nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒04‒25
fifteen papers chosen by
Stan C. Weeber, McNeese State University

  1. A Simultaneous Analysis of Turnout and Voting under Proportional Representation: Theory and Experiments By Aaron Kamm; Arthur Schram
  2. Solving the Inverse Power Problem in Two-Tier Voting Settings By Matthias Weber
  3. Choosing Voting Systems behind the Veil of Ignorance: A Two-Tier Voting Experiment By Matthias Weber
  4. Do Polls create Momentum in Political Competition? By Philipp Denter; Dana Sisak
  5. Citizen Candidates and Voting Over Incentive-Compatible Nonlinear Income Tax Schedules By Craig Brett; John A Weymark
  6. Members, Joiners, Free-riders, Supporters By Erik Ansink; Cees Withagen
  7. Cognitive Diversity, Binary Decisions, and Epistemic Democracy By John A Weymark
  8. Other-regarding Preferences, Group Identity and Political Participation: An Experiment By Pedro Robalo; Arthur Schram; Joep Sonnemans
  9. Superstars need Social Benefits: An Experiment on Network Formation By Boris van Leeuwen; Theo Offerman; Arthur Schram
  10. International Environmental Agreements for River Sharing Problems By Harold Houba; Gerard van der Laan; Yuyu Zeng
  11. The Prediction Value By Maurice Koster; Sascha Kurz; Ines Lindner; Stefan Napel
  12. Ability Dispersion and Team Performance By Sander Hoogendoorn; Simon C. Parker; Mirjam van Praag
  13. Social coordination with locally observable types By Ennio Bilancini; Leonardo Boncinelli
  14. The Flipside of Comparative Payment Schemes By Thomas Buser; Anna Dreber
  15. Scientific Advice for Policy Making: The Role and Responsibility of Expert Bodies and Individual Scientists By OECD

  1. By: Aaron Kamm (University of Amsterdam); Arthur Schram (University of Amsterdam)
    Abstract: In a system of proportional representation, we study the interaction between a voter’s turnout decision and her party choice, and how these relate to party polarization. Quantal response equilibria predict such interaction effects. In particular they predict (i) a Polarization Effect: reduced strategic party choice when voting is voluntary makes voters more likely to vote for extreme parties (conditional on voting at all); (ii) an Extremist Effect: voters supporting extreme parties are most likely to vote; (iii) a Turnout Effect: party polarization increases voter turnout. We provide data from a laboratory experiment that support these theoretical predictions. In addition, we provide supporting empirical evidence from real world elections. Hence, the interaction between turnout and strategic voting that has been neglected in most of the previous literature is shown to be important.
    Keywords: Voting behavior, Proportional representation, Political participation, Strategic voting, Experimental Economics
    JEL: C92 D72
    Date: 2013–12–05
  2. By: Matthias Weber (CREED, University of Amsterdam)
    Abstract: There are many situations in which different groups make collective decisions by committee voting, where each group is represented by a single person. Theoretical concepts suggest how the voting systems in such committees should be designed, but these abstract rules can usually not be implemented perfectly. To find voting systems that approximate these rules the so called inverse power problem needs to be solved. I introduce a new method to address this problem in two-tier voting settings using the coefficient of variation. This method can easily be applied to a wide variety of settings and rules. After deriving the new method, I illustrate why it is to be preferred over more traditional methods.
    Keywords: inverse power problem, indirect voting power, two-tier voting, Penrose’s Square Root Rule
    JEL: D71 D72
    Date: 2014–02–10
  3. By: Matthias Weber (CREED, University of Amsterdam)
    Abstract: There are many situations in which different groups make collective decisions by committee voting, with each group represented by a single person. A natural question is what voting system such a committee should use. Concepts based on voting power provide guidelines for this choice. The two most prominent concepts require the Banzhaf power index to be proportional to the square root of group size or the Shapley-Shubik power index to be proportional to group size. Instead of studying the choice of voting systems based on such theoretical concepts, in this paper, I ask which systems individuals actually prefer. To answer this question, I design a laboratory experiment in which participants choose voting systems. I find that people behind the veil of ignorance prefer voting systems following the rule of proportional Shapley-Shubik power; in front of the veil subjects pr efer voting systems benefiting their own group. Participants' choices can only partially be explained by utility maximization or other outcome based concepts.
