nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒11‒15
ten papers chosen by
Stan C. Weeber
McNeese State University

  1. Voluntary Provision of Public Knowledge Goods: Group-Based Social Preferences and Coalition Formation By Tom Dedeurwaerdere; Paolo Melindi-Ghidi; Willem Sas
  2. Voting with Endogenous Information Acquisition: Theory and Evidence By Sourav Bhattacharya; John Duffy; Sun-Tak Kim
  3. Electoral Competition with Rationally Inattentive Voters By Filip Matejka; Guido Tabellini
  4. Systemic Opposition at Russia’S Gubernatorial Elections By Rostislav F. Turovsky
  5. Changing Social Preferences and Optimal Redistributive Taxation By Jang-Ting Guo; Alan Krause
  6. Linking individual and collective contests through noise level and sharing rules By Orestis Troumpounis; Pau Balart; Subhasish Chowdhury
  7. Nudge for (the Public) Good: How Defaults can affect Cooperation By Toke Reinholt Fosgaard; Marco Piovesan
  8. Equality concerns and the limits of self-governance in heterogeneous populations By Lata Gangadharan; Nikos Nikiforakis; Marie Claire Villeval
  9. Budget, expenditures composition and political manipulation: Evidence from Portugal By Vítor Castro; Rodrigo Martins
  10. Asymmetric and Endogenous Within-Group Communication in Competitive Coordination Games By Timothy N. Cason; Roman M. Sheremeta; Jingjing Zhang

