nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2015‒12‒28
ten papers chosen by
Stan C. Weeber
McNeese State University

  1. Voter Preferences and Political Change: Evidence from Shale Booms By Viktar Fedaseyeu; Erik Gilje; Philip E. Strahan
  2. On discounting and voting in a simple growth model By Borissov, Kirill; Pakhnin, Mikhail; Puppe, Clemens
  3. Consistent collective decisions under majorities based on difference of votes By Mostapha Diss; Patrizia Pérez-Asurmendi
  4. Social network and private provision of public goods By Bulat Sanditov; Saurabh Arora
  5. An Experimental Study of Decentralized Link Formation with Competition By Margherita Comola; Marcel Fafchamps
  6. The Political Legacy of Entertainment TV By Ruben Durante; Paolo Pinotti; Andrea Tesei
  7. Electoral Effects of Public Sector Austerity Efforts in the United Kingdom 1900-2015 By Rozana Himaz
  8. Globalization and Its (Dis-)Content: Trade Shocks and Voting Behavior By Christian Dippel; Robert Gold; Stephan Heblich
  9. Political capitalism: The interaction between income inequality, economic freedom and democracy By Krieger, Tim; Meierrieks, Daniel
  10. Entry or Exit? The Effect of Voluntary Participation on Cooperation By Daniele Nosenzo; Fabio Tufano

