nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒02‒16
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Balanced Voting By Hans Gersbach; Kamali Wickramage
  2. The Power of Religious Organizations in Human Decision Processes: Analyzing Voting Behavior By Stadelmann, David; Portmann, Marco; Torgler, Benno
  3. Electoral competition and endogenous political institutions: quasi-experimental evidence from Germany By Baskaran, Thushyanthan; Lopes da Fonseca, Mariana
  4. The Impact of Within-Party and Between-Party Ideological Dispersion on Fiscal Outcomes : Evidence from Swiss Cantonal Parliaments By Tjasa Bjedov; Simon Lapointe; Thierry Madiès
  5. No news is costly news: the link between the diffusion of the press and public spending By Ilaria Petrarca
  6. Elite Influence? Religion, Economics, and the Rise of the Nazis By Spenkuch, Jörg; Tillmann, Philipp
  7. Electoral Rules for Mayors and Incentives to Pork-Barrel: Quasi-Experimental Evidence from German Municipalities By Hessami, Zohal
  8. Free and Fair Elections - A New Database By Anke Hoeffler; Sylvia Bishop
  9. Tailored Bayesian Mechanisms: Experimental Evidence from Two-Stage Voting Games By Dirk Engelmann, Dirk; Grüner, Hans Peter
  10. From Rebellion to Electoral Violence Evidence from Burundi By Olivier Sterck; Andrea Colombo; Olivia D'Aoust
  11. Precarious Democracies, Political Negotiation and Selective Predation By Andrés Cendales; Jhon James Mora
  12. How Transparency Kills Information Aggregation: Theory and Experiment By Hughes, Niall E; Fehrler, Sebastian
  13. Cooperation and Expectations in Networks Evidence from a Network Public Good Experiment in Rural India By Marcel Fafchamps; A. Stefano Caria
  14. Asymmetric and Endogenous Communication in Competition between Groups By Timothy N. Cason; Roman M. Sheremeta; Jingjing Zhang
  15. Instability And Network Effects In Innovative Markets By Paolo Sgrignoli; Elena Agliari; Raffaella Burioni; Augusto Schianchi
  16. On the Choice and the Effects of Rule-Based Contribution Schemes in Public Good Games By Gallier, Carlo; Kesternich, Martin; Sturm, Bodo

  1. By: Hans Gersbach (ETH Zurich, Switzerland); Kamali Wickramage (ETH Zurich, Switzerland)
    Abstract: We introduce `Balanced Voting', a new voting scheme that is particularly suitable for making fundamental societal decisions. Such decisions typically involve subgroups that are strongly in favor of, or against, a new fundamental direction, and others that care much less. In a two-stage procedure, Balanced Voting works as follows: Citizens may abstain from voting on a fundamental direction in a first stage. In a second voting stage, this guarantees them a voting right on the variations of the fundamental direction chosen in the first. All ‘losers’ from the first stage also obtain voting rights in the second stage, while ‘winners’ do not. We develop a model with two fundamental directions for which stakes are high for some individuals and with private information about preferences among voters. We demonstrate that Balanced Voting is superior to simple majority voting, Storable Votes and Minority Voting with regard to utilitarian welfare if the voting body is sufficiently large. Moreover, the outcome under Balanced Voting is Pareto-dominant to the outcome under simple majority voting and Minority Voting. We discuss several aspects that need to be considered when Balanced Voting is applied in practice. We also suggest how Balanced Voting could be applied to elections.
    Keywords: Balanced Voting; fundamental decision; tyranny of majority; minority protection
    JEL: D7
    Date: 2015–01
  2. By: Stadelmann, David; Portmann, Marco; Torgler, Benno
    Abstract: In Switzerland, two key church institutions the Conference of Swiss Bishops (CSB) and the Federation of Protestant Churches (FPC) make public recommendations on how to vote for certain referenda. We leverage this unique situation to directly measure religious organizations power to shape human decision making. We employ an objective measure of voters commitment to their religious organization to determine whether they are more likely to vote in line with this organization s recommendations. We find that voting recommendations do indeed matter, implying that even in a secularized world, religion plays a crucial role in voting decisions.
