nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2014‒08‒28
fourteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Is it a Norm to Favour Your Own Group? By Donna Harris; Benedikt Herrmann; Andreas Kontoleon; Jonathan Newton
  2. Women’s representation in local politics: Evidence from The Philippines By Valente, Jordan; Moreno, Frede
  3. Increasing Organizational Performance through Diversity and Organizational Climate Initiatives: What works, what doesn't (Japanese) By TANIGUCHI Mami
  4. Citizen Empowerment in Service Delivery By Babajanian, Babken
  5. The New Hampshire Effect: Behavior in Sequential and Simultaneous Election Contests By Zeynep B. Irfanoglu; Shakun D. Mago; Roman M. Sheremeta
  6. Lobbying over Exhaustible-Resource Extraction By Achim Voss; Mark Schopf
  7. Dissolution of Partnerships in Infinitely Repeated Games By Alistair Wilson; Hong Wu
  8. Endowment Effects in Bundles By Dutta, Swati; Mukhopadhyay, Jyoti Prasad; Pingali, Viswanath
  9. The Single Supervisory Mechanism - Panacea or Quack Banking Regulation? Preliminary assessment of the evolving regime for the prudential supervision of banks with ECB involvement By Tröger, Tobias
  10. An ultimatum game with multidimensional response strategies By Werner Güth; M. Vittoria Levati; Chiara Nardi; Ivan Soraperra
  11. Team Performance in a Fractious Culture By Wayne, George; Darrel, Percy
  12. Two-Stage Allocation Rules By Nils Roehl
  13. Capital Taxation under Political Constraints By Alexander Wolitzky; Florian Scheuer
  14. Handing out guns at a knife fight: behavioral limitations of subgame-perfect implementation By Ernst Fehr; Michael Powell; Tom Wilkening

  1. By: Donna Harris; Benedikt Herrmann; Andreas Kontoleon; Jonathan Newton
    Abstract: This paper examines the relationship between norm enforcement and in-group favouritism behaviour.� Using a new two-stage allocation experiment with punishments, we investigate whether in-group favouritism is considered as a social norm in itself or as a violation of a different norm, such as egalitarian norm.� We find that which norm of behaviour is enforced depends on who the punisher is.� If the punishers belong to the in-group, in-group favouritism is considered a norm and it does not get punished.� If the punishers belong to the out-group, in-group favouritism is frequently punished.� If the punishers belong to no group and merely observe in-group favouritism (the third-party), they do not seem to care sufficiently to be willing to punish this behavour.� Our results shed a new light on the effectiveness of altruistic norm enforcement when group identities are taken into account and help to explain why in-group favouritism is widespread across societies.
    Keywords: In-group Favouritism, Group Identity, Social Norms, In-group Punishment, Out-group Punishment, Third-party Punishment
    JEL: C92 D70 D73
    Date: 2014–08–15
  2. By: Valente, Jordan; Moreno, Frede
    Abstract: Although at the beginning of the 21st century, over 95 percent of all countries in the world have granted women the right to vote and the right to stand for election (Ballington & Karam, 2005), gender equality in terms of representation in political structures remains to be a challenge around the world. This study seeks to determine the level of political representation of women at the level of the smallest unit of Philippine government—the village or barangay. Data comparison—within a span of 11 years—using the results of the July 15, 2002 and October 28, 2013 barangay elections, shows an increase of women’s representation in the 98 barangays of Zamboanga City, Philippines. After the 2013 barangay elections, the total number of female Barangay Captains increased to 14 compared to 8 in the 2002 election results. A total of 159 female Barangay Councilors were also elected in 2013, an increase of 14 percent compared to the 139 female councilors who won in the 2002 elections. The increasing number of elected female barangay officials in 2013 reached 173 women (22 percent) compared to 147 (19 percent) in 2002. In year 2013, a total of 147 women (18.75 percent) were elected as barangay officials out of 784 barangay positions throughout the city. The study concludes that women’s participation in politics at the barangay level is directly and inversely proportional to the representation of men in the same political structures. While existing laws and pertinent public policies promoting women’s equal representation with men in local politics and the efforts to improve the political landscape for women around the world, still the political structures, even at the smallest unit of the government, is a male-dominated arena.
