nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒01‒03
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Eliciting Preferences Over Risk: An Experiment By Morone, Andrea; Temerario, Tiziana
  2. Exposing politicians’ ties to criminal organizations: the effects of local government dissolutions on electoral outcomes in southern Italian municipalities By Gianmarco Daniele; Benny Geys
  3. Immigration to the U.S.: A problem for the Republicans or the Democrats? By Mayda, Anna Maria; Peri, Giovanni; Steingress, Walter
  4. Executive Branch and Major Electoral Reforms in Russia By Mikhail Turchenko; Sergey Shevchuk
  5. The Political Economy of Growth, Inequality, the Size and Composition of Government Spending By Klaus Schmidt-Hebbel; José Carlos Tello
  6. Internet and Politics: Evidence from U.K. Local Elections and Local Government Policies By Gavazza, Alessandro; Nardotto, Mattia; Valletti, Tommaso
  7. The political economy of municipal amalgamation: Evidence of common pool effects and local public debt By Feld, Lars P.; Fritz, Benedikt
  8. Calling the Greek Referendum on the Nose with Google Trends By Askitas, Nikos
  9. Pawn or Vigilant Watchdog? How board vigilance and board tenure moderate the effects of executive tenure on board functioning By Irene Mostert; Dennis Veltrop; Paula van Veen-Dirks; Jakob de Haan
  10. Predicting the Irish "Gay Marriage" Referendum By Askitas, Nikos
  11. International Environmental Agreements-The Role of Foresight By Effrosyni Diamantoudi; Eftichios S. Sartzetakis
  12. Legislative Bargaining with Heterogeneous Disagreement Values: Theory and Experiments By Luis Miller; Maria Montero; Luis Miller
  13. Monitoring institutions in indefinitely repeated games By G. Camera; M. Casari
  14. Daniel Ellsberg on the Ellsberg Paradox By Carlo Zappia
  15. An Extended N-player Network Game and Simulation of Four Investment Strategies on a Complex Innovation Network By Zhou, Wen; Koptyug, Nikita; Ye, Shutao; Jia, Yifan; Lu, Xiaolong
  16. Social Network Analysis and Community Detection by Decomposing a Graph into Relaxed Cliques By Timo Gschwind; Stefan Irnich; Fabio Furini; Roberto Wol?er Calvo

  1. By: Morone, Andrea; Temerario, Tiziana
    Abstract: Previous research has begun to investigate how small groups make decisions when facing risky choices. However, no consensus has been reached. One stream of research found that groups are more risk averse, while another one reported the contrary and some studies did not even find any significant difference. This paper is meant to provide a clear comparison between two different experimental designs from Harrison et al. (2012) and Zhang and Casari, (2012). The former tests the risk preferences of groups of three members where group’s decision is taken with the majority rule; the latter, also tests risk preferences of three-members group, but using a different lottery set and aggregation rule, i.e. unanimity. These two experiments lead to different results: Harrison et al. (2012) did not find any substantial difference between individuals’ and groups’ preferences over risk, while Zhang and Casari (2012) found that groups tend to be more prone to the risk neutrality than individuals. Additionally, we present a replication study of Harrison et al. (2012) and Zhang and Casari (2012) in order to check to what extent the lottery set and the aggregation rule (majority or unanimity) adopted to elicit preferences may affect the final group choice. It results that individual and group choices are not significantly different, regardless of the lottery set and the aggregation rule used in the experimental design.
    Keywords: risk choice; decision-making under risk and uncertainty; experimental economics; group behavior;
    JEL: C92 D81
    Date: 2015–11
  2. By: Gianmarco Daniele (University of Barcelona & IEB & Vrije Universiteit Brussel (VUB)); Benny Geys (Norwegian Business School BI)
    Abstract: Since 1991, the Italian national government can dissolve municipal councils when infiltration by organized crime is suspected (Law 164/1991). We exploit variation over time and space in the application of this law to study voters’ responses to politicians’ publicly exposed ties to criminal organizations. Using a difference-in-differences approach, we find that public exposure of ties to organized crime significantly depresses turnout in local elections, and negatively impacts the electoral performance of incumbents and purely local political parties. The breach in the local political principal-agent relationship also translates into citizens’ reduced willingness to contribute to the financing of local public goods.
