nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒02‒22
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Ideology, Nationalism, and Identity in Basque Regional Elections By Stephen Ansolabehere; M. Socorro Puy
  2. Does polarization of opinions lead to polarization of platforms? the case of correlation neglect By Levy, Gilat; Razin, Ronny
  3. Proportional influence? Electoral rules and special interest spending By Köthenbürger, Marko; Egger, Peter; Smart, Michael
  4. Teams Contribute More and Punish Less By Thum, Marcel; Auerswald, Heike; Schmidt, Carsten; Torsvik, Gaute
  5. Public Good Provision in Indian Rural Areas: the Returns to Collective Action by Microfinance Groups By Paolo Casini; Lore Vandewalle; Zaki Wahhaj
  6. The Role of Lawyer-Legislators in Shaping the Law: Evidence from Voting Behavior on Tort Reforms By Matter, Ulrich; Stutzer, Alois
  7. Political Selection and the Concentration of Political Power By Pönitzsch, Gert; Grunewald, Andreas; Hansen, Emanuel
  8. The dynamics of coalition formation - a multilateral bargaining experiment with free timing of moves By Tremewan, James; Vanberg, Christoph
  9. The We and the I: The Logic of Voluntary Associations By Ekaterina Melnik; Jean-Benoît Zimmermann
  10. Local Political Budget Cycles in a Federation: Evidence from West German Cities By Furdas, Marina; Homolkova, Katerina; Kis-Katos, Krisztina
  11. Intergovernmental Grants as Signals and the Alignment Effect: Theory and Evidence By Bracco, Emanuele; Lockwood, Ben; Porcelli, Francesco; Redoano, Michela
  12. Distributional Consequences of Political Representation By Maaser, Nicola; Stratmann, Thomas
  13. Competition for status creates superstars: An experiment on public good provision and network formation By Offerman, Theo; Schram, Arthur; Van Leeuwen, Boris

  1. By: Stephen Ansolabehere (Government Department, Harvard University); M. Socorro Puy (Department of Economic Theory, Universidad de Málaga)
    Abstract: Parliamentary elections to the Basque Autonomous Community have a stable multi-party system that regularly produces long-lived minority and coalition governments. More amazing still, this stable party system arises in the context of a complex social and political setting in which the society cleaves along at least two lines -- left-right ideology and nationalism – and in which people have strong identities tied to the Basque language and culture. This paper analyzes voting behavior in parliamentary elections in this region to understand how the left-right ideology, nationalism, and identity sustain this party system. We extend the conventional spatial voting model to incorporate identity issues. Our empirical analysis shows that left-right ideology, nationalism (or regional autonomy) and identity strongly predict vote choice. Interestingly, the analysis suggests that identity politics both polarizes voting and sustains a stable multi-party system.
    Keywords: Basque-Elections; Multi-Party Elections; Coalition Governments; Positional Issues; Valence Issues; Identity groups
    Date: 2015–02
  2. By: Levy, Gilat; Razin, Ronny
    Abstract: In this paper we question the common wisdom that more polarized voters’ opinions imply larger policy polarization. We analyze a voting model in which the source of the polarization in voters’ opinions is “correlation neglect”, that is, voters neglect the correlation in their information sources. Our main result shows that such polarization in opinions does not necessarily translate to policy polarization; when the electoral system is not too competitive (that is, when there is some aggregate noise in the election’s outcome), then voters with correlation neglect may induce lower levels of policy polarization compared with rational electorates.
    Keywords: correlation neglect; polarization; policy polarization; public opinion
    JEL: D72
    Date: 2015–02
  3. By: Köthenbürger, Marko; Egger, Peter; Smart, Michael
    Abstract: Conventional wisdom has it that proportional representation leads to more coalition governments and so to greater government spending, especially in redistributive categories favoured by special-interest groups. In contrast, we show in a theoretical model that first-past-the-post systems of government may give special interests greater influence in the winning electoral coalition than they would have in the corresponding legislative coalition under proportional representation. Evidence from a quasi-experimental reform in German local government supports this view. Introduction of a mayor directly elected under first-past-the-post rules caused a significant increase in local government expenditure, particularly in redistributive spending categories.
