nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒11‒01
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Representation-Compatible Power Indices By Serguei Kaniovski; Sascha Kurz
  2. Challenges to Political Parties in Emerging Democracy (Challenges to Jordanian Political Parties for Sustaine By Amin Ali Alazzam
  3. Electoral Cycles in Public Expenditures: Evidence from Czech Local Governments By Lenka Stastna
  4. Territorial clusters of economic cooperation: a new attempt to build entrepreneurial and institutional partnerships within a social economy? By Myriam Matray; Jacques Poisat
  5. Meaningful Learning in Weighted Voting Games: An Experiment By Eric Guerci; Nobuyuki Hanaki; Naoki Watanabe
  6. Identification and estimation of preference distributions when voters are ideological By Antonio Merlo; Áureo de Paula
  7. The stakes of politics and electoral administration : a comparative study of Southeast Asian democracies By Kawanaka, Takeshi
  8. Modeling Risk and Ambiguity-on-Nature in Normal-form Games By Jian Yang
  9. Trading Votes for Votes. A Decentralized Matching Algorithm By Casella, Alessandra; Palfrey, Thomas R
  10. Risk taking and information aggregation in groups By Spiro Bougheas; Jeroen Nieboer; Martin Sefton
  11. Behavior in Group Contests: A Review of Experimental Research By Sheremeta, Roman
  12. (Not) in my backyard? The impact of citizen initiatives on housing supply in Germany By Thorsten Martin; Felix Arnold; Ronny Freier
  13. Finding your right (or left) partner to merge By Ronny Freier; Benjamin Bruns; Abel Schumann

  1. By: Serguei Kaniovski (Austrian Institute of Economic Research (WIFO)); Sascha Kurz (Department of Mathematics, University of Bayreuth)
    Abstract: We use average representations of a weighted voting game to obtain four new indices of voting power for this type of voting games. The average representations are computed from weight and representation polytopes defined by the set of winning and losing coalitions of the game.These average representations come remarkably close to fulfilling the standard criteria for a coherent measure of voting power. They are symmetric, positive, efficient and strongly monotonic. The dummy property, which assigns zero power to powerless players, can be imposed by restricting the polytopes. The resulting restricted average representations are coherent measures of power.The defining property of the four new indices is representation compatibility, which ensures proportionality between power and weight. We believe that proportionality makes the new indices ideal measure of power for voting institutions, in which the votes are distributed to the voter based on their contribution to a fixed purse. Examples include shareholder voting in corporations and country member voting in the multilateral institutions of the Bretton Woods Accord (The World Bank, IMF).The practical significance of representation compatibility lies in institutional design. In a weighted voting game, the design is given by the voting weights and the voting rule, or the number of affirmative votes required to pass a decision. In institutions, in which the number of votes depends on the capital contributions of the voters to a purse of a given size, a voter wants to know which distributions of voting weights confer the desired power or that voter's expected share of the purse. A prime example of such an institution is the corporation. But the same principles can be used for designing any voting body, for example distributing parliamentary seats after a general election, and we provide examples for the German Bundestag and the Austrian Nationalrat.
    Keywords: average representation; power index; proportionality between weights and power
    JEL: D71 C71
  2. By: Amin Ali Alazzam (Al al-Bayt University- Bayt Al-Hekmah (House of Wisdom))
    Abstract: Democracy has been defined by different researchers in various ways. However, almost all researchers agree that democracy refers to a form of government in which the people select their leaders and hold their leaders accountable for their policies and their actions or inaction. The citizens decide who will represent them in parliament and in government. They do so by choosing between competing parties by holding free and fair elections at regular intervals. In addition, it has been argued that no contemporary democracy has excelled without political parties. To meet the requirements of democracy, politics require social organizations that collect interests, and communicate them to the political and governmental institutions. Political parties, beside the other non-governmental organizations of the civil society, are such organizations that collect and aggregate social interests. Accordingly, this study aims at discussing the case of Jordan by identifying the main challenges that face the Jordanian political parties and prevent them from playing that role of collecting and aggregating social interests and prevent them from capturing political power through elections in order to influence policies and implement their programs. These challenges facing political parties have led in conclusion to lose their credibility.Accordingly, the basic questions that need to be answered in this study are: Are political parties considered one of the most important political organizations in politics in Jordan?; Are they have political power to do changes, or are they powerless?; what are the various challenges faced by political party? Are these challenges stem from the parties itself, or is it cultural obstacles, or is it the lack of political will of the political system to give political parties a role by preventing parties from drawing big attention and introducing its political position to gain new followers and members.?. The study concluded that Jordanian political parties facing many challenges-these challenges are considered obstacle to parties and Jordanian democracy alike- the most important are; poor finance, poor political integration, lack of coherent and internal cohesion, institutional and structural challenges, poor internal democracy, lack of political will, a credibility challenges, and social challenges particularly tribalism which keep individuals hesitating from joining other groups.
