nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2014‒09‒25
eleven papers chosen by
Stan C. Weeber, McNeese State University

  1. Asymptotic utilitarianism in scoring rules By Marcus Pivato
  2. Growth, Unemployment, and Fiscal Policy: A Political Economy Analysis By Tetsuo Ono
  3. Group contests of incomplete information By Philip Brookins; Dmitry Ryvkin
  4. Food Comes First, Then Morals: Redistribution Preferences, Altruism and Group Heterogeneity in Western Europe By David Rueda
  5. Maximally Informative Decision Rules In a Two-Person Decision Problem By Kei Kawakami
  6. Consumer information networks By Simon MIEGIELSEN
  8. Structures and dynamics of transnational cooperation networks: evidence based on Local Action Groups in the Veneto Region By Pisani, Elena; Burighel, Laura
  9. Independent directors: less informed, but better selected? New evidence from a two-way director-firm fixed effect model By Sandra Cavaco; Patricia Crifo; Antoine Reberioux; Gwenael Roudaut
  10. The Political Economy of Sovereign Borrowing: Explaining the Policy Choices of Highly Indebted Governments By Stephen B. Kaplan; Kaj Thomsson
  11. Instability and network effects in innovative markets By Paolo Sgrignoli; Elena Agliari; Raffaella Burioni; Augusto Schianchi

