nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒01‒03
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Student politics: A Game-theoretic exploration By Soumyanetra Munshi
  2. Revealing Malfeasance: How Local Media Facilitates Electoral Sanctioning of Mayors in Mexico By Horacio A. Larreguy; John Marshall; James M. Snyder, Jr.
  3. Power indices when players can commit to reject coalitions By László Á. Kóczy
  4. Does Regression Discontinuity Design Work? Evidence from Random Election Outcomes By Janne Tukiainen; Tuukka Saarimaa; Ari Hyytinen; Jaakko Meriläinen; Otto Toivanen
  5. Skewed Norms under Peer Pressure: Formation and Collapse By Michaeli, Moti; Spiro, Daniel
  6. Voting on Infrastructure Investment: The Role of Product Market Competition By Arghya Ghosh; Kieron Meagher
  7. Masses, crowds, communities, movements: Collective formations in the digital age By Dolata, Ulrich; Schrape, Jan Felix
  8. Interpreting Communist Systems and Their Differences in Operation and Transformation as Networks By Maria Csanádi
  9. Structural restrictions in cooperation By Selçuk, O.
  10. Rethinking the politics of development in Africa? How the 'political settlement' shapes resource allocation in Ghana By Abdul-Gafaru Abdulai; Sam Hickey
  11. How individual characteristics shape the structure of social networks By Yann Girard; Florian Hett; Daniel Schunk
  12. The Euro Area Crisis: Politics over Economics By Orphanides, Athanasios
  13. Towards Innovation Democracy? Participation, Responsibility and Precaution in Innovation Governance By Andy Stirling
  14. Disagreement and Learning About Reforms By Binswanger, J.; Oechslin, M.
  15. Reciprocal Climate Negotiators: Balancing Anger against Even More Anger By Nyborg, Karine
  16. Weapons of Choice By Dreher, Axel; Kreibaum, Merle

  1. By: Soumyanetra Munshi (Indira Gandhi Institute of Development Research)
    Abstract: Students in institutes of higher education often engage in campus-politics. Typically there are student-parties who electorally compete with each other to gain control of the union which is usually the apex student body dealing directly with the higher authorities on student-related and other academic issues. Often however, campus politics act as fertile breeding grounds for future politicians of the country. As a result there is often direct intervention by larger political parties into student affairs. In fact, the student parties on campus are essentially student wings of larger national parties, which command huge amounts of resources that are used during elections, often instigating conflict and violence on-campus. This paper game-theoretically models the interplay of such `extra-electoral' investments and electoral outcomes in an otherwise standard probabilistic voting model. We find that the political party who is likely to be more popular is also more likely to expend greater resources towards `extra-electoral' elements, in turn spawning greater violence on-campus, even when such investments are disliked by student-voters. We also look at some plausible extensions of the benchmark model where this basic conclusion still holds true. The essential flavor and predictions of the model are borne out by several historical and contemporary instances of student politics in some countries like India, Burma, and Latin America.
    Keywords: Student politics, Partisanships and conflict, Electoral competition in colleges, National parties and student politics
    JEL: D72 D74 I23 J52
    Date: 2014–11
  2. By: Horacio A. Larreguy; John Marshall; James M. Snyder, Jr.
    Abstract: We estimate the effect of local media outlets on political accountability in Mexico, focusing on malfeasance by municipal mayors. We study federal grants earmarked for infrastructure projects targeting the poor, and leverage two sources of plausibly exogenous variation. First, we exploit variation in the timing of the release of municipal audit reports. Second, and moving beyond existing studies, we exploit variation in media exposure at the electoral precinct level. In particular, we compare neighboring precincts on the boundaries of media stations’ coverage areas to isolate the effects of an additional media station. We find that voters punish the party of malfeasant mayors, but only in electoral precincts covered by local media stations (which emit from within the precinct’s municipality). An additional local radio or television station reduces the vote share of an incumbent political party revealed to be corrupt by 1 percentage point, and reduces the vote share of an incumbent political party revealed to have diverted funds to projects not benefiting the poor by around 2 percentage points. We also show that these electoral sanctions persist: at the next election, the vote share of the current incumbent’s party continues to be reduced by a similar magnitude. The electoral costs of diverting resources away from the poor are especially large for the populist Institutional Revolutionary Party (PRI) party. However, we find no effect of media stations based in other municipalities.