    JEL: H20 D72 H11
    Date: 2014
  4. By: Thum, Marcel; Auerswald, Heike; Schmidt, Carsten; Torsvik, Gaute
    Abstract: Many decisions in politics and business are made by teams rather than by single individuals. In contrast, economic models typically assume an individual rational decision maker. A rapidly growing body of (experimental) literature investigates team decisions in different settings. We study team decisions in a public goods contribution game with a costly punishment option and compare it to the behavior of individuals in a laboratory experiment. We also consider different team decision-making rules (unanimity, majority). We find that teams contribute significantly more and punish less than individuals, regardless of the team decision rule. Overall, teams yield higher payoffs than individuals.
    JEL: C72 C92 H41
    Date: 2014
  5. By: Paolo Casini; Lore Vandewalle; Zaki Wahhaj
    Abstract: Self-help groups (SHGs) are the most common form of microfinance in India. We provide evidence that SHGs, composed of women only, undertake collective actions for the provision of public goods. Using a theoretical model, we show that an elected official, whose aim is to maximise re-election chances, would exert higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods. This effect occurs although government and private contributions are assumed to be perfect substitutes. Using first-hand data on SHGs in India, we test the predictions of the model and show that, in response to collective action by SHGs, local authorities tackle a larger variety of public issues, and are more likely to tackle issues of interest to SHGs.
    JEL: D70 G21 H42
    Date: 2015–01
  6. By: Matter, Ulrich; Stutzer, Alois
    Abstract: Attorneys elected to the US House of Representatives and to US state legislatures are systematically less likely to vote in favor of tort reforms that restrict tort litigation, but more likely to support bills that extend tort law. This finding is based on the analysis of 54 votes at the federal and state level between 1995 and 2012. It holds when controlling for legislators ideology and is particularly strong for term-limited lawyer-legislators. The empirical regularity is consistent with the hypothesis that lawyer- legislators, at least in part, pursue their private interests when voting on tort issues. Our results highlight the relevance of legislators identities and individual professional interests for economic policy making.
    JEL: D72 K13 C81
    Date: 2014
  7. By: Pönitzsch, Gert; Grunewald, Andreas; Hansen, Emanuel
    Abstract: This paper studies the effects of power-concentrating institutions on the quality of political selection, i.e., the voters' capacity to identify and empower competent politicians. In our model, candidates are privately informed about their abilities and are driven by office rents as well as welfare considerations. We show that variations in power concentration involve a trade-off. On the one hand, higher concentration of power enables the voters' preferred politician to enforce larger parts of his agenda. On the other hand, higher power concentration increases electoral stakes and thereby induces stronger policy distortions. We identify a negative relation between the optimal level of power concentration and the extent of office motivation. In particular, full concentration of power is desirable if and only if politicians are mostly welfare-oriented. The results of an empirical analysis are in line with this prediction.
    JEL: D72 D82 H11
    Date: 2014
  8. By: Tremewan, James; Vanberg, Christoph
    Abstract: We experimentally study behavior in a finitely repeated coalition formation game played in real time. Subjects interact in groups of three, bargaining over the distribution of payments which occur at regular time intervals. During a given interval, payments occur if and only if a majority is in agreement about their allocation. Aside from these rules, we purposefully impose little structure on the bargaining process. We investigate the frequency and stability of different types of agreements, as well as transitions between them. The most frequent agreement is an equal split between two players, leaving the third with nothing. The most stable is the three-way equal split. Transitions between agreements are frequent and generally consistent with myopic payoff maximization. We find evidence that both fairness concerns and risk aversion may explain the prevalence of the three-way equal split, and that loyalty can play a role in cementing coalitions.