    JEL: Z12 D72 D03
    Date: 2014
  3. By: Baskaran, Thushyanthan; Lopes da Fonseca, Mariana
    Abstract: Do established parties change political institutions to disadvantage smaller, non-mainstream parties if the latters' electoral prospects improve? We study this question with a natural experiment from the German federal State of Hesse. The experiment is the abolishment of an explicit electoral threshold (the so called "five percent hurdle") for local elections in 2001 by the Hessian state parliament. The abolishment improved the electoral prospects of smaller parties at local elections, but local politicians from mainstream parties had the ability to adjust municipal political institutions in such as way as to counteract the increased competitiveness of smaller parties. One such institutional adjustment is to reduce the size of the local council and thereby raise implicit electoral thresholds. Using a dataset that covers all 426 Hessian municipalities over the period 1989-2011, we document with a difference-in-discontinuity design that municipalities where the electoral competitiveness of smaller parties improved more because of the abolishment of the explicit threshold, reduced their council size more. Hence, established parties appear to erect barriers to entry by adjusting political institutions once new political formations become viable electoral alternatives.
    JEL: D70 D72 D78
    Date: 2014
  4. By: Tjasa Bjedov (University of Fribourg, Switzerland); Simon Lapointe (University of Fribourg, Switzerland); Thierry Madiès (University of Fribourg, Switzerland)
    Abstract: The impact of the fragmentation of executive and legislative bodies on the level and composition of government expenditure is a political feature that attracted considerable attention from economists. However, previous authors have abstracted from two important concepts : ideology and intra-party politics. In this paper, we explicitly account for these two phenomenons, and make two main contributions. First, we show that both intra-party and interparty ideological dispersion matters in the level of public spending. Therefore, it is incorrect to consider parties as monolithic entities. We also show that ideological dispersion matters especially for current expenditures, and not so much for investment expenditures. To do so, we construct a panel database (2003 to 2011) including data from a survey that quantifies the policy preferences of individual party members that were candidates to federal elections in Switzerland.
    Keywords: Political Fragmentation, Public Spending, Political Parties, Ideology
    JEL: D72 H72 D78
    Date: 2014
  5. By: Ilaria Petrarca (Department of Economics (University of Verona))
    Abstract: This paper studies the link between the diffusion of news and spending decisions. We develop a canonical model that illustrates how the spread of information affects expenditures close to elections, conditional on the electoral rules. With the indirect election of the incumbent, news limits total spending by reducing the most targetable expenditure item; with the direct election of the government, it leaves unaffected total spending and narrows the gap between the opposite variations of the most and the least targetable expenditure items. We test these hypotheses on a dataset of Italian Regions from 1984 to 2008, approximating the spread of information with the diffusion of newspapers. We estimate the effect of news conditional on the electoral rule, exploiting a reform that introduced the direct election of the governor in 1999. The empirical analysis confirms the expectations, and suggests that capital expenditure is the most targetable item. The results are robust to alternative categorizations of press and indicate a deeper effectiveness of the diffusion of local press.
    Keywords: Local diffusion of newspapers, expenditure composition, electoral expenditure cycles, dynamic panel estimation
    JEL: D72 H72 D83
    Date: 2013–09
  6. By: Spenkuch, Jörg; Tillmann, Philipp
    Abstract: Adolf Hitler's seizure of power was one of the most consequential events of the twentieth century. Yet, our understanding of which factors fueled the astonishing rise of the Nazis remains highly incomplete. This paper shows that religion played an important role in the Nazi party's electoral success---dwarfing all available socio-economic variables. To obtain the first causal estimates we exploit plausibly exogenous variation in the geographic distribution of Catholics and Protestants due to a peace treaty in the sixteenth century. Even after allowing for sizeable violations of the exclusion restriction, the evidence indicates that Catholics were significantly less likely to vote for the Nazi Party than Protestants. Consistent with the historical record, our results are most naturally rationalized by a model in which the Catholic Church leaned on believers to vote for the democratic Zentrum Party, whereas the Protestant Church remained politically neutral.