    Keywords: women, politics, gender, governance, election
    JEL: I3 I31 I38 I39 L2 Y8 Y80 Z1 Z13 Z18
    Date: 2014–08–08
  3. By: TANIGUCHI Mami
    Abstract: Globalization of business leads to environmental uncertainty for corporate organizations. To establish competitive advantage, organizations need continuous introduction of new products and services to markets and quick implementation of new strategies. This paper shows what kinds of initiatives are required for companies to leverage a diverse workforce. Study 1 explores diversity initiatives that are effective in terms of innovativeness by dividing companies into three groups based on gender diversity in management and gender diversity in non-management. Companies that are high in gender diversity in management, diversity awareness training, network group support, and mentoring programs are effective in terms of innovativeness. In contrast, in companies that are low in gender diversity, a participative decision making climate improves innovativeness. Study 2 explores how the chief executive officer's (CEO) leadership style and commitment and initiatives to change employees' mindset influence climate formation. Transformational Leadership is effective for climate formation regardless of gender diversity in both management and non-management. The CEO's commitment and initiatives to change employees' mindset aren't effective in companies with high gender diversity in management. This may be due to backlash by male employees. Study 3 shows that Transformational Leadership influences inclusive initiatives and participative decision-making climate while top management teams' fault lines detract from Transformational Leaderships' impact on diversity initiatives and climate. Weakened fault lines (of age, external working experience, educational background and knowledge) are essential to maintain transformational leadership influences.
    Date: 2014–08
  4. By: Babajanian, Babken (Overseas Development Institute)
    Abstract: This paper examines different approaches for promoting empowerment and discusses conditions required for effective empowerment. It focuses on three empowerment models, including grievance redress, participatory performance monitoring, and community-driven development. There are three sets of factors that affect people’s ability to influence service delivery: institutional properties of empowerment models, citizen participation, and responses of service providers and public officials. Evidence suggests that all three models can enhance people’s capacity to engage with service providers and government agencies, articulate their needs, and demand better service quality and accountability. Yet, these models are based on distinct institutional arrangements that account for the variation in their empowerment and service delivery outcomes. Citizen empowerment in service delivery necessitates the need to enhance people’s ability and willingness to participate and express their voice. It also requires commitment of service providers and government agencies to facilitate fair and effective redress. To address these conditions, policy makers need to ensure careful design and effective outreach as well as support broader policies to allow opportunities for citizen participation, enforce the rule of law, and ensure inclusive access to services.
    Keywords: citizen empowerment; participation; governance; service delivery; community-driven development; grievance redress; participatory performance monitoring
    JEL: C93 D72 H41 O12
    Date: 2014–06–01
  5. By: Zeynep B. Irfanoglu (Department of Agricultural Economics, Purdue University); Shakun D. Mago (Department of Economics, Robins School of Business, University of Richmond); Roman M. Sheremeta (Weatherhead School of Management, Case Western Reserve University and the Economic Science Institute, Chapman University)
    Abstract: This experimental study compares sequential and simultaneous election contests. Consistent with the theory, we find evidence of the “New Hampshire effect” in the sequential contests, i.e., the winner of the first electoral battle wins the overall contest with much higher probability than the loser of the first battle. However, contrary to the theory, sequential contests generate higher expenditure than the simultaneous contests. This is mainly because in the sequential contests losers of the first battle do not decrease their expenditure in the second battle while winners of the first battle increase (instead of decreasing) their expenditure in the second battle. We discuss the implications of our findings both for policy makers and social scientists.
    Keywords: election, sequential contests, simultaneous contests, experiments
    JEL: C72 C73 C91 D72
    Date: 2014
  6. By: Achim Voss (University of Muenster); Mark Schopf (University of Paderborn)
    Abstract: Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the path of contributions and the resulting extraction path, taking into account how the environmental damage of resource usage and the demand elasticity change optimal extraction. A high marginal environmental damage reduces the governmentÕs preferred extraction, a high price elasticity of resource demand reduces that of the lobby. We show that if the former effect dominates, the equilibrium contributions in a setting of repeated bargaining exceed those under full commitment.