  1. By: Tom Dedeurwaerdere (Université Catholique de Louvain and Fonds National de la Recherche Scientifique (FNRS), Biogov Unit); Paolo Melindi-Ghidi (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS, GREQAM); Willem Sas (Center for Economics Studies (CES), KU Leuven)
    Abstract: In this paper we develop a private-collective model of voluntary public knowledge production, where group-based social preferences have an impact on coalition formation. Our theoretical model builds on the large empirical literature on voluntary production of pooled public knowledge goods, including source code in communities of software developers or data provided to open access data repositories. Our analysis shows under which conditions social preferences such as 'group belonging' or 'peer approval' influence stable coalition size, as such rationalising several stylized facts emerging from large scale surveys of Free/Libre/Open-Source software developers (David and Shapiro, 2008), previously unaccounted for. Furthermore, heterogeneity of social preferences is added to the model to study the formation of stable, but mixed coalitions.
    Keywords: public knowledge goods, coalition formation, private-collective model, group belonging, peer approval, open source software
    JEL: C70 D71 H40 L17
    Date: 2015–11–03
  2. By: Sourav Bhattacharya (Department of Economics, Royal Holloway, University of London); John Duffy (Department of Economics, University of California-Irvine); Sun-Tak Kim (Department of Economics, National Taiwan University)
    Abstract: The standard model of jury or committee voting, with costless, exogenously given and noisy but informative signals regarding the true state of the world, predicts that the efficiency of group decision-making increases unambiguously with the group size. However, once signal acquisition is made a costly and endogenous decision, there are important free-riding considerations that counterbalance the information aggregation effect. If the cost of acquiring information is fixed, then rational voters have disincentives to purchase information as the group size becomes larger since the impact of their vote becomes smaller. In this paper we investigate the extent to which human subjects recognize this trade-off between information aggregation and free-riding in a laboratory experiment where we vary the group size, the cost of information acquisition and the precision of signals. We find that in most of the settings we study, free-riding incentives are weak as there is a pronounced tendency for subjects to over-acquire information relative to equilibrium predictions and we offer several possible explanations for this finding.
    Keywords: Voting; Condorcet jury model; Information aggregation; Endogenous information acquisition; Experimental economics
    JEL: C72 D72 D81
    Date: 2015–11
  3. By: Filip Matejka; Guido Tabellini
    Abstract: This paper studies how voters optimally allocate costly attention in a model of probabilistic voting. The equilibrium solves a modified social planning problem that reflects voters' choice of attention. Voters are more attentive when their stakes are higher, when their cost of information is lower and prior uncertainty is higher. We explore the implications of this in avariety of applications. In equilibrium, extremist voters are more influential and public goods are under-provided. The analysis also yields predictions about the equilibrium pattern of information, and about policy divergence by two opportunistic candidates. Endogenous attention can lead to multiple equilibria, explaining how poor voters in developing countries can be politically empowered by welfare programs.
    Keywords: electoral competition; limited inattention;
    JEL: D72 D83
    Date: 2015–11
  4. By: Rostislav F. Turovsky (National Research University Higher School of Economics)
    Abstract: This study is based on descriptive analysis of systemic opposition in Russia and its regions. We focus on the procedure and results of gubernatorial elections held in 2012-2015 in 62 regions (twice in two of them). The author has analyzed statistical information on electoral participation and performance of the opposition at gubernatorial elections, along with numerous interviews with political actors and experts. This study presents a logical model of ruling elites’ and systemic opposition’s strategic behavior and interaction proved by cases studied by the author in Russia’s regions. The author gives the definition of systemic opposition and analyzes its relations with the federal and regional authorities. Of particular importance is the role of systemic opposition in the legitimating of gubernatorial elections. However, the study shows that the legitimating process fails due to low turnout and usually leads to electoral losses of systemic opposition. Gubernatorial elections give systemic opposition very limited opportunities (despite the fact of its first victory in 2015) but still integrate it into the system while leaving the systemic parties with more chances to get political positions in legislative bodies.
    Keywords: systemic opposition, gubernatorial elections, hybrid regime, sub-national authoritarianism
    JEL: D72
    Date: 2015
  5. By: Jang-Ting Guo; Alan Krause
    Abstract: We examine a dynamic model of optimal nonlinear taxation of labor income and savings, in which there are two political parties: left-wing and right-wing. The parties differ only in their redistributive preferences, with the left-wing party having a stronger preference for redistribution. Our analysis explicitly considers the possibility that society's preference for redistribution may change, as reflected in its future voting behavior. The incumbent government respects the possibility that society's preference may change, and sets taxes to maximize expected social welfare. Our main result is that an incumbent left-wing (resp. right-wing) government will implement a regressive (resp. progressive) savings tax policy. The incumbent government implements this policy not out of self interest, but to accommodate the redistributive goals of the opposing party.
    Keywords: Nonlinear Taxation; Redistribution; Normative Taxation
    JEL: H21 H24
    Date: 2015–11
  6. By: Orestis Troumpounis; Pau Balart; Subhasish Chowdhury
    Abstract: We provide a theoretical link between the two most prominent ways of modeling<br/>individual and collective contests as proposed by Tullock (1980) and Nitzan (1991) respectively. By introducing Nitzan's sharing rule as a way of modeling individual contests we obtain a contest success function nesting a standard Tullock contest and a fair lottery. We first provide an equivalence result between the proposed contest and Tulllock's contest for the two-player set-up. We then employ this nested contest as a way of introducing noise in multi-player contests when in the Tullock contest a closed form solution for the equilibrium in pure strategies does not exist. We conclude by comparing the proposed contest with the existing ones in the literature.
    Keywords: Individual contest, Collective contest, Equivalence
    JEL: C72 D72 D74
    Date: 2015
  7. By: Toke Reinholt Fosgaard (Department of Food and Resource Economics, University of Copenhagen); Marco Piovesan (Department of Economics, University of Copenhagen)
    Abstract: In this paper we test the effect of non-binding defaults on the level of contribution to a public good. We manipulate the default numbers appearing on the decision screen to nudge subjects toward a free-rider strategy or a perfect conditional cooperator strategy. Our results show that the vast majority of our subjects did not adopt the default numbers, but their stated strategy was affected by the default. Moreover, we find that our manipulation spilled over to a subsequent repeated public goods game where there default was not manipulated. Here we found that subjects who previously saw the free rider default were significantly less cooperative than those who saw the perfect conditional cooperator default.
    Keywords: Cooperation, Nudging
    JEL: C90
    Date: 2015–11
  8. By: Lata Gangadharan (Department of Economics, Monash University, Clayton, Australia); Nikos Nikiforakis (Social Science Division, New York University Abu Dhabi, P.O. Box 129188, Abu Dhabi, United Arab Emirates); Marie Claire Villeval (Université de Lyon, F-69007, France; CNRS, GATE Lyon St Etienne, 93, Chemin des Mouilles, F-69130, Ecully, France)
    Abstract: Mechanisms to overcome social dilemmas provide incentives to maximize efficiency. However, often – such as when agents are heterogeneous – there is a trade-off between efficiency and equality. Agents’ concerns for equality in such instances can limit the ability of mechanisms to promote efficiency. We provide evidence for this from a public good experiment using a simple mechanism which allows individuals to communicate periodically with other group members and reward them for their actions. We show that, in homogeneous populations – where there is no tension between efficiency and equality – the mechanism permits group to obtain maximum efficiency. This is not the case in heterogeneous populations where individuals derive different benefits from cooperation. Although almost all heterogeneous groups agree to follow specific contribution rules with positive contributions, most of them either prioritize equality over efficiency or strike a compromise between the two. These findings suggest that equality concerns can impose limits on the ability of heterogeneous populations to reach efficient outcomes through self-governance.
    Keywords: Communication, rewards, cooperation, normative conflict, heterogeneity
    JEL: C92 H41 D74
    Date: 2015
  9. By: Vítor Castro (Faculty of Economics, University of Coimbra, and Economic Policies Research Unit (NIPE)); Rodrigo Martins (Faculty of Economics, University of Coimbra and Group for Monetary and Fiscal Studies (GEMF))
    Abstract: This paper examines the presence of political cycles in Portuguese governments’ expenditures. The empirical analysis is done using monthly data for the main categories of government expenditures. The results indicate that Portuguese governments act opportunistically regarding the budget surplus and that they also favour capital instead of current spending near elections. Furthermore, right-wing governments tend to be more prone to expenditures’ reduction and deficits after the elections. A disaggregated analysis for the main components of government expenditures corroborates the previous findings and shows other relevant patterns of political manipulations.
    Keywords: Political budget cycles; Expenditure composition; Portugal; Elections; Fiscal policy
    JEL: H72 D72 D78
    Date: 2015
  10. By: Timothy N. Cason (Department of Economics, Krannert School of Management, Purdue University); Roman M. Sheremeta (Department of Economics, Weatherhead School of Management, Case Western Reserve and Economic Science Institute, Chapman University); Jingjing Zhang (Economics Discipline Group, University of Technology Sydney)
    Abstract: Within-group communication in competitive coordination games has been shown to increase competition between groups and lower efficiency. This study further explores potentially harmful effects of communication, by addressing the questions of (i) asymmetric communication and (ii) the endogenous emergence of communication. Our theoretical analysis provides testable hypotheses regarding the effect of communication on competitive behavior and efficiency. We test these predictions using a laboratory experiment. The experiment shows that although asymmetric communication is not as harmful as symmetric communication, it leads to more aggressive competition and lower efficiency relative to the case when neither group can communicate. Moreover, groups vote to endogenously open communication channels even though this leads to lower payoffs and efficiency.
    Keywords: between-group competition, within-group competition, communication, coordination, contests, experiments
    JEL: C70 D72 H41
    Date: 2015

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