    Keywords: Political accountability, voter turnout, elections, mafia, tax compliance
    JEL: K42 H89 O17
    Date: 2015
  3. By: Mayda, Anna Maria; Peri, Giovanni; Steingress, Walter
    Abstract: We empirically analyze the impact of immigration to the U.S. on the share of votes to the Republicans and Democrats between 1994 and 2012. Our analysis is based on variation across states and years – using data from the Current Population Survey merged with election data – and addresses the endogeneity of immigrant flows using a novel set of instruments. On average across election types, immigration to the U.S. has a significant and negative impact on the Republican vote share, consistent with the typical view of political analysts in the U.S.. This average effect – which is driven by elections in the House – works through two main channels. The impact of immigration on Republican votes in the House is negative when the share of naturalized migrants in the voting population increases. Yet, it can be positive when the share of non-citizen migrants out of the population goes up and the size of migration makes it a salient policy issue in voters’ minds. These results are consistent with naturalized migrants being less likely to vote for the Republican party than native voters and with native voters’ political preferences moving towards the Republican party because of high immigration of non-citizens. This second effect, however, is significant only for very high levels of immigrant presence.
    Keywords: Citizenship; Elections; Immigration; Republican Party
    JEL: F22 J61
    Date: 2015–12
  4. By: Mikhail Turchenko (National Research University Higher School of Economics); Sergey Shevchuk (National Research University Higher School of Economics)
    Abstract: Within the period of 1993-2014 Russia experienced four major electoral reforms: in 1993, 2002, 2005 and 2014. One more attempt to change the Russian electoral system initiated by the president in 1994-1995 failed. This article considers the cases of major electoral reforms in Russia through the veto player theory. It demonstrates that the reforms were successfully implemented in cases when the executive branch, striving for maximum control over the legislative process, was interested in such implementation and there were no other veto players, who were able to block passage of the law
    Keywords: institutional change, elections, veto players, executive branch, Russia
    JEL: D72
    Date: 2015
  5. By: Klaus Schmidt-Hebbel; José Carlos Tello
    Abstract: This paper develops a dynamic general-equilibrium political-economy model for the optimal size and composition of public spending. An analytical solution is derived from majority voting for three government spending categories: public consumption goods and transfers (valued by households), as well as productive government services (complementing private capital in an endogenous-growth technology). Inequality is reflected by a discrete distribution of infinitely-lived agents that differ by their initial capital holdings. In contrast to the previous literature that derives monotonic (typically negative) relations between inequality and growth in one-dimensional voting environments, this paper establishes conditions, in an environment of multi-dimensional voting, under which a non-monotonic, inverted U-shape relation between inequality and growth is obtained. This more general result – that inequality and growth could be negatively or positively related – could be consistent with the ambiguous or inconclusive results documented in the empirical literature on the inequality-growth nexus. The paper also shows that the political-economy equilibrium obtained under multi-dimensional voting for the initial period is time-consistent.
    JEL: D72 E62 H11 H31
    Date: 2014
  6. By: Gavazza, Alessandro; Nardotto, Mattia; Valletti, Tommaso
    Abstract: We empirically study the effects of broadband internet diffusion on local election outcomes and on local government policies using rich data from the U.K. Our analysis suggests that the internet has displaced other media with greater news content (i.e., radio and newspapers), thereby decreasing voter turnout, most notably among less-educated and younger individuals. In turn, local government expenditures (and taxes) are lower in areas with greater broadband diffusion, particularly expenditures targeted at less-educated voters. Our findings corroborate the idea that voters' information plays a key role in determining electoral participation, government policies and government size.
    Keywords: media; voting
    JEL: D72
    Date: 2015–12
  7. By: Feld, Lars P.; Fritz, Benedikt
    Abstract: This paper investigates the political economy of after merger effects of the large scale municipal amalgamations in the German state of Baden-Württemberg in the early 1970s. By exploiting the huge variance in the amalgamation process in terms of number of participating municipalities, municipality size or amalgamation strategy we identify considerable common pool effects. Amalgamations can create a common pool, as the former independent municipalities have now access to more resources. Common pool exploitation is stronger the more municipalities participate and when municipalities amalgamate by annexation. Additionally, voter involvement is lower in amalgamated municipalities.
    Keywords: Municipal Amalgamation,Public Debt,Common Pool,Difference in Difference
    JEL: D78 H11 H72
    Date: 2015
  8. By: Askitas, Nikos (IZA)
    Abstract: In a bold and risky political move the Greek prime minister Alexis Tsipras called for a referendum on June 27 2015 quitting ongoing negotiations with Greece's creditors in Brussels. The referendum framed as a yes or no question asked the Greek voters to decide whether or not they approve or reject the latest take-it-or-leave-it proposal for "program continuation" by Greece's creditors. What followed was a chaotic week leading to the referendum with intense campaigning by the two camps. Due to tense debates and increasing polarisation it became increasingly impossible to rely on traditional polling. Even the first exit polls (performed by phone on Sunday evening) could only see a marginal lead for one or the other vote at different times. Quite possibly people were jumping party lines and were unwilling to reveal their preferences. Using Google Trends I could tap into voters' true and unbiased revealed preferences and nowcast hourly what the ratio of the No vote to the Yes vote is and called an over 60% No vote well ahead of the closing of the voting urns. In this paper I document this nowcasting exercise.