    Keywords: Environmental Policy, Exhaustible Resources, Political Economy, Lobbying, Nash Bargaining, Dynamic Programming
    JEL: D72 Q31 Q38 Q58
    Date: 2014–03
  7. By: Alistair Wilson; Hong Wu
    Abstract: We experimentally examine repeated partnerships with imperfect monitoring, where participants can unilaterally sever partnerships at any time. The experiment examines effects from changes in the value of an outside-the-partnership option. We find four main results where partners have access to the same outside option: i) the presence of a dissolution option increases cooperation; ii) the use of dissolution is dictated by individual rationality; iii) where dissolution is used as a punishment, subjects increases lenient, but are still forgiving; iv) overall efficiency is non-monotone in the outside option. An extension examines asymmetric outside options finding: advantages to terminating first-movers creates highly inefficient outcomes; a last-mover advantage is less inefficient but reduces forgiveness; while an arbitrator-mechanism assigning higher payoffs to `more-deserving` parties increases efficiency.
    Keywords: Key words and phrases: Repeated Games, Endogenous Termination, Dissolution clauses, Imperfect public monitoring, Dynamic games
    JEL: C92 D01 D86 D90
    Date: 2014–08
  8. By: Dutta, Swati; Mukhopadhyay, Jyoti Prasad; Pingali, Viswanath
    Abstract: Behavioral experiments conducted so far to establish existence of endowment effect as propounded by prospect theorists typically endow subjects with a single good. In this paper we depart from this setting by giving subjects initial endowment bundles which consist of two goods: chocolates and pens and directly pit neo-classical theory against prospect theory by comparing divergence between willingness to pay (WTA) and willingness to accept (WTP). Using a novel experimental setting we examine the difference in such divergence for a group that is given physical bundles as endowment vis-�-vis a group which is asked to imagine the same initial endowment bundle in their possession. We find weak evidence of endowment effect. Moreover, we examine how endowment effect of a good changes when units of the other good in initial endowment bundle change. We find no statistically significant evidence of endowment effect of a good being sensitive to the number of units of the other good in initial endowment bundle.
  9. By: Tröger, Tobias
    Abstract: This paper analyzes the evolving architecture for the prudential supervision of banks in the euro area. It is primarily concerned with the likely effectiveness of the SSM as a regime that intends to bolster financial stability in the steady state. By using insights from the political economy of bureaucracy it finds that the SSM is overly focused on sharp tools to discipline captured national supervisors and thus underincentives their top-level personnel to voluntarily contribute to rigid supervision. The success of the SSM in this regard will hinge on establishing a common supervisory culture that provides positive incentives for national supervisors. In this regard, the internal decision making structure of the ECB in supervisory matters provides some integrative elements. Yet, the complex procedures also impede swift decision making and do not solve the problem adequately. Ultimately, a careful design and animation of the ECB-defined supervisory framework and the development of inter-agency career opportunities will be critical. The ECB will become a de facto standard setter that competes with the EBA. A likely standoff in the EBA’s Board of Supervisors will lead to a growing gap in regulatory integration between SSM-participants and other EU Member States. Joining the SSM as a non-euro area Member State is unattractive because the current legal framework grants no voting rights in the ECB’s ultimate decision making body. It also does not supply a credible commitment opportunity for Member States who seek to bond to high quality supervision. --
    Keywords: prudential supervision,banking union,regulatory capture,political economy of bureaucracy,Single Supervisory Mechanism (SSM),European Central Bank (ECB),European Banking Authority (EBA)
    JEL: G21 G28 H77 K22 K23 L22
    Date: 2013
  10. By: Werner Güth (Max Planck Institute of Economics, Strategic Interaction Group, Jena); M. Vittoria Levati (University of Verona and Max Planck Institute of Economics, Strategic Interaction Group, Jena); Chiara Nardi (University of Verona); Ivan Soraperra (University of Verona)
    Abstract: We enrich the choice task of responders in ultimatum games by allow- ing them to independently decide whether to collect what is offered to them and whether to destroy what the proposer demanded. Such a multidimensional response format intends to cast further light on the motives guiding responder behavior. Using a conservative and strin- gent approach to type classification, we find that the overwhelming majority of responder participants choose consistently with outcome- based preference models. There are, however, few responders that destroy the proposer's demand of a large pie share and concurrently reject their own offer, thereby suggesting a strong concern for integrity.
