nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒06‒05
twelve papers chosen by
Stan C. Weeber, McNeese State University

  1. Media Coverage and Political Accountability: Theory and Evidence By Strömberg, David
  2. Democratization and Barriers to Entry in a Two-Dimensional Voting Model By Dmitry A. Veselov
  3. Electoral Rentierism? The Cross-National and Subnational Effect of Oil on Electoral Competitiveness in Multiparty Autocracies By Michael Wahman; Matthias Basedau
  4. Visigothic Retinues: Roving Bandits that Succeeded Rome By Andrew T. Young
  5. Exchanging fertilizer for votes? By Westberg, Nina Bruvik
  6. Alliance Formation in Contests with Incomplete Information By Lars P. Metzger
  7. Implementation by Sortition in Nonexclusive Information Economies By Rene Saran; Norovsambuu Tumennasan
  8. Social Identity and Social Free-Riding By Mark Bernard; Florian Hett; Mario Mechtel
  9. Can Rumors and Other Uninformative Messages Cause Illiquidity ? By Radu Vranceanu; Damien Besancenot; Delphine Dubart
  10. An Experimental Study of Persuasion Bias and Social Influence in Networks By Jordi Brandts; Ayça Ebru Giritligil; Roberto A. Weber
  11. Strategic influence in social networks By Michel Grabisch; Antoine Mandel; Agnieszka Rusinowska; Emily Tanimura
  12. Direct Democracy: Chances and Challenges By Kirchgaessner, Gebhard

  1. By: Strömberg, David
    Abstract: This chapter investigates how media coverage filters information and how this affects political accountability and policy. I first present a baseline model of media coverage and its affect political accountability. The model is used to discuss the welfare consequences of private provision of news. It shows how media regulation and public broadcasting may correct market failures, notably the under-provision of news. The model also supplies an array of testable implications, used to organize the existing empirical work. The key empirical questions are: what drives media coverage of politics; how does this coverage influence the information levels and the voting behavior of the general public, the actions and selection of politicians and government policy?
    Keywords: media; policy; regulation; voting
    JEL: D03 D72 H5 L82
    Date: 2015–05
  2. By: Dmitry A. Veselov (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, National Research University Higher School of Economics - Laboratory of Macroeconomic Analysis)
    Abstract: We propose a simple quality-ladder model with heterogeneous agents differing in their skills and wealth endowment to explain the persistence of barriers to entry in new democracies. In the model agents vote for a rate of redistribution and for the level of barriers to entry, which protect the incumbent firms from competition with new entrants. We show that even if a society democratizes, under certain conditions this leads only to the rise of redistribution, rather than to the elimination of barriers to entry. We show that this argument is particularly relevant for countries with a low level of human capital and high inequality in incomes and in skills.
    Date: 2015–01
  3. By: Michael Wahman (London School of Economics); Matthias Basedau (GIGA German Institute of Global and Area Studies)
    Abstract: Building on theoretical insights from research on the rentier state and the “resource curse,” several studies have supported the argument that oil hinders democracy. However, previous research on the rentier state has neglected the global surge of multiparty autocracies or “electoral authoritarian” regimes since the end of the Cold War. No systematic study has been carried out on the question of whether or not and how oil affects electoral contests in nondemocratic regimes. In this paper we contribute to filling this gap by combing the literature on multiparty autocracy and the political economy of the rentier state. As oil production creates substantial, nontransparent revenue streams to national and subnational governments, we hypothesize that oil production has a negative effect on electoral competitiveness, both cross- and subnationally, in multiparty autocracies. Consequently, the democratic “resource curse” emphasized in earlier work on the rentier state is likely to persist even after the introduction of multipartyism in cases where oil production predates democratic institutions. The paper tests the hypothesis cross-nationally, using data on all multiparty elections held in the world in the period 1975–2010, and subnationally, using a new data set on subnational election results and oil production in Nigeria. Our results confirm that oil impedes electoral competitiveness, both cross- and subnationally, in multiparty autocracies.
    Keywords: oil, authoritarianism, elections, Nigeria, competition, Africa
    Date: 2015–04
  4. By: Andrew T. Young (West Virginia University, College of Business and Economics)
    Abstract: I employ a case study of the Visigoths in the fourth and fifth centuries to analyze the collective action problems faced by roving versus stationary bandits. A roving bandit provides exclusive collective goods to its members. A stationary bandit also provides exclusive goods to its members, but it also provides inclusive collective goods to out-group individuals in its domain. The inclusive goods provided to the out-group are an input to the production of the exclusive goods enjoyed by the in-group members. I describe how the transition from the former to the latter likely involves redefinition of the relevant group, its shared interest, and the type of good(s) that it provides. The Gothic retinues of the fourth century were essentially roving bandits. Having been driven across the Danube into the Roman Empire by an invasion of Huns, a group of these retinues formed the Visigothic confederacy. The Visigoths sacked Rome and were subsequently settled in Gaul, eventually becoming the stationary Visigothic Kingdom. I describe how the Visigothic elite came to recognize an encompassing interest in their domain and drew upon the human capital of the Gallo-Roman senators to provide inclusive collective goods.
