nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒09‒11
eleven papers chosen by
Stan C. Weeber, McNeese State University

  1. Now or Later? The Political Economy of Public Investment in Democracies By Sanjeev Gupta; Estelle X. Liu; Carlos Mulas-Granados
  2. Authority and centrality: Power and cooperation in social dilemma networks By Boris van Leeuwen; Abhijit Ramalingam; David Rojo Arjona; Arthur Schram
  3. Evidential equilibria: Heuristics and biases in static games of complete information Working Paper Version By Ali al-Nowaihi; Sanjit Dhami
  4. Why are heterogeneous communities inefficient? Theory, history, and an experiment By David Hugh-Jones; Carlo Perroni
  5. Decision Initiation, Decision Implementation, and the Allocation of Decision Rights By Randolph Sloof; Ferdinand A. von Siemens
  6. Identity, language, and conflict: An experiment on ethno-linguistic diversity and group discrimination in two bilingual societies By Maria Paz Espinosa; Enrique Fatas; Paloma Ubeda
  7. Costs of Change, Political Polarization, and Re-election Hurdles By Hans Gersbach; Philippe Muller; Oriol Tejada
  8. Forms of knowledge and eco-innovation modes: Evidence from Spanish manufacturing firms By Alberto Marzucchi; Sandro Montresor
  9. The frontiers of the debate on payments for ecosystem services : a proposal for innovative future research By Van Hecken, Gert; Bastiaensen, Johan; Windey, Catherine
  10. Team Production and the Allocation of Creativity across Global and Local Sectors By NAGAMACHI Kohei
  11. Shared ecological knowledge and wetland values: a case study By Franco, Daniele; Luiselli, Luca

  1. By: Sanjeev Gupta; Estelle X. Liu; Carlos Mulas-Granados
    Abstract: This paper explores the impact of political and institutional variables on public investment. Working with a sample of 80 presidential and parliamentary democracies between 1975 and 2012, we find that the rate of growth of public investment is higher at the beginning of electoral cycles and decelerates thereafter. The peak in public investment growth occurs between 21 and 25 months before elections. Cabinet ideology and government fragmentation influence the size of investment booms. More parties in government are associated with smaller increases in public investment while left-wing cabinets are associated with higher sustained increases in investment. Stronger institutions help attenuate the impact of elections on investment, but available information is insufficient to draw definitive conclusions.
    Keywords: Public investment;Political economy;Governance;Public finance;Political economy, Public Investment, Elections, Fragmentation, Ideology
    Date: 2015–07–27
  2. By: Boris van Leeuwen (Toulouse School of Economics); Abhijit Ramalingam (University of East Anglia); David Rojo Arjona (University of Leicester); Arthur Schram (Amsterdam School of Economics)
    Abstract: We investigate the effects of power on cooperation in repeated social dilemma settings. Groups of five players play either multi-player trust games or VCM-games on a fixed network. Power stems from having the authority to allocate funds raised through voluntary contributions by all members and/or from having a pivotal position in the network (centrality). We compare environments with and without ostracism by allowing players in some treatments to exclude others from further participation in the network. Our results show that power matters but that its effects hinge strongly on the type involved. Reminiscent of the literature on leadership, players with authority often act more cooperatively than those without such power. Nevertheless, when possible, they are quickly ostracized from the group. Thus, this kind of power is not tolerated by the powerless. In stark contrast, centrality leads to less cooperative behavior and this free riding is not punished; conditional on cooperativeness, players with power from centrality are less likely to be ostracized than those without. Hence, not only is this type of power tolerated, but so is the free riding it leads to.
    Keywords: power, cooperation, networks, public goods
    JEL: C91 D02 D03 H41
    Date: 2015–03–03
  3. By: Ali al-Nowaihi; Sanjit Dhami
    Abstract: Standard equilibrium concepts in game theory find it difficult to explain the empirical evidence from a large number of static games including the prisoners dilemma game, the hawk-dove game, voting games, public goods games and oligopoly games. Under uncertainty about what others will do in one-shot games, evidence suggests that people often use evidential reasoning (ER), i.e., they assign diagnostic significance to their own actions in forming beliefs about the actions of other like-minded players. This is best viewed as a heuristic or bias relative to the standard approach. We provide a formal theoretical framework that incorporates ER into static games by proposing evidential games and the relevant solution concept: evidential equilibrium (EE). We derive the relation between a Nash equilibrium and an EE. We illustrate these concepts in the context of the prisoners dilemma game.
    Keywords: Evidential reasoning, game theory, cognitive bias, prisoners dilemma game, oligopoly games, conservative heuristics, radical heuristics, decision making.