    Keywords: assembly voting, EU council, Penrose's Square Root Rule, optimal voting rule
    JEL: D71 D72 C91
    Date: 2014–04–01
  4. By: Philipp Denter (University of St. Gallen, Switzerland); Dana Sisak (Erasmus University Rotterdam, The Netherlands)
    Abstract: We explore how public opinion polls affect candidates' campaign spending in political competition. Generally, polls lead to (more) asymmetric behavior. Under a majority rule there always exists an equilibrium in which the initially more popular candidate invests more in the campaign and thereby increases her lead in expectation: polls create momentum. When campaigning is very effective and the race is very close, a second type of equilibrium may exist: the trailing candidate outspends and overtakes his opponent. Regardless of the type of equilibrium, polls have a tendency to decrease expected total campaigning expenditures by amplifying ex-ante asymmetries between candidates and thus defusing competition. When candidates care also for their vote share in addition to having the majority, candidates' incentives crucially depend on the distribution of voters' candidate preferences.
    Keywords: polls, political campaigns, feedback, momentum
    JEL: D02 D72 D74 D83
    Date: 2013–10–15
  5. By: Craig Brett (Mount Allison University); John A Weymark (Vanderbilt University)
    Abstract: Majority voting over the nonlinear tax schedules proposed by a continuum of citizen candidates is considered. The analysis extends the finite-individual model of Röell (unpublished manuscript, 2012). Each candidate proposes the tax schedule that is utility maximal for him subject to budget and incentive constraints. Each of these schedules is a combination of the maxi-min and maxi-max schedules along with a region of bunching in a neighborhood of the proposer's type. Techniques introduced by Vincent and Mason (1967, NASA Contractor Report CR-744) are used to identify the bunching region. As in Röell's model, it is shown that individual preferences over these schedules are single-peaked, so the median voter theorem applies. In the majority rule equilibrium, marginal tax rates are negative for low-skilled individuals and positive for high-skilled individuals except at the endpoints of the skill distribution where they are typically zero.
    Keywords: bunching, citizen candidates, ironing, majority voting, nonlinear income taxation
    JEL: H2 D7
    Date: 2014–09–26
  6. By: Erik Ansink (VU University Amsterdam, the Netherlands); Cees Withagen (VU University Amsterdam, the Netherlands)
    Abstract: We augment the standard cartel formation game from non-cooperative coalition theory, often applied in the context of international environmental agreements on climate change, with the possibility that singletons support coalition formation without becoming coalition members themselves. Rather, their support takes the form of a monetary transfer to the coalition, which increases the members' payoffs, and thereby provides an incentive for other singletons to join the coalition. We show that, under mild conditions on the costs and benefits of contributing to the public good (i.e. abatement of CO<SUB>2</SUB> emissions), supporters exist in equilibrium. The existence of supporters increases the size of stable coalitions, increases abatement of CO<SUB>2</SUB> emissions, and increases payoffs to each of four types of agents: members, joiners, free-riders, and supporters. Importantly, this result does not require commitment.
    Keywords: Coalition formation; Public goods; Support; Transfers; International Environmental Agreements
    JEL: C72 D02
    Date: 2015–01–27
  7. By: John A Weymark (Vanderbilt University)
    Abstract: In Democratic Reason, Hélène Landemore has built a case for the epistemic virtues of inclusive deliberative democracy based on the cognitive diversity of the group engaged in making collective decisions. She supports her thesis by appealing to the Diversity Trumps Ability Theorem of Lu Hong and Scott Page. In practice, deliberative assemblies often restrict attention to situations with only two options. In this paper, it is shown that it is not possible to satisfy the assumptions of the Diversity Trumps Ability Theorem when decisions are binary. The relevance of this theorem for democratic decision-making in non-binary situations is also considered.