    Keywords: Ultimatum, Social preferences, Incomplete information, Experiments
    JEL: C72 C91 D63 D74
    Date: 2014–08–19
  11. By: Wayne, George; Darrel, Percy
    Abstract: This research paper is an attempt to study the items which are important in the team performance. Team performance is affected by different variables of cross cultural teams. So the researchers have try to find out that how much team performance rely on the factors of cross cultural teams like Language, Perception, Power and Behavior. The study employs the survey questionnaires in gathering information from the respondents on significant items of cross cultural teams. Simple random sampling technique was applied on the homogenous population and identified sample respondent from larger pool of respondents. Logistic regression (optimal scaling) was applied on the data set. Managerial implication can be that organization should make Team in which members having similar language. Member having positive behavior among themselves in the team; Teams can do wonders. Lastly, delegation of power or authority has significant impact. If teams have significant power to do whatever they want to do and how to do it, then they feel relax and motivated to achieve targets. The result empirically proves that Language, behavior, power and perception all the variables play a significant role in team performance.
    Keywords: Cross Cultural Teams, Language, Perception, Behavior, Leadership and Power
    JEL: M12
    Date: 2013–11–23
  12. By: Nils Roehl (University of Paderborn)
    Abstract: Suppose some individuals are allowed to engage in different groups at the same time and they generate a certain welfare by cooperation. Finding appropriate ways for distributing this welfare is a non-trivial issue. The purpose of this work is to analyze two-stage allocation procedures where first each group receives a share of the welfare which is then, subsequently, distributed among the corresponding members. To study these procedures in a structured way, cooperative games and network games are combined in a general framework by using mathematical hypergraphs. Moreover, several convincing requirements on allocation procedures are discussed and formalized. Thereby it will be shown, for example, that the Position Value and iteratively applying the Myerson Value can be characterized by similar axiomatizations.
    Keywords: Allocation Rules, Economic and Social Networks, Hypergraphs, Myerson Value, Position Value
    JEL: C71 D85 L22
    Date: 2013–12
  13. By: Alexander Wolitzky (Stanford University); Florian Scheuer (Stanford University)
    Abstract: This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough political coalition supports reform; thus, credible policies are those that will continue to attract enough political support in the future. If the reform threat is to fully equalize consumption, we find that optimal marginal capital taxes are U-shaped, so that savings are subsidized for the middle class but are taxed for the poor and rich. If ex post the government may strategically propose a reform other than full equalization in order to secure additional political support, then optimal capital taxes are instead progressive throughout.
    Date: 2014
  14. By: Ernst Fehr; Michael Powell; Tom Wilkening
    Abstract: The assumption that payoff-relevant information is observable but not verifiable is important for many core results in contract, organizational and institutional economics. However, subgame-perfect implementation (SPI) mechanisms - which are based on off-equilibrium arbitration clauses that impose fines for lying and the inappropriate use of arbitration - can be used to render payoff-relevant observable information verifiable. Thus, if SPI mechanisms work as predicted they undermine the foundations of important economic results based on the observable but non-verifiable assumption. Empirical evidence on the effectiveness of SPI mechanisms is, however, scarce. In this paper we show experimentally that SPI mechanisms have severe behavioral limitations. They induce retaliation against legitimate uses of arbitration and thus make the parties reluctant to trigger arbitration. The inconsistent use of arbitration eliminates the incentives to take first-best actions and leads to costly disagreements such that individuals - if given the choice - opt out of the mechanism in the majority of the cases. Incentive compatible redesigns of the mechanism solve some of these problems but generate new ones such that the overall performance of the redesigned mechanisms remains low. Our results indicate that there is little hope for SPI mechanisms to solve verifiability problems unless they are made retaliation-proof and, more generally, robust to other-regarding preferences.
    Keywords: Implementation theory, incomplete contracts, experiments
    JEL: D23 D71 D86 C92
    Date: 2014–08

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