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on Collective Decision-Making |
| By: | Ben Lockwood; James Rockey |
| Abstract: | This paper studies how voter loss-aversion affects electoral competition in a Downsian setting. Assuming that voters’ reference point is the status quo, we show that loss-aversion has a number of effects. First, there is policy rigidity both parties choose platforms equal to the status quo, regardless of other parameters. Second, that there is a moderation effect when there is policy rigidity, the equilibrium policy outcome is closer to the moderate voters’ ideal point than in the absence of loss-aversion. In a dynamic extension of the model, we consider how parties strategically manipulate the status quo to their advantage, and we find that this increases policy rigidity. Finally, we show that with loss-aversion, incumbents adjust less than challengers to changes in voter preferences. The underlying force is that the status quo works to the advantage of the incumbent. This prediction of asymmetric adjustment is new, and we test it using elections to US state legislatures. The results are as predicted: incumbent parties respond less to shocks in the preferences of the median voter. |
| Keywords: | electoral competition, loss-aversion, incumbency advantage, platform rigidity |
| JEL: | D72 D81 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:lec:leecon:15/15&r=cdm |
| By: | Miguel Ángel Borrella Mas (Dpto. Fundamentos del Análisis Económico) |
| Abstract: | I study the effect of partisan alignment between local and regional governments on political corruption. I estimate the effect by using rich panel data on three consecutive municipal and regional elections in Spain and also on corrupt practices carried out by local politicians. I find significantly more corruption in aligned municipalities. Partisan alignment increases corruption by 2.2 percentage points with respect to the 5.7% mean level of non-aligned municipalities. This effect is more pronounced among municipalities with i) more than 10,000 inhabitants, ii) a budget size above the mean level, iii) local and regional elections held on the same day and the regional government ruling the Autonomous Community with absolute majority and iv) the main right-wing party in the country ruling both government layers. The empirical results are consistent with a simple model of electoral accountability in which politicians in office have to decide between pleasing voters and extracting rents for their own benefit conditional on alignment. Specifically, the model highlights that corruption is an increasing function of the benefits of being aligned and the budget size, with a complementary response due to the interaction between both effects. |
| Keywords: | corruption, elections, partisan alignment, political career concerns, political economy, Spain |
| JEL: | D72 D73 H77 P16 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2015-07&r=cdm |
| By: | Zineb Abidi; Edoardo Di Porto; Angela Parenti; Sonia Paty |
| Abstract: | We analyze voluntary coalition formation using a unique panel data for 1,056 municipalities in the French region of Brittany between 1995 and 2002. We use a control function approach to develop a binary discrete choice model with spatial interactions. We find that a municipality’s decision to cooperate over the provision local public goods depends on the decisions of its neighbours. Comparison with spatial econometrics models (SAR and Durbin) shows that the decision to cooperate is over estimated by these more traditional models. The results are in line with the recent applied spatial economics literature but are derived for a discrete choice model setting. |
| Keywords: | Inter-municipal Cooperation; Panel Data; Control Function. |
| JEL: | C3 H2 H4 H7 |
| Date: | 2015–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pie:dsedps:2015/202&r=cdm |
| By: | Robin Cubitt (Department of Economics, University of Nottingham); Simon Gaechter (Department of Economics, University of Nottingham); Simone Quercia (University of Bonn, Institute for Applied Microeconomics) |
| Abstract: | We investigate whether there is a link between conditional cooperation and betrayal aversion. We use a public goods game to classify subjects by type of contribution preference and by belief about the contributions of others; and we measure betrayal aversion for different categories of subject. We find that, among conditional cooperators, only those who expect others to contribute little to the public good are significantly betrayal averse, while there is no evidence of betrayal aversion for those who expect substantial contributions by others. This is consistent with their social risk taking in public goods games, as the pessimistic conditional cooperators tend to avoid contribution to avoid exploitation, whereas the optimistic ones typically contribute to the public good and thus take the social risk of being exploited. |
| Keywords: | public goods game, conditional cooperation, trust, betrayal aversion, exploitation aversion, free riding, experiments |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcdx:2015-14&r=cdm |
| By: | Shimpei Koike (Department of Value and Decision Science, Tokyo Institute of Technology); Mayuko Nakamaru (Department of Value and Decision Science, Tokyo Institute of Technology); Tokinao OTAKA (Department of Social Engineering, Tokyo Institute of Technology); Hajime Shimao (Department of Value and Decision Science, Tokyo Institute of Technology); Ken-Ichi Shimomura (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Takehiko Yamato (Department of Social Engineering, Tokyo Institute of Technology) |
| Abstract: | Rotating savings and credit associations (Roscas) are worldwide informal financial institutions, in which all participants contribute to a fund and one of them receives it in rotation. A crucial problem is that participants have incentives to default on contributing after receiving the fund. We conducted an experiment and found that Roscas were sustained using a rule of excluding defaulters from the group by voting. We observed that group members behave reciprocally and revengefully: a member contributed (or did not contribute) to the fund of other members who had (or had not) contributed to theirs. This voluntary behavior sustained Roscas. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2015-31&r=cdm |
| By: | Lachlan Deer; Ralph-C. Bayer |