    Keywords: epistemic democracy, Diversity Trumps Ability Theorem
    JEL: D7 Y8
    Date: 2014–08–13
  8. By: Pedro Robalo (CREED, University of Amsterdam); Arthur Schram (CREED, University of Amsterdam); Joep Sonnemans (CREED, University of Amsterdam)
    Abstract: We experimentally study the relationship between other-regarding preferences, group identity and political participation. In doing so, we propose a novel group identity induction procedure that succeeds in creating environments where in-group bias is either high or low. At the individual level, we find that both altruistic subjects and group identifiers participate above average. The most competitive subjects participate much less often than other types, while the most altruistic subjects manage to sustain high participation levels. At the aggregate level, we observe only few statistically significant differences between environments where group identity is high and low. This suggests that the higher participation observed in field settings for close-knit (political) groups might be due to underlying mobilization processes rather than a heightened sense of group-belonging.
    Keywords: Group identity, Other-regarding preferences, Political participation, Participation Game, Experiment
    JEL: A13 C91 C92 D72
    Date: 2013–06–11
  9. By: Boris van Leeuwen (University of Amsterdam); Theo Offerman (University of Amsterdam); Arthur Schram (University of Amsterdam)
    Abstract: We investigate contributions to the provision of public goods on a network when efficient provision requires the formation of a star network. We provide a theoretical analysis and study behavior in a controlled laboratory experiment. In a 2x2 design, we examine the effects of group size and the presence of (social) benefits for incoming links. We find that social benefits are highly important. They facilitate convergence to equilibrium networks and enhance the stability and efficiency of the outcome. Moreover, in large groups social benefits encourage the formation of superstars: star networks in which the core contributes more than expected in the stage-game equilibrium. We show that this result is predicted by a repeated game equilibrium.
    Keywords: Network formation, networked public goods, peer production, social benefits, open source software
    JEL: C91 D85 H41
    Date: 2013–08–08
  10. By: Harold Houba (VU University Amsterdam); Gerard van der Laan (VU University Amsterdam); Yuyu Zeng (VU University Amsterdam)
    Abstract: This discussion paper led to a publication in <A href="">Environmental and Resource Economics</A> (forthcoming).<P> We study coalition formation and the strategic timing of membership of an IEA for environmental issues in the Coalitional Bargaining Game (CBG) of Gomes 2005, Econometrica). For the general CBG, we derive the necessary and sufficient condition for immediate formation of the grand coalition. We apply the CBG to a river sharing problem with two symmetric upstream agents and one downstream agent. Taking the discount factor and a productivity variable of water as parameters, we identify five regions in the parameter space. First, there is a region in which the grand coalition always forms immediately. Second, there are two regions in which there is for sure gradual coalition formation, in one of these regions there is a positive probability that the upstream agents form a monopoly. Third, there are two regions in which the grand coalition forms immediately with positive probability, but also gradual coalition formation might occur with positive probability.
    Keywords: Coalitional Bargaining Game, International Environmental Agreements, River Sharing Problems, Markov Perfect Equilibrium, Efficiency, Monopoly
    JEL: C78 Q25
    Date: 2013–10–08
  11. By: Maurice Koster (University of Amsterdam); Sascha Kurz (University of Bayreuth, Germany); Ines Lindner (VU University Amsterdam); Stefan Napel (University of Bayreuth, Germany)
    Abstract: We introduce the prediction value (PV) as a measure of players’ informational importance in probabilistic TU games. The latter combine a standard TU game and a probability distribution over the set of coalitions. Player i’s prediction value equals the difference between the conditional expectations of v(S) when i cooperates or not. We characterize the prediction value as a special member of the class of (extended) values which satisfy anonymity, linearity and a consistency property. Every n-player binomial semivalue coincides with the PV for a particular family of probability distributions over coalitions. The PV can thus be regarded as a power index in specific cases. Conversely, some semivalues – including the Banzhaf but not the Shapley value – can be interpreted in terms of informational importance.
