed by the constitution chosen. This paper shows how these ideas emerged in Buchanan's research and are used to develop a very rich constitutional political economy.
    Date: 2013–09
  7. By: Dragana Cvijanovic; Amil Dasgupta; Konstantinos Zachariadis
    Abstract: We investigate how business ties with portfolio firms influence mutual funds’ proxy voting using a comprehensive dataset spanning 2003 to 2011. In sharp contrast to the prior literature, we show that the proxy voting of mutual funds is significantly influenced by their business ties with portfolio firms. Our result holds at the level of individual proposals after robustly controlling for unobserved heterogeneity across firms and fund families and over time as well as for the e?ects of ISS recommendations and fund family holdings. We also show that the influence of business ties on proxy voting is strongest for highly contested shareholder proposals where proxy votes are most relevant for firm value. Finally, we show that the prominent class action lawsuits of 2006 against 401(K) sponsors and providers had di?erential e?ects on the voting of di?erent fund families depending on whether they were sued, thus unearthing a potential link between investor attention and corporate governance.
    Date: 2014
  8. By: Jesus Gonzalez-Feliu (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - École Nationale des Travaux Publics de l'État [ENTPE] - Université Lumière - Lyon II); Joelle Morana (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - École Nationale des Travaux Publics de l'État [ENTPE] - Université Lumière - Lyon II)
    Abstract: This paper aims to propose, via an experimental collaborative decision support method, to define a grid of indicators and a reference situation database to measure the sustainable performance of urban logistics pooling systems. To do this, we start by defining the notion of sustainability in the 4As approach, after what we identify the main sustainability indicators from an overview of the literature, and class them into four categories (one for each A of the approach). Then, a group of 20 experts is required and an iterative experimental collaborative decision making method is applied to the group to converge to the concordance of a set of indicators. The method allowed us to define a hierarchic dashboard agreed by all experts with 7 main indicators and 9 secondary indicators. Moreover, the experts signaled the need of defining a unified basis of comparison to estimate initial situations. To do this, we proposed a database of urban routes from the French Surveys on Urban Goods Transport. This method has the advantage of proposing a dashboard agreed by all involved stakeholders. The proposed dashboard is an example and to provide a more unified one the experience has to be iterated using different groups of decision makers. Therefore, this paper shows the patterns to reproduce it, since the method is able to be replicated in any context of group decision in urban logistics. The originality of the paper arises on the use of an experimental group decision method using a group with a majority of practitioners, and to validate it by consensus.
    Keywords: logistics pooling; sustainable development; group decision support; distribution; consensus
    Date: 2014
  9. By: Martin Kaae Jensen; Alexandros Rigos
    Abstract: This paper introduces two new concepts in evolutionary game theory: Nash equilibrium with Group Selection (NEGS) and Evolutionarily Stable Strategy with Group Selection (ESSGS). These concepts generalize Maynard Smith and Price (1973) to settings with arbitrary matching rules, inparticular they reduce, respectively, to Nash equilibrium and ESS when matching is random. NEGS and ESSGS are to the canonical group selection model of evolutionary theory what Nash Equilibrium and ESS are to the standard replicator dynamics: any NEGS is a steady state, any stable steady state is a NEGS, and any ESSGS is asymptotically stable. We exploit this to prove what may be called “the second welfare theorem of evolution”: Any evolutionary optimum will be a NEGS under some matching rule. Our results are illustrated in Hawk-Dove, Prisoners’ dilemma, and Stag Hunt games.
    Keywords: Evolutionary Game Theory, Evolutionarily Stable Strategy, ESS, Group Selection, Non-random Matching, Trait-group Model, Haystack Model.
    JEL: C72 C73
    Date: 2014–07
  10. By: Florian Johannsen (University of Goettingen / Germany); Inmaculada Martínez-Zarzoso (University of Goettingen / Germany)
    Abstract: The main aim of this paper is to investigate the political determinants of international arms transfers. We distinguish between the decision to exports arms (extensive margin) and the value of the arms exported (intensive margin). A theoretically-justified gravity model of trade augmented with political factors is estimated using a two-stage panel-data approach for 104 exporting countries over the period 1950 to 2007. As main political factors the level of democracy in the trading partners as well as the political orientation of the ruling governments are considered. Furthermore we account for the political differences between trading partners, the political environment differences in their respective regions and the existence of military pacts. The main results indicate that political closeness between countries is an important determinant of transfers in arms and that economic and strategic interests are not the only drivers of the transfers.
