nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒09‒05
nine papers chosen by
Stan C. Weeber, McNeese State University

  1. Vetoing and inaugurating policy like others do: Evidence on spatial interactions in voter initiatives By Asatryan, Zareh; Havlik, Annika; Streif, Frank
  2. Influence of Public Opinion on Investor Voting and Proxy Advisors By Aggarwal, Reena; Erel, Isil; Starks, Laura T.
  3. Information, Popular Constraint, and the Democratic Peace By Potter, Philip B. K.; Baum, Matthew A.
  4. Mediocracy By Mattozzi, Andrea; Merlo, Antonio
  5. Efficiency of Flexible Budgetary Institutions By Bowen, T. Renee; Chen, Ying; Eraslan, Hulya; Zapal, Jan
  6. A Theory of Civil Disobedience By Glaeser, Edward L.; Sunstein, Cass R.
  7. Dynamic coordination among heterogeneous agents By GUIMARAES, Bernardo; PEREIRA, Ana Elisa
  8. Elite behaviour and citizen mobilization By Ivar Kolstad; Arne Wiig
  9. The Motivating Power of Under-Confidence: "The Race Is Close But We're Losing" By Rogers, Todd; Moore, Don A.

  1. By: Asatryan, Zareh; Havlik, Annika; Streif, Frank
    Abstract: A sizeable literature studies whether governments strategically interact with each other through policy-diffusion, learning, fiscal and yardstick competition. This paper asks whether, in the presence of direct democratic institutions, spatial interactions additionally result from voters' direct actions. The proposed mechanism is that the voters' actions in vetoing a decision or inaugurating a preferred policy by a binding initiative in their jurisdiction can potentially have spillover effects on the actions of voters and special interest groups of neighboring jurisdictions. Utilizing data on around 1,800 voter-petitions across over 12,000 German municipalities in 2002-09, we find that a jurisdiction's probability of hosting a petition is positively driven by the neighbors' direct democratic activity. These effects are persistent, and are stronger for more visible instruments of direct democracy. The interactions are also mostly driven by petitions in same or similiar policy areas, and are stronger in towns with relatively more per capita newspapers.
    Keywords: direct democracy,spatial spillovers,policy diffusion,citizen preferences
    JEL: D72 D78 R50
    Date: 2015
  2. By: Aggarwal, Reena (Georgetown University); Erel, Isil (OH State University); Starks, Laura T. (University of TX)
    Abstract: We examine the evolution in voting patterns across firms over time. We find that investors have become more independent in their voting decisions, voting less with the recommendations of management or proxy advisors. Even when the proxy advisor recommends voting against a proposal, we find that over time investors are more likely to ignore the recommendation. Moreover, we also find that proxy advisory recommendations have become more supportive of shareholder proposals. Our main contribution is to examine the role of public opinion in influencing shareholder voting. We show that public opinion on corporate governance issues, as reflected in media coverage and surveys, is strongly associated with investor voting, particularly mutual fund voting.
    JEL: G32 G34 G38
    Date: 2014–08
  3. By: Potter, Philip B. K. (University of MI); Baum, Matthew A. (Harvard University)
    Abstract: Politicians and scholars have long argued that democracies are less prone to international conflict, at least with other democracies. However, while there is widespread acceptance of this "law" in international affairs, the theoretical mechanism that drives it remains opaque. We argue that the distinctive behavior of democracies arises from very specific features of their political institutions that can facilitate (or hinder) the transmission of information between leaders and the public. Specifically, popular constraint on executive action relies on robust partisan opposition that can blow the whistle on foreign policy failures, and media institutions that can effectively relay this information to the voting public. Crucially, not all democracies are alike when it comes to these institutions, meaning that the "democratic peace" may not actually apply equally to all. We find support for these propositions in time series, cross-sectional analyses of conflict initiation from 1965 to 2006.
    Date: 2014–02
  4. By: Mattozzi, Andrea (European University Institute, Florence and MOVE, Florence); Merlo, Antonio (Rice University)
    Abstract: We study the recruitment of individuals in the political sector. We propose an equilibrium model of political recruitment by two political parties competing in an election. We show that political parties may deliberately choose to recruit only mediocre politicians, in spite of the fact that they could select better individuals. Furthermore, we show that this phenomenon is more likely to occur in proportional than in majoritarian electoral systems.
    JEL: D72
    Date: 2014
  5. By: Bowen, T. Renee (Stanford University); Chen, Ying (Johns Hopkins University); Eraslan, Hulya (Rice University); Zapal, Jan (CERGE-EI Prague and Barcelona GSE)