    JEL: Z12 N34 D72
    Date: 2014
  7. By: Hessami, Zohal
    Abstract: This paper exploits a natural experiment in Hesse where a reform of the electoral rule from mayor appointment by the local council towards direct mayor elections was introduced during a phase-in period from 1993 to 1998. The end of the term of the last appointed mayor varies across municipalities for exogenous historical reasons and determines the timing of the switch in a particular municipality. Di fference-in-di fference estimations for 421 municipalities over the period from 1981 to 2010 reveal that municipalities with a directly elected mayor attract 5% more investment transfers from the state tier. This e ffect only materializes in the election year which suggests that mayors under the new electoral rule put more e ffort into grant applications for highly visible infrastructure projects in order to increase their re-election probability.
    JEL: D72 H72 H77
    Date: 2014
  8. By: Anke Hoeffler; Sylvia Bishop
    Abstract: The holding of elections has become universal but only about half of all elections have been free and fair.  Electoral malpractice not only distorts the quality of representation but has implications for political, social and economic outcomes.  Existing datasets either provide broad information on election quality for large panels or they provide very detailed information on electoral processes and event for a small number of elections.  Our data collection effort closes this gap.  We provide an assessment of elections that is closely tied to the commonly used term 'free and fair' and base this proxy on ten variables for a global panel.  Our preliminary results suggest that there are a number of elections that are unfree but fair.  Most observer organisations concentrate on the election as an event, i.e. whether the election was fair.  We therefore recommend that international organisations should put more emphasis on monitoring the run up to the elections, i.e. whether the elections were free.
    Date: 2014–03–20
  9. By: Dirk Engelmann, Dirk; Grüner, Hans Peter
    Abstract: Optimal voting rules have to be adjusted to the underlying distribution of preferences. However, in practice there usually is no social planner who can perform this task. This paper shows that the introduction of a stage at which agents may themselves choose voting rules according to which they decide in a second stage may increase the sum of individuals' payoffs if players are not all completely selfish. We run three closely related experimental treatments (plus two control treatments) to understand how privately informed individuals decide when they choose voting rules and when they vote. Efficiency concerns play an important role on the rule choice stage whereas selfish behavior seems to dominate at the voting stage. Accordingly, in an asymmetric setting groups that can choose a voting rule do better than those who decide with a given simple majority voting rule.
    JEL: C91 D70 D82
    Date: 2014
  10. By: Olivier Sterck; Andrea Colombo; Olivia D'Aoust
    Abstract: We aim at understanding the triggers of electoral violence, which spoiled 80% of elections in Africa during the last decades.  We focus on Burundi, a country which experienced polls in 2010, only a few months after the end of a long-lasting civil war.  Our results suggest that higher polarization between ex-rebels' groups increases the risk of electoral violence at the municipal level.  However, neither ethnic or political cleavages significantly determine such electoral malpractices.  These results are robust to numerous specifications.  We threfore argue that policies supporting the transition of ex-rebel groups from warfare to the political arena should be reinforced.
    Keywords: Civil war, Electoral violence, Polarization, Demobilization, Burundi
    Date: 2014–05–02
  11. By: Andrés Cendales; Jhon James Mora
    Abstract: This article analyzes, at the subnational level, a political system in which there is a precarious democracy given that the mayor, as a member of a political organization constituting a political patron- age machine, not only co-opts civil society but also seeks to plunder municipal funds to reinforce his political hegemony, weakening and even destroying the existing institutional framework. In direct contradiction to the central theses of economic voting and orthodox political economy, the main ?nding of this article demonstrates that the executive, through his local power networks operating in the context of a deteriorated social structure, does not foster equitable wealth redistribution but instead promotes local empowerment processes through clientelist practices, creating a cartel government made up of the parties represented on the municipal council. The council, as a veto player, will strengthen and support the establishment of a predator state led by the executive.