    Keywords: Bargaining; group choice; experiments; coalition formation
    Date: 2015–02–10
  9. By: Ekaterina Melnik (CEE and LEST / Aix-Marseille University and CNRS); Jean-Benoît Zimmermann (Aix-Marseille University (Aix-Marseille School of Economics) GREQAM / CNRS and EHESS)
    Abstract: This paper sheds new light on the economic logic of voluntary associations and the relationship between individual contribution and collective action. The aims are twofold. Firstly, we seek to explain how “team reasoning” (Bacharach et al. 2006) can deeply change the functioning of voluntary associations (which are considered to produce a public good) when some or all of the individual members group together to make collective decisions about their involvement or contribution, rather than deciding separately. Secondly, we seek to better understand the effects of heterogeneity of resources on individual involvement, in terms of both the budget constraints of individual members and their capacity to contribute differentiated non-monetary contributions to the association, in relation to the diversity of their personal abilities and preferences about the characteristics of the good produced. To this end, we use a model of voluntary association collectively producing a public good, where monetary contributions (compulsory fees plus voluntary donations) is combined with volunteering. We analyze the conditions for an association to offer profitable conditions to its members and the consequences that can be drawn in terms of its existence and size. We show that, at equilibrium, the level of voluntary contributions is ceteris paribus higher when individuals make their decisions on the basis of team-reasoning rather than individually. We analyze the role played by heterogeneity of incomes in the formation of teams within associations. We then introduce the concept of subjective quality into the basic model. The originality of the model is that we assume the public good to be characterized by at least two main components: quantity and quality. The quantity is considered here as a purely public component, insofar as all the members benefit equally from it. However, the quality of the public good is assumed to be a mixed (public and private) component. The agents can enjoy part of it in the same way, but there may be certain characteristics of quality that are difficult or impossible to measure objectively. Quality is always somewhat subjective, to the extent that perfect correspondence with the preferences of heterogeneous agents is unlikely to occur. In our model, the agents can contribute money and/or time and effort. The latter, which we call volunteering, allows them to influence the quality of the good (or service) provided according to their own preferences.
    Keywords: voluntary associations, public good, contribution, voluteering, team reasonning, collective action
    JEL: C71 D71 H4 L3
    Date: 2015–01
  10. By: Furdas, Marina (University of Freiburg); Homolkova, Katerina (University of Kiel); Kis-Katos, Krisztina (University of Freiburg)
    Abstract: This paper analyzes the occurrence of political budget cycles in 604 West German cities between 1975 and 2007. Due to the idiosyncratic timing of state and local elections, the budgetary changes before elections at two tiers of the federalist government can be separately estimated and can also be distinguished from common time effects. Both local and state elections result in pre-election manipulation of the local finances of moderate size. Before both types of elections, we observe an increase in building investments, accompanied by increasing intergovernmental grants for investment purposes but also a halt in the increase of local tax rates. By contrast, elections at the two tiers of the government affect the size of the current budget differently: current revenues and expenditures decrease before local but increase before state elections, suggesting a difference in the tightness of the local budget constraint. The extent of these political budget cycles is more pronounced in municipalities that are politically aligned with the state governments and are politically more contested.
    Keywords: political budget cycles, German cities, municipal finances, local and state elections
    JEL: D72 H71 H72
    Date: 2015–01
  11. By: Bracco, Emanuele; Lockwood, Ben; Porcelli, Francesco; Redoano, Michela
    Abstract: This paper provides a simple political agency model to explain the effect of political alignment between different tiers of government on intergovernmental grants and election outcomes. Key features of the model are: (i) rational voters interpret public good provision as a signal of incumbent competence, and (ii) realistically, grants are unobservable to voters. In this setting, the national government will use the grant as an instrument to manipulate the public good signal for the benefit of aligned local incumbents and challengers. Then, aligned municipalities receive more grants, with this effect being stronger before elections, and the probability that the aligned local incumbent is re-elected is higher. These predictions are tested using a regression discontinuity design on a new data-set on Italian municipalities. At a second empirical stage, the national grant to municipalities is instrumented with an alignment indicator, allowing estimation of a flypaper effect for Italian municipalities.
    Keywords: accountability; fiscal federalism; flypaper effect; political competition
    JEL: D7 H2 H77 H87
    Date: 2015–02
  12. By: Maaser, Nicola; Stratmann, Thomas
    Abstract: We investigate the geographical concentration of representatives and the distribution of fiscal transfers both theoretically and empirically. We develop a model which predicts that funds to an area are positively correlated with the number of representatives residing in that area. Our empirical analysis uses the fact that due to the electoral rules for German state elections the number of representatives varies quasi-randomly across electoral districts. Controlling for various socio-economic and demographic variables and using a variety of estimation techniques, we find that areas with greater number of representatives receive more government funds.
    JEL: D72 H72 R10
    Date: 2014
  13. By: Offerman, Theo; Schram, Arthur; Van Leeuwen, Boris
    Abstract: We investigate a mechanism that facilitates the provision of public goods in a network formation game. We show how competition for status encourages a core player to realize efficiency gains for the entire group. In a laboratory experiment we systematically examine the effects of group size and status rents. The experimental results provide very clear support for a competition for status dynamic that predicts when, and if so which, repeated game equilibrium is reached. Two control treatments allow us to reject the possibility that the supergame effects we observe are driven by social motives.
    JEL: C91 D85 H41
    Date: 2014–12

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