    Keywords: Political parties, Challenges, Democracy, Government, Obstacles.
    JEL: D72
  3. By: Lenka Stastna
    Abstract: The paper analyzes local political cycle in Czech municipalities over the period between 1997 and 2013. We apply the system and the difference GMM estimators to detect electoral manipulation in current and capital expenditures in electoral and pre-electoral years. Primarily, we estimate the effects for expenditure levels but to check the robustness we re-estimate the model for spending shares. We have found that the size of municipalities matters, and unsurprisingly, small municipalities do not increase spending in such an extent as bigger municipalities, though big municipalities tend to have lower share of capital spending before elections. Leftist governments tend to attract votes by increasing current expenditures, while rightist governments increase rather capital expenditures. On the one hand, the share of votes of the mayor's party in previous elections increases pre-election capital spending, on the other hand, its winning margin works in the opposite direction. Finally, the more terms a mayor has been in office, the lower is capital spending in pre-electoral year.
    Keywords: political cycle; local government expenditures; municipalities
    JEL: H72 D72 R50
    Date: 2015–10
  4. By: Myriam Matray (EVS - UMR 5600 Environnement Ville Société - ENSAL - Ecole nationale supérieure d'architecture de Lyon - Ecole Nationale Supérieure des Mines de Saint-Etienne - CNRS - UL2 - Université Lumière - Lyon 2 - Université Jean Moulin - Lyon III - Université Jean Monnet - Saint-Etienne - École Nationale des Travaux Publics de l'État [ENTPE] - ENS Lyon - École normale supérieure - Lyon); Jacques Poisat (EVS - UMR 5600 Environnement Ville Société - ENSAL - Ecole nationale supérieure d'architecture de Lyon - Ecole Nationale Supérieure des Mines de Saint-Etienne - CNRS - UL2 - Université Lumière - Lyon 2 - Université Jean Moulin - Lyon III - Université Jean Monnet - Saint-Etienne - École Nationale des Travaux Publics de l'État [ENTPE] - ENS Lyon - École normale supérieure - Lyon)
    Abstract: Coming from the civil society and entrepreneurial processes in a bottom-up strategy, territorial clusters of economic cooperation (inspired by French economic clusters) could not emerge and develop without support from public institutions. Indeed, jointly developed local strategies by groups of citizens and institutions tend to foster the emergence of groups of social actors. The study of TCEC in the Rhone-Alps Region highlights the many practical forms that the involvement of public institutions can take in the development of a social cluster, and shows the strategic importance of reaching an agreement, both from the social economy and local public institutions point of views. However the forms of public-civil society governance differ according to the types of clusters and their evolution. As the political approach to economic problems shows (Ostrom, 1990), local development projects are partly based on the ability of social actors to create collective intelligence (Heurgon, 2006) through deliberation in public spaces (Habermas, 1978), involving all stakeholders, including Universities (Goujon, Goyet, Poisat, 2011). However, local democracy cannot be imposed and collective intelligence requires broad mobilization. Consequently, the questions of the actors' coordination and of the emergence of new forms of regulations in territories become strategic, including in the social sector. Thus, after a long period of social innovations, the organizations in social and solidarity economy (SSE) experiment new forms of coordination between actors, companies and local authorities to pool resources and develop cooperative projects in territories. For example, the concept of "territorial clusters of economic cooperation" (TCEC), which was inspired by the French competitiveness clusters launched in 2005, has recently emerged under the influence of the main networks of SSE. This approach was backed by public authorities.
    Keywords: deliberation,entrepreneurship,governance,local authorities,social innovation,TCEC
    Date: 2015–07–15
  5. By: Eric Guerci (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - UNS - Université Nice Sophia Antipolis); Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS - UNS - Université Nice Sophia Antipolis); Naoki Watanabe (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
    Abstract: By employing binary committee choice problems, this paper investigates how varying or eliminating feedback about payoffs affects: (1) subjects' learning about the underlying relationship between their nominal voting weights and their expected payoffs in weighted voting games; and (2) the transfer of acquired learning from one committee choice problem to a similar but different problem. In the experiment, subjects choose to join one of two committees (weighted voting games) and obtain a payoff stochastically determined by a voting theory. We found that: (i) subjects learned to choose the committee that generates a higher expected payoff even without feedback about the payoffs they received; and (ii) there was statistically significant evidence of ``meaningful learning'' (transfer of learning) only for the treatment with no payoff-related feedback. This finding calls for re-thinking existing models of learning to incorporate some type of introspection.