    Keywords: influence, voting games, cooperative games, Banzhaf value, Shapley value
    JEL: C71 D71 D72
    Date: 2013–11–25
  12. By: Sander Hoogendoorn (CPB Netherlands Bureau for Economic Policy Analysis, the Netherlands); Simon C. Parker (Ivey Business School, Western University, London, Canada); Mirjam van Praag (Copenhagen Business School, Denmark)
    Abstract: What is the effect of dispersed levels of cognitive ability of members of a (business) team on their team’s performance? This paper reports the results of a field experiment in which 573 students in 49 teams start up and manage real companies under identical circumstances. We ensured exogenous variation in — otherwise random — team composition by assigning students to teams based on their measured cognitive abilities (Raven test). Each team performs a variety of tasks, often involving complex decision making. The key result of the experiment is that the performance of business teams first increases and then decreases with ability dispersion. We seek to understand this finding by developing a model in which team members of different ability levels form sub-teams with other team members with similar ability levels to specialize in different productive tasks. Diversity spreads production over different tasks in order to escape diminishing marginal returns under specialization. The model comes with a boundary condition: our experimental finding is most likely to emerge in settings where different tasks exhibit moderate differences in their productive contributions to total output.
    Keywords: Ability dispersion, team performance, field experiment, entrepreneurship
    JEL: C93 D83 J24 L25 L26 M13 M54
    Date: 2014–05–06
  13. By: Ennio Bilancini; Leonardo Boncinelli
    Abstract: In this paper we study the typical dilemma of social coordination between a risk- dominant convention and a payoff-dominant convention. In particular, we consider a model where a population of agents play a coordination game over time, choosing both the action and the network of agents with whom to interact. The main novelty with respect to the existing literature is that: (i) agents come in two distinct types, (ii) the interaction with a di.erent type is costly, and (iii) an agent's type is unobservable prior to interaction. We show that when the cost of interacting with a different type is small with respect to the payo. of coordination, then the payoff-dominant convention is the only stochastically stable convention; instead, when the cost of interacting with a different type is large, the only stochastically stable conventions are those where all agents of one type play the payoff-dominant action and all agents of the other type play the risk-dominant action.
    Keywords: coordination, equilibrium selection, stochastic stability, learning, network formation
    JEL: C73 D83
    Date: 2014–12
  14. By: Thomas Buser (University of Amsterdam); Anna Dreber (Stockholm School of Economics, Sweden)
    Abstract: Comparative payment schemes and tournament-style promotion mechanisms are ubiquitous in the work place. We test experimentally whether they have a negative impact on the willingness to cooperate. Participants first perform in a simple task and then participate in a public goods game. The payment scheme for the task varies across treatment groups. Compared to a piece-rate scheme, individuals in a winner-takes-all competition are significantly less cooperative in the public goods game. A lottery treatment, where the winner is decided by luck, has the same effect. In a competition treatment with feedback, winners cooperate as little as participants in the other treatments, whereas losers cooperate even less. All three treatments lead to substantial losses in the realised social surplus from the public good while having no significant impact on performance. The public go ods game is payoff-independent and is played with a separate set of others; we therefore estimate a psychological effect of comparative pay on the willingness to cooperate.
    Keywords: comparative pay; competition; cooperation; gender differences; incentive schemes
    JEL: D03 D23 J16 J33
    Date: 2013–11–28
  15. By: OECD
    Abstract: The scientific community is increasingly being called upon to provide evidence and advice to government policy-makers across a range of issues, from short-term public health emergencies through to longer-term challenges, such as population ageing or climate change. Such advice can be a valuable, or even essential, input to sound policy-making but its impact depends on how it is formulated and communicated as well as how it is perceived by its target policy audience and by other interested parties. It is rare that scientific evidence is the only consideration in a policy decision and, particularly for complex issues; many interests may have to be balanced in situations where the science itself may be uncertain. The rapid evolution of information and communication technologies and moves towards more participative democratic decision-making have put additional pressure on science to help provide answers and solutions, whilst also opening up the academic enterprise to closer surveillance and criticism. What used to be ‘private’ debates between different scientific viewpoints over areas of uncertainty have now become public disputes that can be exploited by different stakeholders to confirm or deny entrenched positions. Science is truly at the centre of many important policy issues and scientists are increasingly visible and, in many cases, increasingly vulnerable, in policy-making processes.
    Date: 2015–04–20

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