    Keywords: collective action problems, governance institutions, state emergence, roving versus stationary bandits, Visigoths, Roman Empire, ancient economic history
    JEL: D72 N43 N93 P16
    Date: 2015–05
  5. By: Westberg, Nina Bruvik (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Several countries have made targeted input subsidy programs an integral part of their policies for improving food security. Given the programs' often centralized structure and targeting of private goods nation-wide, these may also serve as instruments for garnering electoral support. I investigate to what extent distributions from such a program was altered leading up to the 2009 Malawian presidential election, comparing the allocations of fertilizer vouchers in the last season prior to this relative to other seasons. I do not nd evidence of targeting at the incumbent's core supporters, whereas swing supporters receive on average more fertilizer vouchers in the 2008/09 season relative to other seasons. This increase comes at the expense of the main opponents' core supporters, whom receive on average fewer vouchers. These ndings add to the broader set of questions of whether targeted subsidies is the right approach for improving food security, and if so how.
    Keywords: fertilizer subsidies; elections; Malawi
    JEL: D72 H53 O13 Q18
    Date: 2015–06–03
  6. By: Lars P. Metzger
    Abstract: This paper studies a contest in which players with unobservable types may form an alliance in a pre-stage of the game to join their forces and compete for a prize. We characterize the pure strategy equilibria of this game of incomplete information. We show that if the formation of an alliance is voluntary, players do not reveal private information in the process of alliance formation in any equilibrium. In this case there exists a pooling equilibrium without alliances with a unique effort choice in the contest and there exist equilibria in which all types prefer to form an alliance. If the formation of an alliance can be enforced by one player with positive probability there exists an equilibrium in which only the low types prefer to form an alliance.
    Keywords: Service quality; non-essential benefits; prices; health plan switching; German sickness funds; SOEP
    JEL: C72 D72 D74 D82
    Date: 2015–03
  7. By: Rene Saran (Yale University); Norovsambuu Tumennasan (Department of Economics and Business, Aarhus University, Denmark and IZA)
    Abstract: We study the Bayesian implementation problem in economies that are divided into groups consisting of two or more individuals with the same information. Our results cover problems like that of allocating public funds among states, regulating activities causing externalities among firms, locating public facilities in neighborhoods, electing candidates from multiple districts etc. Instead of the standard communication protocol of direct democracy whereby the planner consults all individuals, we analyze sortition schemes whereby the planner consults only a subset of the individuals, called senators, who are selected via some kleroterion (i.e., a lottery machine) p. In general environments, under mild "economic" assumptions on preferences, we show that every social choice function (SCF) that is implementable by direct democracy is also p-implementable if p always selects two or more individuals from each group and the selection process does not partition any group into "disconnected" subgroups (in the sense that individuals belonging to different subgroups are never selected together). In quasilinear environments satisfying a generic condition on individuals' beliefs, every SCF can be implemented by a simple and economically meaningful mechanism in which the kleroterion selects a predesignated group leader and one other randomly chosen individual from each group.
    Keywords: Bayesian implementation, Nonexclusive information, p-Implementation, Sortition
    JEL: C72 D02 D82
    Date: 2015–05–26
  8. By: Mark Bernard (Department of Management and Microeconomics, Goethe University Frankfurt); Florian Hett (Department of Management and Microeconomics, Goethe University Frankfurt); Mario Mechtel (Institute for Labour Law and Industrial Relations in the EU, University of Trier)
    Abstract: We model individual identification choice as a strategic group formation problem. When choosing a social group to identify with, individuals appreciate high social status and a group stereotype to which they have a small social distance. A group's social status and stereotype are shaped by the (exogenous) individual attributes of its members and hence endogenous to individuals' choices. Unless disutility from social distance is strong enough, this creates a strategic tension as individuals with attributes that contribute little to group status would like to join high-status groups, thereby diluting the latters' status and changing stereotypes. Such social free-riding motivates the use of soft exclusion technologies in high-status groups, which provides a unifying rationale for phenomena such as hazing rituals, charitable activities or status symbols that is not taste-based or follows a standard signaling mechanism.