    Keywords: arms trade, political factors, democracy, conflict, gravity model, military pacts
    JEL: F14 F51
  11. By: Kouvavas, Omiros
    Abstract: Recent literature on Political Budget Cycles has provided appealing evidence that their existence is conditional to country specific characteristics. In this paper we hypothesize that the level of social capital prevailing in a country might be an underlying fundamental reason that might be driving these results. We provide strong evidence that political budget cycles are only present in low social capital countries by utilizing a large panel data set for 63 democratic countries. We also show that the political budget cycles occur both in developing and developed countries under low social capital. Simultaneously, our results are robust under most other conditional effects considered by the literature. Finally, we also propose a theoretical model of conditional capital budget cycles by adapting a moral hazard model to account for different distributions of social capital.
    Keywords: Political Budget Cycles; Political Processes; Trust; Social Capital;
    JEL: D72 E02 E32 E62 H60
    Date: 2013–06–20
  12. By: Rivas, Javier
    Date: 2013
  13. By: Michael Caldara (Economic Science Institute, Chapman University); Michael McBride (Department of Economics, University of California-Irvine)
    Abstract: Many social and economic networks emerge among actors that only partially observe the network when forming network ties. We ask: what types of network architectures form when actors have limited observation, and does limited observation lead to less efficient structures? We report numerous results from a laboratory experiment that varies both network observation and the cost of forming links. Overall, we find that limited network observation does not inevitably lead to highly inefficient networks but instead might actually inhibit inefficient positional jockeying among actors.
    Keywords: Networks; Limited observation; Coordination
    JEL: C92 D83 D85
    Date: 2014–07
  14. By: David Levinson; David Giacomin; Antony Badsey-Ellis (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: In 1863, the Metropolitan Railway of what came to be known as the London Underground successfully opened as the world’s first subway. Its high ridership spawned interest in additional links. Entrepreneurs secured funding and then proposed new lines to Parliament for approval, though only a portion were actually approved. While putative rail barons may have conducted some economic analysis, the final decision lay with Parliament, which did not have available modern transportation economic or geographic analysis tools. How good were the decisions that Parliament made in approving Underground Lines? This paper explores the role accessibility played on the decision to approve or reject proposed early London Tube Schemes. It finds that maximizing accessibility to population (highly correlated with revenue and ridership) largely explains Parliamentary approvals and rejections.
    Keywords: Accessibility, Network Growth, Subways, Public Transport, Travel Behavior, Networks
    JEL: R40
    Date: 2014
  15. By: Christensen, Pernille
    Abstract: Since the 1970s, we have seen a significant change in the attitudes of the society, governments and the business community toward sustainability measures and regulations. Most recently, the real estate industry has struggled through the mortgage crisis and the global financial crisis resulting in the emergence of a new period in which the real estate industry is addressing sustainability issues using a more holistic, systems approach. Companies are no longer adopting sustainability concerns solely for reasons related to social good; instead, they are focusing on how to prove to their stakeholders that they are focused on sustainable property performance and management - and that sustainability-related initiatives are positively impacting their bottom-line.Current market conditions have forced companies to address market uncertainties, and industry leaders are using sustainability initiatives as a means of managing risks and meeting the requirements of a market in transition. Companies are increasingly judged not only by the corporate social responsibility values, as reflected in their CSR statements, but also by the actions through which those values are actualized and how these actions impact their financial stability. This also extends to how companies make decisions about sustainability initiatives for their real estate assets. These market changes have resulted in new strategies for decision-making and assessment of both specific sustainability initiatives and sustainable real estate. Simons, Slob, Holswilder and Tukker noted that more complex and more integrated strategies will be needed to deal with the new societal challenges now associated with sustainability.
    Date: 2013

This issue is ©2014 by Stan C. Weeber. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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