    JEL: D03
    Date: 2015–08
  4. By: David Hugh-Jones (University of East Anglia); Carlo Perroni (University of Warwick)
    Abstract: We examine why heterogenous communities may fail to provide public goods. Current work characterizes sanctioning free-riders as an under-supplied public good. We argue that often free-riders can be punished by the coordinated action of a group. This punishment can be profitable, and need not be undersupplied. But the power to expropriate defectors can also be used to expropriate outgroups. Heterogenous societies may be inefficient because minorities, rather than free-riders, are expropriated. Even if this is not so, groups’ different beliefs about the reasons for expropriation may make the threat of punishment less effective at preventing free-riding. We illustrate our theory with evidence from California mining camps, contemporary India, and US schools. In a public goods experiment using minimal groups and a profitable punishment institution, outgroups were more likely to be punished, and reacted differently to punishment than in group members.
    Keywords: group coercion, social heterogeneity
    JEL: H1 H4 N4 D02
    Date: 2015–04–02
  5. By: Randolph Sloof (University of Amsterdam, the Netherlands); Ferdinand A. von Siemens (Goethe University Frankfurt, Germany)
    Abstract: Organizations must not only take the right decisions, they must also ensure that these decisions are effectively implemented. Fama and Jensen (1983) argue that the same members of many organization are often responsible for both decision initiation and implementation. If these have social preferences, they might thus sabotage both project choices and implementation to express their discontent with the allocation of decision rights. How decisions come about also affects implementation if workers have reciprocal fairness concerns. Our experimental evidence demonstrates that the possibility to sabotage implementation leads to more delegation, but only if workers have high costs of obstructing informed decisions. We further find that the allocation of authority as such affects implementation.
    Keywords: Delegation; Implementation; Procedural Preferences; Reciprocity
    JEL: C91 D23 D86 L20
    Date: 2015–09–01
  6. By: Maria Paz Espinosa (University of the Basque Country); Enrique Fatas (University of East Anglia); Paloma Ubeda (University of the Basque Country)
    Abstract: Ethno-linguistic diversity has been empirically linked to low provision of public goods. We contribute to this literature analyzing diversity in a lab-in-the-field experiment in which we carefully control for ethno-linguistic diversity in two different bilingual societies, one with a much stronger identity conflict (the Basque Country) than the other (Valencia Country). In both locations, our participants come from different ethno- linguistic cultures (Catalan or Spanish, Basque or Spanish), and interact with other participants from their same background or a different one. We recruit participants using their mother tongue language, and study the effect of homogeneous (with no diversity) or mixed (with ethno-linguistic diversity) natural cultural identities in a nested public goods game with a local and a global public good. The game is constructed to eliminate any tension between efficiency and diversity; so, not contributing to the global (and efficient) public good can be interpreted as willingness to exclude the other group from the benefits of your contribution. Our results strongly support that diversity is strongly context dependent. While diversity in the Basque Country significantly reduces contributions to the global public good, and efficiency, it has no effect in the Valencia Country (if any, the effect is positive, but insignificant). We show that diversity destroys (reinforces) conditional cooperation in the Basque (Valencia) Country. While diversity is associated with overoptimistic empirical beliefs in Valencia, it significantly increases normative group discrimination in Basque Country.
    Keywords: natural identity, ethno-linguistic groups, group effects, norms, discrimination
    Date: 2015–08
  7. By: Hans Gersbach (ETH Zurich, Switzerland); Philippe Muller (ETH Zurich, Switzerland); Oriol Tejada (ETH Zurich, Switzerland)
    Abstract: We develop and study a two-period model of political competition with office- and policymotivated candidates, in which (i) changes of policies impose costs on all individuals and (ii) such costs increase with the magnitude of the policy change. We show that there is an optimal positive level of costs of change that minimizes policy polarization and maximizes welfare. One interpretation of this finding is that societies with intermediate levels of conservatism achieve the highest welfare and the lowest polarization levels. We apply our model to the design of optimal re-election hurdles. In particular, we show that raising the vote-share needed for re-election above 50% weakly reduces policy polarization and tends to increase welfare. Furthermore, we identify circumstances where the optimal re-election hurdle is strictly larger than 50%.
