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

  1. The Brazilian Electoral Panel Studies (BEPS): Brazilian Public Opinion in the 2010 Presidential Elections By Barry Ames; Fabiana Machado; Lucio Renno; David Samuels; Amy Smith; Cesar Zucco
  2. Politics under the Weather: Droughts, Parties and Electoral Outcomes By Paulo Bastos; Sebastian Miller
  3. Get Rid of Unanimity: The Superiority of Majority Rule with Veto Power By Laurent Bouton; Aniol Llorente-Saguer; Fr�d�ric Malherbe
  4. Can Institutions Cure Clientelism? Assessing the Impact of the Australian Ballot in Brazil By Daniel Gingerich
  5. Are We All Playing the Same Game? The Economic Effects of Constitutions Depend on the Degree of Institutionalization By German Caruso; Carlos Scartascini; Mariano Tommasi
  6. Macroeconomies as Constructively Rational Games By Sinitskaya, Ekaterina; Tesfatsion, Leigh
  7. Measuring the Political Economy of Tax Lawmaking: A Methodology and Evidence from Argentina By Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
  8. The Debt Brake in the Eyes of the German Population By Bernd Hayo; Florian Neumeier
  9. Revisiting the PRSP Experience in Bangladesh: Perspectives on Representation, Accountability and Inclusiveness By Fahmida Khatun; Debapriya Bhattacharya; Mustafizur Rahman
  10. Handing Out Guns at a Knife Fight: Behavioral Limitations of Subgame-Perfect Implementation By Fehr, Ernst; Powell, Michael; Wilkening, Tom
  11. Institutions for Effective Business-Government Collaboration: Micro Mechanisms and Macro Politics in Latin America By Ben Ross Schneider