  1. By: Viktar Fedaseyeu; Erik Gilje; Philip E. Strahan
    Abstract: Local interests change sharply after the energy booms that began in 2003, when hydraulic fracturing spurred extraction of formerly uneconomic oil and gas reserves. Support for conservative interests rises and Republican political candidates gain votes after booms, leading to a near doubling in the probability of a change in incumbency. All of this change occurs at the expense of Democrats. Voting records of U.S. House members from boom districts become sharply more conservative across a wide range of issues, including issues unrelated to energy policy. At the level of the individual, marginal candidates skew their voting behavior somewhat toward more conservative causes, but generally not enough to maintain power. Thus, even when the stakes are high and politicians risk losing power, ideology trumps ambition.
    JEL: P16
    Date: 2015–12
  2. By: Borissov, Kirill; Pakhnin, Mikhail; Puppe, Clemens
    Abstract: In dynamic resource allocation models, the non-existence of voting equilibria is a generic phenomenon due to the multi-dimensionality of the choice space even with agents heterogeneous only in their discount factors. Nevertheless, at each point of time there may exist a "median voter" whose preferred instantaneous consumption rate is supported by a majority of agents. Based on this observation, we propose an institutional setup ("intertemporal majority voting") in a Ramsey-type growth model with common consumption and heterogeneous agents, and show that it provides a microfoundation of the choice of the optimal consumption stream of the median agent. While the corresponding intertemporal consumption stream is in general not a Condorcet winner among all feasible paths, its induced instantaneous consumption rate receives a majority at each point in time in the proposed intertemporal majority voting procedure. We also provide a characterization of balanced-growth and steady-state voting equilibria in the case in which agents may differ not only in their time preference, but also in their instantaneous utility functions.
    Keywords: collective choice,common-pool resource,economic growth,heterogeneous agents,median voter theorem
    JEL: D11 D71 D91 O13 O43
    Date: 2015
  3. By: Mostapha Diss (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France); Patrizia Pérez-Asurmendi (Grupo de investigacion PRESAD, Universidad de Valladolid, Avda. Valle de Esgueva 6,47011, Valladolid, Spain & Grupo de investigacion SEED, Universidad Publica de Navarra, Campus de Arrosadia,31006, Pamplona, Spain.)
    Abstract: The main criticism to the aggregation of individual preferences under majority rules refers to the possibility of reaching inconsistent collective decisions from the election process. In these cases, the collective preference includes cycles and even could prevent the election of any alternative as the collective choice. The likelihood of consistent outcomes under a class of majority rules constitutes the aim of this paper. Specifically, we focus on majority rules that require certain consensus in individual preferences to declare an alternative as the winner. Under majorities based on difference of votes, the requirement asks to the winner alternative to obtain a difference in votes with respect to the loser alternative taking into account that individuals are endowed with weak preference orderings. Same requirement is asked to the restriction of these rules to individual linear preferences.
    Keywords: Majorities based on difference of votes, Probability, Transitivity, Triple-acyclicity.
    JEL: D70 D71
    Date: 2015
  4. By: Bulat Sanditov (TELECOM Ecole de Management, Institut Mines-T´el´ecom, France); Saurabh Arora (Science Policy Research Unit, University of Sussex, UK)
    Abstract: Using a simple model with interdependent utilities, we study how social networks influence individual voluntary contributions to the provision of a public good. Departing from the stan- dard model of public good provision, we assume that an agent’s utility has two terms: (a) ‘ego’-utility derived from the agent’s consumption of public and private goods, and (b) a so- cial utility which is the sum of utility spillovers from other agents with whom the agent has social relationships. We establish conditions for the existence of a unique interior Nash equi- librium and describe the equilibrium in terms of network characteristics. We show that social network always has a positive effect on the provision of the public good. We also find that, in networks with “small world”-like modular structures, ‘bridging’ ties connecting distant parts of social network play an important role inducing the agent’s contribution to public good. Assumptions and results of the model are discussed in relation to the role of social capital in community-level development projects and to the effect of innovation networks on firms’ R&D investments.
    Keywords: public goods, interrelated utilities, social capital, R&D networks
    JEL: H41 D85 O31
    Date: 2015–12
  5. By: Margherita Comola; Marcel Fafchamps
    Abstract: We design a laboratory experiment to investigate bilateral link formation in a setting where payoffs are pair-specific. Our link formation rule is decentralized and players can make link offers and counter-offers, as in a Beckerian marriage market. The game is designed in such a way that a stable equilibrium configuration exists and does not depend on conditions such as initial configuration or order of move. We test whether the theoretical equilibrium is obtained under experimental conditions, and which individual motivations and decision-making techniques lead players to depart from myopic best response. We find that players are remarkably good at attaining a stable equilibrium configuration, which happens in 86% of the games. Results show that complete information speeds up the game via self-censoring, and that sub-optimal choices are mostly driven by over-thinking behavior and reluctance to accept to link with players who have been disloyal earlier in the game.
    JEL: D03 D49 O17
    Date: 2015–11
  6. By: Ruben Durante (Sciences Po and CEPR); Paolo Pinotti (Bocconi University and DONDENA Center); Andrea Tesei (Queen Mary University of London and CEP (LSE))
    Abstract: We investigate the political impact of entertainment television in Italy over the past thirty years by exploiting the staggered introduction of Silvio Berlusconi's commercial TV network, Mediaset, in the early 1980s. We find that individuals in municipalities that had access to Mediaset prior to 1985 - when the network only featured light entertainment programs - were significantly more likely to vote for Berlusconi's party in 1994, when he first ran for office. This effect persists for almost two decades and five elections, and is especially pronounced for heavy TV viewers, namely the very young and the old. We relate the extreme persistence of the effect to the relative incidence of these age groups in the voting population, and explore different mechanisms through which early exposure to entertainment content may have influenced their political attitudes.
    Keywords: Television, Entertainment, Voting, Political participation, Italy
    JEL: L82 D72 Z13
    Date: 2015–12
  7. By: Rozana Himaz
    Abstract: Abstract: This paper investigates empirically whether large expenditure cuts and revenue rises that were the result of deliberate political efforts towards being austere had an impact on electoral outcomes in the UK using data from 1900 to 2015. The main electoral outcomes considered are the change in ruling party ideology and the margin of victory faced by the incumbent at the general election, in terms of seats secured. The paper finds that large cuts in spending and large rises in revenue significantly increases the chance of a government changing. However, the loss in seats were significantly higher for the incumbent compared to the winning partly only when large spending cuts were pursued rather than revenue increases during the incumbent's tenure in office. We also find that voters are sensitive to particular types of spending cuts, such as cuts in social security. These results are contrary to those in Alesina (2013) using OECD data for 19 countries from 1975-2008, and several other papers in the empirical literature that found no significant correlation between fiscal adjustment and electoral looses
    Keywords: Fiscal austerity, electoral outcomes, United Kingdom
    JEL: H2 H3 H5
    Date: 2015–12–16
  8. By: Christian Dippel; Robert Gold; Stephan Heblich
    Abstract: We identify the causal effect of trade-integration with China and Eastern Europe on voting in Germany from 1987 to 2009. Looking at the entire political spectrum, we find that only extreme-right parties respond significantly to trade integration. Their vote share increases with import competition and decreases with export access opportunities. We unpack mechanisms using reduced form evidence and a causal mediation analysis. Two-thirds of the total effect of trade integration on voting appears to be driven by observable labor market adjustments, primarily changes in manufacturing employment. These results are mirrored in an individual-level analysis in the German Socioeconomic Panel.
    JEL: D72 F16 J2
    Date: 2015–12
  9. By: Krieger, Tim; Meierrieks, Daniel
    Abstract: In this contribution we study the relationship between income inequality and economic freedom for a panel of 100 countries for the 1971-2010 period. From a panel causality study we find that income inequality has a negative causal effect on economic freedom, while causation does not run in the opposite direction. We argue that the negative effect of inequality on economic liberty is due to the elite's political power stemming from its disproportionate control over a country's economic resources. The elite uses this power to curtail economic freedom to defend its economic interests by discouraging innovation, competition and protecting its rents. Running a series of dynamic panel estimations, we show that the negative effect of income inequality on economic freedom is robust to different sets of controls and estimation techniques. Finally, we show that the dynamics of the inequality-freedom nexus are to some extent conditional upon a country's political regime. When inequality is low, democracies enjoy comparatively higher levels of economic liberty, in line with the interests of a large middle-class. By contrast, economic freedom is lower in democracies (compared to strongly autocratic regimes with the same income distribution) when inequality is high. We argue that the latter finding corresponds to a system of political capitalism or captured democracy, where a powerful economic elite cooperates with politicians and bureaucrats for their mutual benefit.
    Keywords: income inequality,economic freedom,democratic institutions,political capitalism,middle-class,captured democracy
    JEL: D31 D72
    Date: 2015
  10. By: Daniele Nosenzo (Department of Economics, University of Nottingham.); Fabio Tufano (Department of Economics, University of Nottingham.)
    Abstract: We study the effects of voluntary participation on cooperation in collective action problems. Voluntary participation may foster cooperation through an entry mechanism, which leads to assortative selection of interaction partners, or an exit mechanism, whereby the opportunity to leave the partnership can be used as a threat against free-riders. We examine the effectiveness of these mechanisms in a one-shot public goods experiment. Voluntary participation has a positive effect on provision only through the exit mechanism. Assortative selection of interaction partners seems to play a minor role in our setting, whereas the threat of costly exit is a powerful force to discipline free-riding.
    Keywords: public goods; cooperation; voluntary participation; exit; entry; experiment
    Date: 2015

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