    Keywords: two-armed bandit problem,learning, voting game, experiment
    Date: 2015–10–15
  6. By: Antonio Merlo (Institute for Fiscal Studies); Áureo de Paula (Institute for Fiscal Studies and University College London)
    Abstract: This paper studies the nonparametric identification and estimation of voters' preferences when voters are ideological. We establish that voter preference distributions and other parameters of interest can be identified from aggregate electoral data. We also show that these objects can be consistently estimated and illustrate our analysis by performing an actual estimation using data from the 1999 European Parliament elections.
    Keywords: Voting; Voronoi tessellation; identification; nonparametric
    JEL: D72 C14
    Date: 2015–09
  7. By: Kawanaka, Takeshi
    Abstract: Elections play a crucial role in political stability in post-democratization, and electoral administrations are the key to the electoral process. However, not all newly democratized countries have established reliable electoral administration. New democracies in Southeast Asia, such as the Philippines, Indonesia and Thailand, have independent election commissions which have different characteristics, especially in terms of neutrality. Based on three cases, this paper claims that the stakes of politics are the major determinant of the variations in neutrality. The high stakes of politics in Thailand brought about the partisan election commission, while the low stakes in Indonesia made the electoral system relatively neutral. Like Thailand, the high stakes of politics in the Philippines also cause political intervention in the electoral administration.
    Keywords: Southeast Asia, Philippines, Thailand, Indonesia, Democracy, Elections, Electoral administration, The stakes of politics
    JEL: D72
    Date: 2015–10
  8. By: Jian Yang
    Abstract: We propose multi-player frameworks that mitigate decision-theoretical difficulties with the traditional normal-form game, where players are concerned with expected utility functions of their payoffs. We react to Allais's (1953) paradox by concerning players with potentially nonlinear functionals of the payoff distributions they encounter. To counter Ellsberg's (1961) paradox, we let players optimize on vectors of payoff distributions in which every component is a payoff distribution corresponding to one particular nature action. In the preference game we introduce, players merely express preferences over payoff-distribution vectors. Depending on ways in which players' mixed strategies are verified, there will emerge two equilibrium concepts, namely, the ex post and ex ante types. Conditions for equilibrium existence are identified; also, the unification of the two concepts at the traditional game is explained. When the preference relations lead to real-valued satisfaction functions, we have a satisfaction game. Two notable special cases are one coping with Gilboa and Schmeidler's (1989) ambiguity-averse worst-prior setup and another involving Artzner et al.'s (1999) coherent-risk measure with risk-averse tendencies. For both, searching for ex post equilibria boils down to solving sequences of simple nonlinear programs (NLPs).
    Date: 2015–10
  9. By: Casella, Alessandra; Palfrey, Thomas R
    Abstract: Vote-trading is common practice in committees and group decision-making. Yet we know very little about its properties. Inspired by the similarity between the logic of sequential rounds of pairwise vote-trading and matching algorithms, we explore three central questions that have parallels in the matching literature: (1) Does a stable allocation of votes always exists? (2) Is it reachable through a decentralized algorithm? (3) What welfare properties does it possess? We prove that a stable allocation exists and is always reached in a finite number of trades, for any number of voters and issues, for any separable preferences, and for any rule on how trades are prioritized. Its welfare properties however are guaranteed to be desirable only under specific conditions. A laboratory experiment confirms that stability has predictive power on the vote allocation achieved via sequential pairwise trades, but lends only weak support to the dynamic algorithm itself.
    Keywords: algorithms; matching; vote trading; voting
    JEL: C92 D7 D72 P16
    Date: 2015–10
  10. By: Spiro Bougheas; Jeroen Nieboer; Martin Sefton
    Abstract: We report a controlled laboratory experiment examining risk-taking and information aggregation in groups facing a common risk. The experiment allows us to examine how subjects respond to new information, in the form of both privately observed signals and signals reported from others. We find that a considerable number of subjects exhibit ‘reverse confirmation bias’: they place less weight on information from others that agrees with their private signal and more weight on conflicting information. We also find a striking degree of consensus when subjects make decisions on behalf of the group under a random dictatorship procedure. Reverse confirmation bias and the incidence of consensus are considerably reduced when group members can share signals but not communicate.