    JEL: D72 D78 H41 H76 O17
    Date: 2014–11
  3. By: László Á. Kóczy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Keleti Faculty of Economics, Óbuda University)
    Abstract: Power indices have been used to evaluate the allocation of power in a wide range of voting situations. While they use the language of game theory known measures of a priori voting power are hardly more than statistical expectations assuming the random behaviour of the players. We introduce a model where players can reject certain partnerships in cooperation. For normalised indices strategic rejection may increase power. Our notion of a strategic power index is well defined if power is measured by an index that takes only minimal winning coalitions into account.
    Keywords: quarrelling, rejected coalitions, a priori voting power, power indices, minimal winning coalitions, rational players
    JEL: C71 D71
    Date: 2014–11
  4. By: Janne Tukiainen; Tuukka Saarimaa; Ari Hyytinen; Jaakko Meriläinen; Otto Toivanen
    Abstract: We use data for 198121 candidates and 1351 random election outcomes to estimate the effect of incumbency status on future electoral success. We find no evidence of incumbency advantage using data on randomized elections. In contrast, regression discontinuity design, using optimal bandwidths, produces a positive and significant incumbency effect. Using even narrower bandwidths aligns the results with those obtained using the randomized elections. So does the bias-correction of Calonico et al. (forthcoming). Standard validity tests are not useful in detecting the problems with the optimal bandwidths. The appropriate bandwidth seems narrower in larger elections and is thus context specific.
    Keywords: Elections, experiment, incumbency advantage, regression discontinuity design
    JEL: D72 C52 C21
    Date: 2014–11–20
  5. By: Michaeli, Moti (Department of Economics, and Center for the Study of Rationality, the Hebrew University,); Spiro, Daniel (Dept. of Economics, University of Oslo)
    Abstract: This paper shows that peer pressure may lead to dynamic convergence to a norm that is skewed with respect to preferences in society, yet is endogenously upheld by the population. Moreover, a skewed norm will often be more sustainable than a representative norm. This may explain the skewness of various social and religious norms. By furthermore interpreting a norm as a political regime, we show that biased regimes can be sustained even without the existence of a powerful group with coherent interests. We analyze the pattern by which political regimes collapse and relate it to contemporary revolutions and mass protests.
    Keywords: Peer pressure; Social norm; Revolution; Protest movement; Alienation; Religion
    JEL: D02 D03 D72 D74 Z10 Z12
    Date: 2014–06–30
  6. By: Arghya Ghosh; Kieron Meagher
    Abstract: In spatial competition, public infrastructure plays a crucial role in determining product market outcomes. In our model, consideration of infrastructure’s impact on the product market drives the voting behavior of consumers in their dual role as voter/taxpayers. The spatial heterogeneity of consumers produces conflicting political interests and in many cases inefficient outcomes. However across both exogenous and endogenous market environments product market competition consistently leads to higher levels of publicly funded infrastructure than monopoly/collusion. Furthermore, competition’s boost to the popular support for infrastructure investment is often excessive while monopoly leads to underinvestment.
    JEL: D43 L13 H40 H54
    Date: 2014–08
  7. By: Dolata, Ulrich; Schrape, Jan Felix
    Abstract: From prosumers to swarms, crowds, e-movements and e-communities, the Internet allows for new forms of collective behavior and action anywhere on the spectrum between individuals and organizations. In all of these cases, online technologies function as connectivityenhancing tools and have prompted the search for novel or inherently different collective formations and actors on the web. However, research to date on these new collective formations on the web lacks a sociologically informed and theoretical focus. Instead, loosely defined terms such as "swarm", "crowd" or "network" are readily used as a catch-all for any formation that cannot be characterized as a stable corporate actor. Such terms contribute little to an understanding of the vast range of collective activities on the Internet, namely because the various collective formations differ significantly from each other with regard to their size, internal structure, interaction, institutional dynamics, stability and strategic capability. In order to bridge this gap, this study investigates two questions: One, how might the very differently structured collectives on the Internet be classified and distinguished along actor- or action-centered theory? And two, what influence do the technological infrastructures in which they operate have on their formation, structure and activities? For this we distinguish between two main types of collectives: non-organized collectives, which exhibit loosely-coupled collective behavior, and collective actors with a separate identity and strategic capability. Further, we examine the newness, or distinctive traits, of online-based collectives, which we identify as being the strong and hitherto non-existent interplay between the technological infrastructures that these collectives are embedded in and the social processes of coordination and institutionalization they must engage in in order to maintain their viability over time. Conventional patterns of social dynamics in the development and stabilization of collective action are now systematically intertwined with technology-induced processes of structuration.