| Abstract: | We use experimental methods to investigate whether pledges of commitment can improve cooperation in endogenously formed partnerships facing a social dilemma. Treatments vary in terms of the individual’s (a) opportunity to commit to their partner, (b) the cost of dissolving committed partnerships, and (c) the distribution of these dissolution costs between partners. Our findings show that pledges of commitment increase cooperation in committed partnerships when costs to dissolve them are shared equally among partners. In contrast, when costs to dissolve committed partnerships fall solely on the individual choosing to break up, pledges of commitment fail to improve cooperation and instead decrease cooperation. |
| Keywords: | Commitment, cooperation, endogenous group formation, experiment |
| JEL: | C92 D03 D83 H41 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:201&r=cdm |
| By: | Quiñones Ruiz, Xiomara Fernanda; Belletti, Giovanni; Penker, Marianne; Marescotti, Andrea; Scaramuzzi, Silvia |
| Keywords: | TTIP, GIs, Consumers, Collective efforts, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Institutional and Behavioral Economics, Political Economy, Public Economics, |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:ags:eaa145:206463&r=cdm |
| By: | Peter Mitic (Santander UK); Bertrand K. Hassani (Grupo Santander et Centre d'Economie de la Sorbonne) |
| Abstract: | The Shapley method is applied to capital allocation in the context of a simple business model, where many business units supported by services. In this model the services are capable of either reducing the capital payable by the business units, or the opposite. A simple model of evaluating the value of coalitions is proposed, with a modification if a service is a member of the coalition. A closed form formula for the Shapley allocation to all players is derived, thus eliminating combinatorial problems |
| Keywords: | Allocation; Shapley; operational risk; diversification; service; Game theory; capital value |
| JEL: | C71 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:15057&r=cdm |
| By: | Maertens, Annemie; Michelson, Hope; Nourani, Vesall |
| Abstract: | Farmer clubs play an important role in improving the lives of millions of farmers in developing countries as they can resolve critical market failures, ranging from providing access to output markets and club-based input credit to sharing technology and marketing information. The efficacy of farmer clubs, however, depends on successful collaboration between members and their ability to overcome free-riding. In this study, we conducted a public goods game among farmer clubs in Malawi. In this game, club members were asked to divide 400 Malawian kwacha between an individual account and a common account. At the end of the game, the funds in the common account were multiplied by two and used by the club to provide a public good of their choice. Using the amount contributed into the common account as a measure of cooperative behavior, we find that most club members display some level of cooperative behavior, and that the extent of this cooperative behavior critically depends on an individual’s relative status within the club. Individuals with a higher status cooperate less compared to individuals with a lower status. In addition, women appear to be less cooperative compared to men. We show that these results are consistent with the predictions of a Voluntary Contribution Nash Equilibrium in which club members are uncertain about each other’s valuations and expect a bargaining process (as opposed to democratic process) to resolve these uncertainties and provide a resolution as to which public good the club selects at the end of the game. |
| Keywords: | Farmer clubs, Malawi, Public Goods Game, Political Economy, Public Economics, O1, Q1, H4, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:205551&r=cdm |
| By: | Shipman, Taylor D.; Wilson, Paul N. |
| Abstract: | In 1995 Arizona implemented a set of rules designed to require new development to use “renewable” (non-groundwater) water supplies. Many of the key provisions of the rules were developed by the regulated community itself, including the creation of a legal mechanism—known as the Central Arizona Groundwater Replenishment District—designed to aid compliance with the rules. The District enables developers to pay a small fee to pass the burden of acquiring renewable water supplies for their proposed development to the District. Over the last 15 years, the District has amassed a considerable debt obligation to acquire renewable water supplies on behalf of its thousands of member communities, creating a yet-undefined future water supply acquisition cost for an estimated 200,000 homeowners in central Arizona. This research explores the political economy behind the creation of the District and characterizes its formation using a Nash model of cooperative negotiation with bargaining power. |
| Keywords: | Central Arizona Groundwater Replenishment District, Mutual Gains, Paper Water, Triangulation, Water Management, Environmental Economics and Policy, Resource /Energy Economics and Policy, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ags:usazwp:197555&r=cdm |
| By: | Twine, Edgar; Rao, Elizaphan; Baltenweck, Isabelle; Omore, Amos |
| Abstract: | The study investigates the role of technology adoption and collective action in the demand for credit among dairy farmers in rural Tanzania. Using survey data from four districts in Tanga and Morogoro regions, the incidence of credit is found to be seven percent. Logit and tobit models based on a conceptual framework that assumes endogenously determined interest rates and nonseparability of production and consumption credit, are applied to the data. Interest rates are found to be exogenous and statistically insignificant in the demand for credit. The logit model shows collective action to positively influence the decision to borrow, but technology adoption is insignificant. From the tobit model, both collective action and technology adoption positively influence the amount of funds borrowed. We use these results to examine the observed failure of rural savings and credit cooperative societies to lend to smallholder dairy farmers and livestock keepers in general in Tanzania. |
| Keywords: | Credit, technology adoption, collective action, smallholder dairy farmers, Tanzania, Agricultural Finance, Community/Rural/Urban Development, Livestock Production/Industries, Research and Development/Tech Change/Emerging Technologies, Q13, Q14, Q16, |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aaea15:204198&r=cdm |