    Keywords: social identity, social status, social distance, categorization, group formation
    JEL: Z13 D01 D03
    Date: 2015–05
  9. By: Radu Vranceanu (Economics Department - Essec Business School); Damien Besancenot (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - Université Sorbonne Paris Cité (USPC) - CNRS); Delphine Dubart (ESSEC Business School - Essec Business School)
    Abstract: In the model, a group of investors are invited to participate to a high-yield collective project. The project succeeds only if a minimum participation rate is reached. Before taking their decision, investors receive a vague statement about the outcome of a past investment decision. If investors believe that the message has an impact on the beliefs of the others, the problem can be analyzed as a typical global game and would present a threshold equilibrium. If not, in theory both an equilibrium where all invest and an equilibrium where no one invests can occur. In a Lab experiment, a large number of subjects adopt switching strategies consistent with the threshold equilibrium and appear to respond to the orientation of the message. Insights apply to contagion and market manipulation episodes.
    Date: 2014–06–12
  10. By: Jordi Brandts; Ayça Ebru Giritligil; Roberto A. Weber
    Abstract: In many areas of social life, individuals receive information about a particular issue of interest from multiple sources. When these sources are connected through a network, then proper aggregation of this information by an individual involves taking into account the structure of this network. The inability to aggregate properly may lead to various types of distortions. In our experiment, four agents all want to find out the value of a particular parameter unknown to all. Agents receive private signals about the parameter and can communicate their estimates of the parameter repeatedly through a network, the structure of which is known by all players. We present results from experiments with three different networks. We find that the information of agents who have more outgoing links in a network gets more weight in the information aggregation of the other agents than under optimal updating. Our results are consistent with the model of “persuasion bias” of DeMarzo et al. (2003).
    Keywords: persuasion bias, experiments, bounded rationality
    JEL: C92 D03 D83
    Date: 2015–05
  11. By: Michel Grabisch (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Antoine Mandel (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Agnieszka Rusinowska (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Emily Tanimura (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: We consider a model of influence with a set of non-strategic agents and two strategic agents. The non-strategic agents have initial opinions and are linked through a simply connected network. They update their opinions as in the DeGroot model. The two strategic agents have fixed opinions, 1 and 0 respectively, and are characterized by the magnitude of the impact they can exert on non-strategic agents. Each strategic agent forms a link with one non-strategic agent in order to alter the average opinion that eventually emerges in the network. This procedure defines a zero-sum game whose players are the two strategic agents and whose strategy set is the set of non-strategic agents. We focus on the existence and the characterization of equilibria in pure strategy in this setting. Simple examples show that the existence of a pure strategy equilibrium does depend on the structure of the network. The characterization of equilibrium we obtain emphasizes on the one hand the influenceability of target agents and on the other hand their centrality whose natural measure in our context defines a new concept, related to betweenness centrality, that we call intermediacy. We also show that in the case where the two strategic agents have the same impact, symmetric equilibria emerge as natural solutions whereas in the case where the impacts are uneven, the strategic players generally have differentiated equilibrium targets, the high-impacts agent focusing on centrality and the low-impact agent on influenceability.
    Abstract: Nous considérons un modèle d'influence avec un ensemble d'agents non-stratégiques et deux agents stratégiques. Les agents non-stratégiques sont liés par un réseau simplement convexe et leurs opinions évoluent comme dans le modèle de DeGroot. Les deux agents stratégiques ont des opinions fixes, respectivement 1 et 0, et sont caractérisés par l'impact qu'ils exercent sur les croyances des agents non-stratégiques. Chaque agent stratégique forme exactement un lien avec un agent non-stratégique en vue d'influencer l'opinion moyenne limite qui se forme dans le réseau. Cette procédure définie un jeu à somme nulle où les ensembles de stratégie des deux joueurs sont l'ensemble des agents non-stratégiques. Nous nous intéressons à l'existence et à la caractérisation des équilibres de Nash en stratégie pure dans ce cadre. Des exemples simples montrent que l'existence d'équilibres en stratégie pure dépend de la structure du réseau. La caractérisation des équilibres que nous obtenons met en avant d'une part l'influençabilité et d'autre part l'influence des agents cibles que nous mesurons à travers un nouveau concept mesurant l'intermédiation effectuée par un agent.
    Date: 2015–01
  12. By: Kirchgaessner, Gebhard
    Abstract: This paper discusses several problems of direct popular decisions. In the first part, we consider problems related to the functioning of direct democracy. As a political system it only makes sense if there exists a continuous process and not if only occasional single questions are brought to a referendum. Then, the relation between direct democracy and the rule of unanimity is discussed, a subject of special relevance to the European Union, before we consider the role of quorums. In the second part, some areas are considered in which conflicts might arise. Results of initiatives might be incompatible with individual human rights or might endanger fiscal sustainability, and referenda might impede economic reforms. All these problems, how-ever, do not justify a general rejection of direct popular rights. Thus, we conclude by listing several points that should be observed to safeguard the well-functioning of direct democracy.
    Keywords: Direct democracy, referendum, initiative, human rights, economic re-forms, fiscal sustainability
    JEL: H11
    Date: 2015–05

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