    Abstract: Dieses Discussion Paper geht den beiden Fragen nach, wie sich die sehr unterschiedlich strukturierten kollektiven Gebilde im Internet - beispielsweise Swarms, Crowds, Social Networks, E-Communities, E-Movements - akteur- bzw. handlungstheoretisch einordnen und voneinander abgrenzen lassen und welchen Einfluss die technologischen Infrastrukturen, in denen sie sich bewegen, auf ihre Entstehung, Strukturierung und Aktivität haben. Dazu wird zunächst zwischen zwei wesentlichen Varianten kollektiver Formationen unterschieden, die als nicht-organisierte Kollektive und als strategiefähige kollektive Akteure charakterisiert werden. Daran anknüpfend wird herausgearbeitet, was das Neue ist, das kollektive Formationen im Internet auszeichnet: Es besteht in einer so zuvor nicht gekannten Verschränkung nach wie vor unverzichtbarer sozialer Konstitutions-, Koordinations- und Institutionalisierungsprozesse mit den technischen Infrastrukturen, die das Netz bietet. Klassische soziale Entstehungs- und Organisierungsmuster kollektiven Verhaltens bzw. Handelns mischen sich im Online-Kontext systematisch mit eigenständigen technischen Strukturierungsleistungen.
    Date: 2014
  8. By: Maria Csanádi (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)
    Abstract: Why some party-states collapse and others don't? Why some transformations are accompanied by economic crisis while others by economic growth? Are first political or economic transformation strategic alternatives? This paper comprises the essence of the author’s comparative research on party-state systems in Europe and Asia embodied in a comparative interactive party-state model interpreted as network. Networks evolve during the decision-making process formed by the tightly intertwined dependency and interest promotion relationships among actors in the party, the state, and the economy. The model also describes the structural background of the different operation and transformation of party-state systems as specific patterns of power distribution in the network forging the different ways and instruments of self-reproduction, and different sequence, speed and conditions of system transformation.
    Keywords: party-state systems, network, varieties of power distribution, selective resource distribution, political rationality of economic behavior, transformation, China
    JEL: P2 P5 D78 F5 P21 P26 P30
    Date: 2014–11
  9. By: Selçuk, O. (Tilburg University, School of Economics and Management)
    Abstract: Cooperative games with transferable utilities, or simply TU-games, refer to the situations where the revenues created by a coalition of players through cooperation can be freely distributed to the members of the coalition. The fundamental question in cooperative game theory deals with the problem of how much payoff every player should receive. The classical assumption for TU-games states that every coalition is able to form and earn the worth created by cooperation. In the literature, there are several different modifications of TU-games in order to cover the cases where cooperation among the players is restricted. The second chapter of this monograph provides a characterization of the average tree solution for TU-games where the restricted cooperation is represented by a connected cycle-free graph on the set of players. The third chapter considers TU-games for which the restricted cooperation is represented by a directed graph on the set of players and introduces the average covering tree solution and the dominance value for this class of games. Chapter four considers TU-games with restricted cooperation which is represented by a set system on the set of players and introduces the average coalitional tree solution for such structures. The last two chapters of this monograph belong to the social choice theory literature. Given a set of candidates and a set of an odd number of individuals with preferences on these candidates, pairwise majority comparison of the candidates yields a tournament on the set of candidates. Tournaments are special types of directed graphs which contain an arc between any pair of nodes. The Copeland solution of a tournament is the set of candidates that beat the maximum number of candidates. In chapter five, a new characterization of the Copeland solution is provided that is based on the number of steps in which candidates beat each other. Chapter six of this monograph is on preference aggregation which deals with collective decision making to obtain a social preference. A sophisticated social welfare function is defined as a mapping from profiles of individual preferences into a sophisticated social preference which is a pairwise weighted comparison of alternatives. This chapter provides a characterization of Pareto optimal and pairwise independent sophisticated social welfare functions.