  1. By: Barry Ames; Fabiana Machado; Lucio Renno; David Samuels; Amy Smith; Cesar Zucco
    Abstract: This report presents sample characteristics and summary statistics from the Brazilian Electoral Panel Study (BEPS) project. The survey, composed of three waves, was conducted in Brazil in 2010, a presidential election year, and is composed of 4,611 interviews with 2,669 voting-age Brazilians.
    Date: 2013–04
  2. By: Paulo Bastos; Sebastian Miller
    Abstract: The increased occurrence of extreme weather conditions leading to drought is a key development challenge. This paper studies how these extreme events interact with the political process at the local level using rich administrative data for drought declarations and mayoral elections in Brazil. While accounting for current and historical rainfall patterns, the paper finds that that: i) municipalities led by a mayor affiliated with the President’s party are more likely to receive formal drought declarations prior to the municipal election; and ii) receiving a drought declaration reinforces the electoral advantage of incumbent mayors running for reelection. These results are robust to the inclusion of a rich set of controls for municipal attributes.
    JEL: D72 Q54
    Date: 2013–10
  3. By: Laurent Bouton (Georgetown University and NBER); Aniol Llorente-Saguer (Queen Mary University of London); Fr�d�ric Malherbe (London Business School)
    Abstract: A group of agents wants to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We analyze a simple voting system - majority rule with veto power (Veto) - that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in the EU institutions and could help to inform debates about policy reforms in cases such as juries in the US.
    Keywords: Unanimity rule, Veto power, Information aggregation, Pareto criterion, Constructive abstention
    JEL: D70
    Date: 2014–08
  4. By: Daniel Gingerich
    Abstract: This paper examines how the adoption of the Australian ballot (AB), and ipso facto, the transition from the nominal to effective secret vote, shaped the nature of party politics in Brazil. Engaging the literature on political clientelism, the impact of the AB on three outcomes is studied: 1) the ideological leanings of voters at the ballot box; 2) the degree of electoral control enjoyed by local vote brokers; and 3) the capacity of citizens to effectively participate in the electoral process. In order to get leverage on these issues, the paper utilizes an original dataset -painstakingly assembled from regional electoral archives- which contains municipal-level vote returns for federal deputy and senate contests during the period before and after the AB's introduction in Brazil (1958-1962). The dataset exploits the fact that the AB was introduced at different times in different states and for different offices in the country, thereby creating an unprecedented opportunity to assess the impact of this institution. Using a triple difference-in-difference procedure, the study finds that the AB: 1) shifted the ideological balance of power from Right to Left; 2) did not greatly weaken the hand of vote brokers; and 3) greatly increased the proportion of wasted votes cast in elections.
    JEL: D72 K N4 N46 O17
    Date: 2013–09
  5. By: German Caruso; Carlos Scartascini; Mariano Tommasi
    Abstract: The understanding of the economic effect of formal institutional rules has progressed substantially in recent decades. These formal analyses have tended to take for granted that institutional arenas such as Congress are the places where decision-making takes place. That is a good approximation in some cases (such as many developed countries today) but not in others. If countries differ in how institutionalized their policymaking is, it is possible that the impact of formal political rules on policy outcomes might depend on that. This paper explores that hypothesis and finds that some important claims regarding the impact of constitutions on policy outcomes do not hold for countries in which institutionalization is low. The findings suggest the need to develop a broader class of policymaking models in which the degree to which decision-making follows 'the rules' is also endogenized.
    JEL: D72 D73 D78 H20 H60 H62
    Date: 2013–07
  6. By: Sinitskaya, Ekaterina; Tesfatsion, Leigh
    Abstract: Real-world decision-makers are forced to be locally constructive, in the sense that their actions are constrained by the interaction networks, limited information, and computational capabilities at their disposal.� This study poses the following question:� Suppose utility-seeking consumers and profit-seeking firms in an otherwise standard dynamic macroeconomic model are required to be locally constructive decision-makers, unaided by the external imposition of global coordination conditions.� What combinations of locally constructive decision rules result in good macroeconomic performance relative to a social planner benchmark model, and what are the game-theoretic properties of these decision-rule combinations?� We begin our investigation of this question by specifying locally constructive decision rules for the consumers and firms that range from simple reinforcement learning to sophisticated adaptive dynamic programming algorithms.� We then use computational experiments to explore macroeconomic performance under alternative decision-rule combinations.� A key finding is that simpler rules can outperform more sophisticated rules, but that forward-looking behavior coupled with a relatively long memory permitting past observations to inform current decision-making is critical for good performance.
    Keywords: Learning; Macroeconomics; agent-based; game; stochastic optimization
    JEL: B4 C6 C7 E2
    Date: 2014–08–22
  7. By: Javier Alvaredo; Alejandro Bonvecchi; Ernesto Calvo; Maximiliano Castillo; Juan Carlos Gomez
    Abstract: Although recent research has shed new light on the political determinants and economic consequences of tax lawmaking, existing analyses rely on coarse data measuring political aggregates. Consequently, little is known about the political processes determining how tax legislation is written or their effect on the nature of tax reforms. This paper therefore develops a methodology to examine how Congress edits the content of tax legislation by measuring the ways Deputies, Senators, Presidents, and Ministers propose and amend such legislation. The Legislative Substance Scale proposed here measures the distance between a bill’s original position and the actual outcome of the legislative process by comparing the differences in content according to coding of the main tax policy dimensions. The scale is used to build the first systematic database of tax lawmaking in Argentina, and to describe its general patterns of authorship, approval and substantive content across presidencies in the current democratic period.
    JEL: D78 H20 H77
    Date: 2013–12
  8. By: Bernd Hayo (University of Marburg); Florian Neumeier (University of Marburg)
    Abstract: In response to the recent sovereign debt crisis, the member states of the European Union agreed to enact balanced budget rules in their national legislation. However, little is known about the public’s opinion of balanced budget rules. To fill this gap, we conducted a survey among 2,000 representatively chosen German citizens. Our findings suggest that 61% of the German population supports the debt brake, whereas only 8% oppose it. However, approval rates differ notably among various subgroups of the population. The debt brake enjoys greater support among high-income earners and among those well-informed about the future costs of deficit spending. People who do not trust politicians would like to see the government’s hands tied even more tightly. Opinions about the debt brake also differ markedly across the supporters of different political parties.
    Keywords: Debt brake; balanced budget rule; European Fiscal Compact; survey; Germany
    JEL: E02 E62 H62 H63
    Date: 2014
  9. By: Fahmida Khatun; Debapriya Bhattacharya; Mustafizur Rahman
    Abstract: Given its political history and economic performance, Bangladesh emerges as an interesting case to study the nature of representation, extent of inclusiveness and degree of accountability of various actors in the process of designing and implementation of national development plans. While a number of country studies on the Poverty Reduction Strategy Paper (PRSP) process are available, literature and information on the above mentioned subject are rather scarce in Bangladesh, particularly from the perspectives of representation, accountability and inclusiveness. Based on structured interviews with a select group of relevant stakeholders including policymakers, members of the civil society and the development partners to generate the required additional information, the paper presents insights into the nature and extent of participation of the civil society organisations in the Bangladesh PRS exercise, and analyses the degrees of representation, accountability and inclusiveness achieved in the country’s PRS process.
    Keywords: Bangladesh, civil society, PRSP, democracy, CPD, TIB, Bangladesh Mahila Parishad
    Date: 2013–10
  10. By: Fehr, Ernst (University of Zurich); Powell, Michael (Northwestern University); Wilkening, Tom (University of Melbourne)
    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
  11. By: Ben Ross Schneider
    Abstract: What makes for effective cooperation between government and business in industrial policy? Core research questions on the institutional design of arrangements for business-government interactions focus on three main functions: i) maximizing the benefits of dialogue and information exchange; ii) motivating participation through authoritative allocation; and iii) minimizing unproductive rent seeking. Countries with more experiences of public-private collaboration (PPC) tend to have more pragmatic governments and better organized and informally networked private sectors. Effective cooperation also depends on the macro context, in particular the nature of the political system and the alternative avenues it provides for business politicking, especially through parties, networks and appointments, the media, and campaign finance. Lastly, the structure and strategies of big domestic businesses -mostly diversified, family-owned business groups- affects their preferences and interest in collaborating in industrial policy.
    JEL: D72 L52
    Date: 2013–10

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