    Abstract: Which budgetary institutions result in efficient provision of public goods? We analyze a model with two parties bargaining over the allocation to a public good each period. Parties place different values on the public good, and these values may change over time. We focus on budgetary institutions that determine the rules governing feasible allocations to mandatory and discretionary spending programs. Mandatory spending is enacted by law and remains in effect until changed, and thus induces an endogenous status quo, whereas discretionary spending is a periodic appropriation that is not allocated if no new agreement is reached. We show that discretionary only and mandatory only institutions typically lead to dynamic inefficiency and that mandatory only institutions can even lead to static inefficiency. By introducing appropriate flexibility in mandatory programs, we obtain static and dynamic efficiency. An endogenous choice of mandatory and discretionary programs, sunset provisions and state-contingent mandatory programs can provide this flexibility in increasingly complex environments.
    JEL: C73 C78 D61 D78 H61
    Date: 2015–06
  6. By: Glaeser, Edward L. (Harvard University); Sunstein, Cass R. (Harvard University)
    Abstract: From the streets of Hong Kong to Ferguson, Missouri, civil disobedience has again become newsworthy. What explains the prevalence and extremity of acts of civil disobedience? This paper presents a model in which protest planners choose the nature of the disturbance hoping to influence voters (or other decision-makers in less democratic regimes) both through the size of the unrest and by generating a response. The model suggests that protesters will either choose a mild "epsilon" protest, such as a peaceful march, which serves mainly to signal the size of the disgruntled population, or a "sweet spot" protest, which is painful enough to generate a response but not painful enough so that an aggressive response is universally applauded. Since non-epsilon protests serve primarily to signal the leaders' type, they will occur either when protesters have private information about the leader's type or when the distribution of voters' preferences are convex in a way that leads the revelation of uncertainty to increase the probability of regime change. The requirements needed for rational civil disobedience seem not to hold in many world settings, and so we explore ways in which bounded rationality by protesters, voters, and incumbent leaders can also explain civil disobedience.
    Date: 2015–07
  7. By: GUIMARAES, Bernardo; PEREIRA, Ana Elisa
    Abstract: We study a dynamic model of coordination with timing frictions and payoff heterogeneity. There is a unique equilibrium, characterized by thresholds that determine the choices of each type of agent. We characterize equilibrium for the limiting cases of vanishing timing frictions and vanishing shocks to fundamentals. A lot of conformity emerges: despite payoff heterogeneity, agents’ equilibrium thresholds partially coincide as long as there exists a set of beliefs that would make this coincidence possible – though they never fully coincide. In case of vanishing frictions, the economy behaves almost as if all agents were equal to an average type. Conformity is not inefficient. The efficient solution would have agents following others even more often and giving less importance to the fundamental
    Date: 2015–03–16
  8. By: Ivar Kolstad; Arne Wiig
    Abstract: This paper studies the relation between self-serving elite behaviour and citizen political participation. We use a fixed effects approach to analyze the association between portfolio investment in tax havens and voter turnout, using data from 213 parliamentary elections in 65 countries for the period 1998-2014. For well-functioning democracies, we find a positive relation between the use of tax havens and voter turnout, suggesting that self-serving elite behaviour is associated with citizen political mobilization rather than voter apathy. The estimated relationship is stronger in the period after the 2008 economic crisis, when elite behaviour was a particularly salient issue.
    Keywords: Elites, citizens, portfolio investment, tax havens, voter turnout,political economy
    Date: 2015
  9. By: Rogers, Todd (Harvard University); Moore, Don A. (University of CA, Berkeley)
    Abstract: Should political campaigns in close races communicate that they may win (over-confidence) or that they may lose (under-confidence)? In six studies (three survey experiments, two field experiments, and one archival study) we demonstrate the motivating power of under-confidence. While uncommitted voters show bandwagon effects (prefer candidates who are barely winning as opposed to barely losing), supporters show the opposite (greater motivation when their preferred candidate is barely losing as opposed to barely winning). Two fundraising email field experiments (1M+ observations) show a large effect size: emphasizing polls that show that a preferred candidate was barely losing raised 55% more than emphasizing polls that show that he was barely winning. The 2012 Obama and Romney campaigns' emails reflect this insight: they were more likely to send emails reporting that they were barely losing than that they were barely winning. Sometimes leaders are more effective appearing under-confident rather than over-confident.
    Date: 2014–10

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