    Keywords: elections, democracy, political polarization, costs of change, re-election hurdles, political contracts
    JEL: D7 H4
    Date: 2015–09
  8. By: Alberto Marzucchi (Catholic University of Milan (Italy)); Sandro Montresor (Kore University of Enna (Italy))
    Abstract: This paper investigates the relevance of different forms of knowledge for the firm’s propensity to pursue eco-innovation (EI) strategies. The incidence of different types of internal and external knowledge is disentangled in search of specific EI-modes. We employ panel data on around 4,700 manufacturing firms from the Spanish PITEC dataset. Results show that a Science, Technology, EI-mode (STEI) prevails, though generally in an attenuated way, in the use of internal knowledge, with R&D knowledge more pivotal than some (embodied vs. disembodied) non-R&D one. On the other hand, a synthetic kind of external knowledge, typically drawn from business actors, is more important than the analytical one mainly coming from the “world of science”, suggesting a Doing, Using, Interacting EI-mode (DUIEI) in external terms. Overall, a hybrid EI-mode emerges across the internal and external realm of the firm, with interesting qualifications when specific EI strategies (e.g. cleaner production technologies vs. product eco-innovations) are considered.
    Keywords: Eco-innovation, knowledge, innovation modes, DUI, STI
    JEL: Q55 O31 O32
    Date: 2015–09
  9. By: Van Hecken, Gert; Bastiaensen, Johan; Windey, Catherine
    Abstract: This paper offers a review and analysis of the key issues and different perspectives in the Payments for Ecosystem Services (PES) debate. We discuss how the current debate has to a certain degree moved beyond ‘neoliberal’ vs. ‘non-neoliberal’ discussions, instead recognizing the variegated ways in which this policy tool plays out in the field. We argue, however, that despite this progress PES research remains weakly theorized in social and political terms, resulting in only superficial understanding of the role of culture, agency, social diversity and power relations in the shaping of PES institutions and their outcomes. Building on insights from other fields and disciplines in the social sciences –in particular critical institutionalism, social anthropology and political ecology-, we subject some of the common assumptions underlying mainstream and alternative conceptualizations of PES and identify the main issues that, we believe, deserve more attention in future research. More specifically, we explore three key challenges in current PES research related to the tendency (1) to assume that institutions can be designed in order to make them ‘fit’ specific human-nature problems; (2) to oversimplify culture and social diversity through the apolitical concept of ‘social capital’; and (3)to conceptualize human agency, collective action, and institutional change through either overly-rational or overlystructuralist models. We argue that an expanded actor-oriented, socially-informed and powersensitive conceptualization of PES can help generate novel insights in the power geographies underlying institutional logics, and thus the complex ways in which PES policies are shaped and experienced in the field.
    Keywords: Payments for Ecosystem Services (PES); neoliberal conservation; power; critical institutionalism; institutional bricolage; agency; environmental governance
  10. By: NAGAMACHI Kohei
    Abstract: This paper introduces team production into a two-sector Ricardian comparative advantage model having two types of agents, high-skilled and low-skilled, each with comparative advantage in one of the two sectors under self-production. A team is an organization in which one high-skilled agent manages low-skilled workers, allowing the latter to use their manager's knowledge, and thus resulting in a more efficient outcome than self-production. This paper conducts a comparative statics analysis to understand how the allocation of the high-skilled agents in a sector in which they do not have comparative advantage under self-production is affected by team production in that sector. The analysis provides two implications: First, team production changes the nature of comparative advantage, possibly leading to reallocation of the high-skilled agents from the sector for which they initially have comparative advantage to the other sector where the environment of team production improves. Second, the likelihood of shift is limited, and, in the case of shift, non-monotonic dynamics are likely to occur; namely, if a shift occurs, then redispersion follows.
    Date: 2015–09
  11. By: Franco, Daniele; Luiselli, Luca
    Abstract: The estimation of wetlands’ non-use values to build up a total economic evaluation can be based on stated preference methods, which derives from the standard economic model that assumes a rational assessment of the consequence of preferences on personal utility. The paper describes the citizens’ shared ecological knowledge (SEK) of wetlands functions. It descibes SEK nature, SEK relation with the official knowledge, the relation between the motivations outlined by SEK and those expected by the standard economic model. The results demonstrate that economic preferences are driven by multiple motivations well rooted in the SEK’s social nature, and not by simply consequential motivations. In this case study, social knowledge of wetlands' ecological functions is proportionally related to people's living proximity to those wetlands. Unexpectedly, SEK of historically well-known and critically important services like hydraulic and hydrologic services has also been diminishing. Furthermore, there is a partial or clear-cut separation between official knowledge and SEK on crucial aspects like wetlands’ climate change role. This approach helps to construct a motivational framework to derive values that are useful as long as they allow accounting for a complex socio-cultural capital in the public decision making process.
    Keywords: Wetlands; ecosystem services; ecological functions; public goods; multiple motivation analyses; environmental awareness; perceived utility
    JEL: Q5 Q57 Z1 Z13
    Date: 2014–04

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