    Keywords: Group behaviour; teams; decision making; risk; experiment
    JEL: C91 C92 D71 D80
    Date: 2015
  11. By: Sheremeta, Roman
    Abstract: Group contests are ubiquitous. Some examples include warfare between countries, competition between political parties, team-incentives within firms, group sports, and rent-seeking. In order to succeed, members of the same group have incentives to cooperate with each other by expending individual efforts. However, since effort is costly, each member also has an incentive to abstain from expending any effort and instead free-ride on the efforts of other members. Contest theory shows that the intensity of competition between groups and the amount of free-riding within groups depend on the group size, sharing rule, group impact function, contest success function, and heterogeneity of players. We review experimental studies testing these theoretical predictions. Almost all studies of behavior in group contests find significant over-expenditure of effort relative to the theory. We discuss potential explanations for such over-expenditure, including the utility of winning, bounded rationality, relative payoff maximization, parochial altruism, and social identity. Despite over-expenditure, most studies find support for the comparative statics predictions of the theory (with the exception of the “group size paradox”). Finally, studies show that there are effective mechanisms that can promote within-group cooperation and conflict resolution mechanisms that can de-escalate and potentially eliminate between-group conflict.
    Keywords: groups, contests, experiments
    JEL: C7 C9 D7 H4 J4 K4 L2 M5
    Date: 2015–10–29
  12. By: Thorsten Martin; Felix Arnold; Ronny Freier
    Abstract: Recently, the channels of citizen participation in Germany with regard to governmental processes are subject to change. Classical interaction between politicians and citizens still takes place. However, there are new tools for participation at hand as well. One interesting channel that attracted attention recently consists of citizen initiatives trying to obtain a referendum at a local level. These local referendums received much attention, even at the federal level in Germany. Interestingly, in a referendum on housing construction in a green area in Berlin, proponents were arguing that there is a lack of developable areas in terms of living space and a scarcity of housing areas. The shortage of housing supply became an apparent phenomenon in urbanized areas all over Germany. Therefore, it is worth to explore the interplay of local initiatives and the amount of provided housing areas. This paper contributes to this discussion by estimating the impact of local initiatives on the amount of approved and finished residential areas in Bavaria from 2003 until 2012. Since citizen initiatives were introduced in 1995 in Bavaria, it has become the federal state within Germany where most citizen initiatives took place. We use the introduction and the spatial expansion of initiatives as a natural experiment to obtain a causal effect of initiatives. We suppose two possible theoretical mechanisms how local initiatives affect the urban development process. First, the median voter in the respective municipality might be a homevoter (Fischel (2001)). Briefly, a homevoter is described as an inhabitant that allocated all his investments into his own house. Therefore, homevoters have an incentive to use local initiatives in order to maintain the existing conditions and avoid a potential loss in their home's value. A second mechanism might be the loss of reputation for local politicians with the presence of an initiative. Therefore, local governments that already experienced an initiative might be more hesitant with urban development policies in the future. We start our empirical assessment by thoroughly exploring the time frame where initiatives might have an impact on local land use. It seems that initiatives have an effect on local land use within five to nine years after they took place. Even though there is a negative trend of housing construction in Bavaria during our observational period, a local initiative causes a moderate negative dip of around 10% in finished residential area per capita. Interestingly enough, initiatives only influence the provision of residential areas but do not have any effect at all on the provision of non-residential areas. We consider this as evidence for our hypothesis, since voters are more directly affected by housing construction in their immediate neighborhood. Our results remain robust through a variety of robustness checks.
    Keywords: Urban development policies; land use regulations;direct democracy
    JEL: D72 D78 Q15 R52
    Date: 2015–10
  13. By: Ronny Freier; Benjamin Bruns; Abel Schumann
    Abstract: We study political determinants of municipality amalgamations during a boundary reform in the German state of Brandenburg, which reduced the number of municipalities from 1,489 to 421. The analysis is conducted using an extensive data set on the political decision makers as well as fiscal and socio-economic variables on the level of the individual municipality and on the level of individual mergers. We ask whether party representation in the town council influences the merger decision. To identify the effect, we follow a dual approach and make use of different stages in the reform process. First, municipalities were initially free to choose partners. In a later phase of the reform the state legislature forced municipalities to amalgamate. We can, thus, compare voluntary to forced units. Second, we simulate potential mergers from the map of municipalities and compare voluntary mergers to those simulated units. Both approaches show that political representation mattered significantly during the voluntary stage of the merger reform.
    Keywords: H10
    JEL: H11
    Date: 2015–10

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