    Date: 2014
  10. By: Abdul-Gafaru Abdulai; Sam Hickey
    Abstract: Debates over whether democratic or neopatrimonial forms of politics are driving the politics of development in Africa have increasingly given way to more nuanced readings which seek to capture the dynamic interplay of these forms of politics. However, most current analyses fail to identify the specific causal mechanisms through which this politics shapes the actual distribution of resources. A political settlements approach which emphasises the distribution of 'holding power' within ruling coalitions and how this shapes institutional functioning can bring greater clarity to these debates. Our analysis shows that patterns of resource allocation within Ghana's education sector during 1993-2008 were closely shaped by the incentives and norms generated by Ghana's competitive 'clientelistic political settlement', which overrode rhetorical concerns with national unity and inclusive development. This had particularly negative implications for the poorest Northern regions, which have lacked holding power within successive ruling coalitions.
    Date: 2014
  11. By: Yann Girard (GSEFM, Goethe University Frankfurt, Germany); Florian Hett (GSEFM, Goethe University Frankfurt, Germany); Daniel Schunk (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany)
    Abstract: We study how students’ social networks emerge by documenting systematic patterns in the process of friendship formation of incoming students; these students all start out in a new environment and thus jointly create a new social network. As a specific novelty, we consider cooperativeness, time and risk preferences - elicited experimentally - together with factors like socioeconomic and personality characteristics. We find a number of robust predictors of link formation and of the position within the social network (local and global network centrality). In particular, cooperativeness has a complex association with link formation. We also find evidence for homophily along several dimensions. Finally, our results show that despite these systematic patterns, social network structures can be exogenously manipulated, as we find that random assignments of students to groups on the first two days of university impacts the students’ friendship formation process.
    Keywords: Social networks, education, link formation, homophily, cooperation, field and lab data
    JEL: C93 D85 I25 J24
    Date: 2014–11–17
  12. By: Orphanides, Athanasios
    Abstract: This paper explores the dominant role of politics in decisions made by euro area governments during the crisis. Decisions that appear to have been driven by local political considerations to the detriment of the euro area as a whole are discussed. The domination of politics over economics has led to crisis mismanagement. The underlying cause of tension is identified as a misalignment of political incentives. Member state governments tend to defend their own interests in a noncooperative manner. This has magnified the costs of the crisis and has resulted in an unbalanced and divisive incidence of the costs across the euro area. The example of Cyprus is discussed, where political decisions resulted in a transfer of about half of 2013 GDP from the island to cover losses elsewhere. In the absence of a federal government, no institution can adequately defend the interests of the euro area as a whole. European institutions appear weak and incapable of defending European principles and the proper functioning of the euro. Political reform is needed to sustain the euro but this is unlikely to pass the political feasibility test with the current governments of Europe.