    JEL: C72 D31 D33 D63
    Date: 2014–12–26
  12. By: Hughes, Niall E (Department of Economics, University of Warwick); Fehrler, Sebastian (University of Konstanz)
    Abstract: We investigate the potential of transparency to influence committee decisionmaking. We present a model in which career concerned committee members receive private information of different type-dependent accuracy, deliberate and vote. We study three levels of transparency under which career concerns are predicted to affect behavior differently, and test the model’s key predictions in a laboratory experiment. The model’s predictions are largely borne out - transparency negatively affects information aggregation at the deliberation and voting stages, leading to sharply different committee error rates than under secrecy. This occurs despite subjects revealing more information under transparency than theory predicts. Key words: Committee Decision-Making; Deliberation; Transparency; Career Concern; Information Aggregation; Experiments; Voting; Strategic Communication JEL classification: C92; D71; D83
    Date: 2015
  13. By: Marcel Fafchamps; A. Stefano Caria
    Abstract: We play a one-shot public good game in rural India between farmers connected to an exogenous star network.  Contributions by the centre of the star reach more players and have a larger impact on aggregate payoffs than contributions by the spoke players.  Yet, we find that the centre player contributes just as much as the average of the spokes.  We elicit expectations about the decisions of the centre player and, in randomly selected sessions, we disclose the average expectation of the farmers in the network.  Farmers match the disclosed values frequently and do so more often when the monetary cost of making a contribution is reduced.  However, disclosure is not associated with higher contributions.  Our results support the predictions of a model of other-regarding preferences where players care about the expectations of others.  This model is helpful to understand barriers to improvement in pro-social behaviour when groups expect low pro-sociality.
    Date: 2014–12–06
  14. By: Timothy N. Cason (Department of Economics, Krannert School of Management, Purdue University); Roman M. Sheremeta (Department of Economics, Weatherhead School of Management, Case Western Reserve University); Jingjing Zhang (Economics Discipline Group, University of Technology Sydney)
    Abstract: Costless pre-play communication has been shown to effectively facilitate within-group coordination. However, in competitive coordination games, such as rent-seeking contests, better within-group coordination leads to more aggressive competition and lower efficiency. We report an experiment in which two groups compete in a weakest-link contest by expending costly efforts. We find that allowing within-group communication makes groups compete more aggressively. When only one group can communicate, the communicating group coordinates better and expends higher efforts than the non-communicating group. However, the communicating group earns payoffs that are not different from the baseline contest without any communication, while the non-communicating group earns lower payoffs than in this baseline contest. Allowing within-group communication in both groups leads to even more aggressive competition and the lowest payoffs to both groups. Despite such a “harmful” effect of communication, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency.
    Keywords: between-group competition, within-group competition, communication, coordination, contests, experiments
    JEL: C70 D72 H41
    Date: 2015
  15. By: Paolo Sgrignoli (Department of Economics (University of Verona)); Elena Agliari (University of Parma); Raffaella Burioni (University of Parma); Augusto Schianchi (University of Parma)
    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.
    Keywords: Innovation diffusion, Agent-based, Collective phenomena, Innovators, Random network
    JEL: D85 O31 O32
    Date: 2014–09
  16. By: Gallier, Carlo; Kesternich, Martin; Sturm, Bodo
    Abstract: In this experiment, we endogenize the choice of which contribution scheme is implemented in a public good game. We investigate three rule-based contribution schemes and a voluntary contribution mechanism (VCM). The game is implemented either as a Single- or a Multi-Phase Game. In the Single-Phase Game, the contribution schemes are exogenously implemented. In the Multi-Phase Game, we let subjects vote on the rule-based contribution schemes. If a scheme gets a sufficient majority it is implemented. In case a sufficient majority is failed, subjects have to make their contributions to the public good using the VCM. We find that the endogenous choice of a contribution scheme has an impact on the level of contributions. In case of a rule-based contribution scheme which equalizes payoffs, contributions are higher if subjects chose the scheme for themselves than in case the scheme is implemented exogenously. The contrary holds for the VCM. Contributions are higher if the VCM is implemented exogenously than in case a sufficient majority is failed and, therefore, subjects have to play the VCM.
    JEL: C72 C92 H41
    Date: 2014

This nep-cdm issue is ©2015 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.