  1. By: Marcus Pivato (Université de Cergy-Pontoise, THEMA and Department of Mathematics, Trent University)
    Abstract: Given a large enough population of voters whose utility functions satisfy certain statistical regularities, we show that voting rules such as the Borda rule, approval voting, and evaluative voting have a very high probability of selecting the social alternative which maximizes the utilitarian social welfare function. We also characterize the speed with which this probability approaches one as the population grows.
    Keywords: utilitarian; relative utilitarian; approval voting; Borda; scoring rule.
    JEL: D63 D71
    Date: 2014
  2. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This study presents an overlapping-generations model featuring endogenous growth, collective wage-bargaining, and probabilistic voting over fiscal policy. We charac- terize a Markov-perfect political equilibrium of the voting game within and across generations and show the following results. First, greater bargaining power of unions lowers the growth rate of capital and creates a positive correlation between unem- ployment and government debt. Second, greater political power of the old lowers the growth rate and shifts government expenditure from the unemployed to the old. Third, a balanced budget requirement increases the growth rate but may benefit the old at the expense of the unemployed.
    Keywords: Economic Growth; Fiscal Policy; Government Debt; Unemployment; Voting
    JEL: E24 E62 H60
    Date: 2014–08
  3. By: Philip Brookins (Department of Economics, Florida State University); Dmitry Ryvkin (Department of Economics, Florida State University)
    Abstract: We prove the existence of monotone pure strategy Bayesian equilibria in two types of contests between groups under incomplete information: (i) individual-level private information group contests, where each player only knows her own ability, and (ii) group-level private information group contests, where each player knows the abilities of all members of her group. In the latter case, we also show that the equilibrium is unique. We provide the results of exploratory numerical computations and discuss the qualitative properties of the equilibria.
    Keywords: contest, group, incomplete information
    JEL: D72 C72 C02
    Date: 2014–09
  4. By: David Rueda (Department of Politics & IR and Nuffield College, University of Oxford)
    Abstract: Altruism is an important omitted variable in much of the Political Economy literature. While material self-interest is the base of most approaches to redistribution (first affecting preferences and then politics and policy), there is a paucity of research on inequality aversion. I propose that other-regarding concerns influence redistribution preferences and that (1) they matter most to those in less material need and (2) they are conditional on the identity of the poor. Altruism is a luxury good most relevant to the rich, and it is most influential when the recipients of benefits are similar to those financing them. Using data from the European Social Survey from 2002 to 2010, I will show that group homogeneity magnifies (or limits) the importance of altruism for the rich. In making these distinctions between the poor and the rich, the arguments in this paper challenge some influential approaches to the politics of inequality.
    Keywords: social policy; welfare state
    Date: 2014
  5. By: Kei Kawakami
    Abstract: This paper studies how much information can be revealed when agents with private information lack commitment to actions in a given mechanism as well as to the mechanism itself. In a two-person decision problem, agents are allowed to hold on to an outcome in one mechanism while they play another mechanism and learn new information. Formally, decision rule is maximally informative if it is (i) posterior im-plementable and (ii) robust to a posterior proposal of another posterior implementable decision rule. Focusing on a two-person problem, we identify environments where maximally informative decision rules exist. We also show that a maximally informative decision rule must be implemented by a mechanism with a small number of actions (at most 5 for two agents). The result indicates that lack of commitment to a mechanism signi?cantly reduces the amount of information revelation in equilibrium. Keywords: Information aggregation, Limited commitment, Posterior e¢ ciency, Posterior implementation, Renegotiation-proofness.
    Keywords: Information aggregation, Limited commitment, Posterior effeciency,Posterior implementation, Renegotiation-proofness.
    Date: 2013
  6. By: Simon MIEGIELSEN
    Abstract: This paper examines the informativeness of consumer information networks and their effect on price competition between .rms. Under the proposed information mechanism, consumers share their initial information with the members of their network and as such become better informed. The main result of this paper shows how informative such networks are by characterizing how many different pieces of information a network is likely to contain. This informativeness is crucial for the degree of competition, as consumers comparing more prices induce firms to compete more fiercely. We find that larger networks imply better information transmission, which intensifies competition and decreases all the percentiles of the price distribution. An increase in the number of firms makes networks more informative, and decreases all the percentiles as well. Our results are robust to the introduction of sequential search and network segregation, but an increase in segregation decreases information transmission and increases all percentiles.
    Date: 2014–06
  7. By: Marcus Pivato (Université de Cergy-Pontoise, THEMA and Department of Mathematics, Trent University, Canada)
    Abstract: We show that if the statistical distribution of utility functions in a population satisfies a certain condition, then a Condorcet winner will not only exist, but will also maximize the utilitarian social welfare function. We also show that, if people's utility functions are generated according to certain plausible random processes, then in a large population, this condition will be satisfied with very high probability. Thus, in a large population, the utilitarian outcome will be selected by any Condorcet consistent voting rule. In particular, it will be the subgame-perfect equilibrium outcome of several voting games.
    Date: 2014
  8. By: Pisani, Elena; Burighel, Laura
    Abstract: The paper assesses the structures and the dynamics of transnational cooperation projects promoted by Local Action Groups (LAGs) in different periods (from LEADER II to LEADER Axis) using Social Network Analysis (SNA) in a specific case study: the Veneto region in Italy. The classical indexes of SNA have been critically examined, moreover the paper presents innovative indexes able to capture the peculiarity of transnational cooperation: disaggregated densities of the network and transnational centrality of the node. These indexes are useful in order to quantify how transnational a network actually is, and to measure the power-information that each actor (LAG) can acquire through its transnational contacts. The methodology can become an instrument for Managing Authorities to implement new forms of evaluation of transnational cooperation of LAGs.
    Keywords: rural, transnational cooperation, LEADER, social network analysis, evaluation, Community/Rural/Urban Development, O22, O18,
    Date: 2014
  9. By: Sandra Cavaco (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris II - Panthéon-Assas : EA4442 - Sorbonne Universités); Patricia Crifo (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, UP10 - Université Paris 10, Paris Ouest Nanterre La Défense - Université Paris X - Paris Ouest Nanterre La Défense, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal, EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense); Antoine Reberioux (EconomiX - CNRS : UMR7166 - Université Paris X - Paris Ouest Nanterre La Défense, CREDDI/LEAD Université Antilles Guyane - Université des Antilles et de la Guyane); Gwenael Roudaut (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, AgroParisTech - AgroParisTech)
    Abstract: This paper develops a two-way director-firm fixed effect model to study the relationship between independent directors' individual heterogeneity and firm operating performance, using French data. This strategy allows considering and differentiating in a unified empirical framework mechanisms related to board functioning and to director selection. We first show that the independence status, netted out unobservable individual heterogeneity, is negatively related to performance. This result suggests that independent board members experience an informational gap compared to other affiliated members. However, we show that industry-specific expertise as well as informal connections inside the boardroom may help to bridge this gap. Finally, we provide evidence that independent directors have higher intrinsic ability as compared to affiliated board members, consistent with a reputation-based selection process.
    Keywords: independent director heterogeneity, information asymmetry, director selection, firm performance, two-way fixed effect model
    Date: 2014–09–03
  10. By: Stephen B. Kaplan (Department of Economics/Institute for International Economic Policy, George Washington University); Kaj Thomsson (Maastricht University)
    Abstract: In newly democratized and developing countries, political economy theory expects politicians to use budget defcits to engineer an election-timed boom, known as the political business cycle. In this paper, we challenge this view by incorporating the Önancial constraints faced by government into an electoral political framework. Debtor governments must often borrow from foreign creditors to fund their domestic spending. Employing a formal model, we show theoretically that the extent of ownership dispersion among these creditors has an important effect on governments' economic policy autonomy. Based on our theoretical results, we argue when highly-indebted governments become more reliant on international bond markets - as opposed to traditional bank lending - politicians alter the way they respond to domestic constituents. These theoretical results Önd support in both quantitative and qualitative empirical findings. In an econometric test of 16 Latin American countries from 1961 to 2011, we show that the 1990ís financial decentralization breeds austerity through its disciplining effect on fiscal policy. These results are consistent with case studies of recent elections in Southern European countries; there too we and that politicians exhibit greater fiscal discipline when they fund a greater share of their spending through decentralized bond markets. These findings have important scholarly implications, suggesting that governmentsísocial responsiveness may in part reflect the structure of their international borrowing.
    Date: 2014–10
  11. By: Paolo Sgrignoli; Elena Agliari; Raffaella Burioni; Augusto Schianchi
    Abstract: We consider a network of interacting agents and we model the process of choice on the adoption of a given innovative product by means of statistical-mechanics tools. The modelization allows us to focus on the effects of direct interactions among agents in establishing the success or failure of the product itself. Mimicking real systems, the whole population is divided into two sub-communities called, respectively, Innovators and Followers, where the former are assumed to display more influence power. We study in detail and via numerical simulations on a random graph two different scenarios: no-feedback interaction, where innovators are cohesive and not sensitively affected by the remaining population, and feedback interaction, where the influence of followers on innovators is non negligible. The outcomes are markedly different: in the former case, which corresponds to the creation of a niche in the market, Innovators are able to drive and polarize the whole market. In the latter case the behavior of the market cannot be definitely predicted and become unstable. In both cases we highlight the emergence of collective phenomena and we show how the final outcome, in terms of the number of buyers, is affected by the concentration of innovators and by the interaction strengths among agents.
    Date: 2014–09

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