    Keywords: currency union; Cyprus; Deauville; euro; European integration; sovereign debt
    JEL: D72 E32 E65 F34 G01 H12 H63
    Date: 2014–06
  13. By: Andy Stirling (SPRU - Science Policy Research Unit, University of Sussex, UK)
    Abstract: Innovation is about more than technological invention. It involves change of many kinds: cultural, organisational and behavioural as well as technological. And there are no guarantees that any particular realised innovation will necessarily be positive. Accordingly, innovation is not a one-track race to the future. Indeed, it is not so much about optimizing a single trajectory, as it is a collaborative process for exploring diverse pathways. So, in order to realise the enormous progressive potential of particular kinds of innovation, what is needed is a more realistic, rational and vibrant ‘innovation democracy’. Yet conventional innovation policy and regulation tend simply to assume that whatever products or technologies are most energetically advanced, are in some way self-evidently beneficial. Scrutiny tends only to be through narrow forms of quantitative ‘risk assessment’ – often addressing innovation pathways at a time too late for significant change. Attention is directed only in circumscribed ways at the pace of innovation and whether risks are ‘tolerable’. The result is a serious neglect for the crucial issue of the direction of innovation in any given area – and increased vulnerability to various kinds of ‘lock in’. These patterns show up across all sectors. Beyond GM crops, for example, there exist many other innovations for improving global food sustainability. But the relatively low potential for commercial benefits often leave many promising options seriously neglected. And this ‘closing down’ of innovation is intensified by deliberate exercise of powerful interests at the earliest stages. For instance, official statistics often conceal the extent to which patterns of support are concentrated in favour of particular innovation pathways. And where uncertainties are side-lined, even scientific evidence itself can carry the imprint of vested interests. Yet these effects of power remain unacknowledged in policy making. Policy is stated simply as ‘pro-innovation’ – a self-evident technical (rather than political) matter. To address these challenges, innovation policy should more explicitly and transparently acknowledge the inherently political nature of the interests and motivations driving contending pathways. Here, this paper explores the potential for three emerging bodies of practice, relevant across all areas: participation, responsibility and precaution. Each involves a range of practical methods and new institutions. Precaution in particular is a subject of much misunderstanding and mischief. Among other qualities, this offers a crucial guard against the error of treating the absence of evidence of harm as evidence of absence of harm – and highlights the importance of wider human and environmental values. Together, qualities of participation, responsibility and precaution extend scrutiny beyond anticipated consequences alone, to also interrogate the driving purposes of innovation. They allow societies to exercise agency not only over the rate and riskiness of innovation, but also over its direction. And they offer means to enable hitherto more distributed and marginal forms of innovation – which presently manage only rarely (like renewable energy or ecological farming) to struggle to major global scale. Together, these qualities celebrate that innovation is not a matter of fear-driven technical imperatives, but of a democratic politics of contending hopes.
    Keywords: Innovation; Democracy; Precaution; Responsibility; Participation
    Date: 2014–12
  14. By: Binswanger, J. (Tilburg University, Center For Economic Research); Oechslin, M. (Tilburg University, Center For Economic Research)
    Abstract: Abstract: When it comes to economic reforms in developing countries, many economists agree on broad objectives (such as fostering outward orientation). Broad objectives, however, can be pursued in many di¤erent ways, and policy experimentation is often indispensable for learning which alternative works locally. We propose a simple model to study this societal learning process. The model explores the role of disagreeing beliefs about “what works”. It suggests that this type of disagreement can stall the societal learning process and cause economic stagnation. Interestingly, this can happen even if everybody knows that Pareto-improving reforms do exist. Our analysis is motivated by the empirical observation of a negative relationship between disagreement and economic growth among poorer countries.
    Keywords: Disagreement; experimentation; societal learning; development policy; gridlock
    JEL: D72 D78 D83 O11
    Date: 2014
  15. By: Nyborg, Karine (Dept. of Economics, University of Oslo)
    Abstract: I explore possible impacts of reciprocal preferences on participation in international environmental agreements. Reciprocal countries condition their willingness to abate on others' abatement. No participation is always stable. A full or majority coalition can be stable, provided that reciprocity is sufficiently strong and widespread. In addition, a stable minority coalition can exist, even with weak reciprocity preferences. This latter coalition is weakly larger than the maximum stable coalition with standard preferences, but is characterized by mutually negative sentiments.
    Keywords: International Environmental Agreements; Reciprocity; Coalitions
    JEL: F53 H87 Q54
    Date: 2014–08–30
  16. By: Dreher, Axel; Kreibaum, Merle
    Abstract: We investigate the effect of natural resources on whether ethno-political groups choose to pursue their goals with peaceful as compared to violent means, distinguishing terrorism from insurgencies. We hypothesize that organizations are more likely to resort to terrorism rather than rebellion in richer countries where population mobilization is more difficult. We use data from the Minorities at Risk Organizational Behavior (MAROB) project, covering 118 organizations in 13 countries of the Middle East and North Africa over the 1980-2004 period. Our multinomial logit models combine group- and country-specific information and show that ethno-political groups are more likely to resort to rebellion rather than using peaceful means or becoming terrorists when representing regions rich in oil. Groups that participate in exerting power over their region are less likely to turn to large-scale violence.
    Keywords: oil; rebellion; resource curse; terrorism
    JEL: F51 Q34
    Date: 2014–07

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