    Keywords: nowcasting, Greek Referendum, greferendum, exit polls, complexity, behaviour, data science, computational social science, complex systems
    JEL: D72 G34
    Date: 2015–12
  9. By: Irene Mostert; Dennis Veltrop; Paula van Veen-Dirks; Jakob de Haan
    Abstract: In this paper we argue that the effects of board vigilance towards top management are less straightforward than initially anticipated. Building on a unique multi-source dataset comprised of data from top managers and board members from a sample of Dutch financial firms we argue that board vigilance differently impacts the effects of top management tenure on board monitoring and advice. Consistent with past theorizing we find that top management tenure negatively impacts both board monitoring and board advice. However, we find that the underlying reasons for these negative effects may differ. As a result, while board vigilance diminishes the negative effects of top management team tenure on board monitoring it may actually exacerbate the negative effects of top management tenure on advice provision towards top management. Further extending our line of reasoning we argue and empirically demonstrate that these interactive effects of top management tenure and board vigilance are contingent on board tenure. Our results underscore the complexities of board functioning and warrant careful consideration in formulating recommendations for limiting board tenure or in solely focusing on increasing the board's critical stance towards top management.
    Keywords: Board Monitoring; Board Advice; Executive Tenure; Board Tenure; Board Vigilance
    JEL: G34
    Date: 2015–12
  10. By: Askitas, Nikos (IZA)
    Abstract: On February 20 2015 Irish Premier Enda Kenny confirmed that a "yes-no" referendum on same sex marriage would be held on May 22 of the same year. A yes vote would legalise same sex marriage in Ireland. As the Irish premier put it, the vote was about "tolerance, respect and sensitivity". The electoral outcome turned out to be 62.07% for the yes vote with voter turnout at 60.52% of the registered voters. Ireland thus became the first country in the world to legalise same sex marriage through a popular vote. Using hourly Google Search data one week prior to the Irish Referendum of May 22 2015 and a simple ratio of "vote yes" to "vote no" searches I demonstrate how the outcome could have been predicted on the nose. The method is used here successfully for the second time and is so far as I know the only one which forecasts popular vote with Google Search.
    Keywords: referendum, predicting, Google Trends, Google Search, complexity, behaviour, data science, computational social science, complex systems
    JEL: D72 G34
    Date: 2015–12
  11. By: Effrosyni Diamantoudi (Department of Economics, Concordia University); Eftichios S. Sartzetakis (Department of Economics, University of Macedonia)
    Abstract: The present paper attempts to bridge the gap between the coop- erative and the non-cooperative approach employed to examine the size of stable coalitions, formed to address global environmental prob- lems. We do so by endowing countries with foresightedness, that is, by endogenizing the reaction of the coalition's members to a deviation by one member. We assume that when a country contemplates with- drawing or joining an agreement, it takes into account the reactions of other countries ignited by its own actions. We identify conditions under which there always exists a unique set of farsighted stable IEAs. The new farsighted IEAs can be much larger than those some of the previous models supported but are not always Pareto efficient.
    Keywords: International Environmental Agreements.
    Date: 2015–12
  12. By: Luis Miller (School of Economics, University of the Basque Country); Maria Montero (Department of Economics, University of Hamburg); Luis Miller (Department of Economics, University of Heidelberg)
    Abstract: We study a legislative bargaining game in which failure to agree in a given round may result in a breakdown of negotiations. In that case, each player receives an exogenous `disagreement value'. We characterize the set of stationary subgame perfect equilibria under all q-majority rules. Under unanimity rule, equilibrium payoffs are strictly increasing in disagreement values. Under all less-than-unanimity rules, expected payoffs are either decreasing or first increasing and then decreasing in disagreement values. We conduct experiments involving three players using majority and unanimity rule finding support for these predictions.
    Keywords: legislative bargaining; majority rule; unanimity rule; risk of breakdown; experiments
    Date: 2015
  13. By: G. Camera; M. Casari
    Abstract: Does monitoring past conduct facilitate intertemporal cooperation? We designed an experiment characterized by strategic uncertainty and multiple equilibria where coordinating on the efficient outcome is a challenge. Participants, interacting anonymously in a group, could pay a cost either to obtain information about their counterparts, or to create a freely available public record of individual conduct. Both monitoring institutions were actively employed. However, groups were unable to attain higher levels of cooperation compared to a treatment without monitoring. Information about past conduct alone thus appears to be ineffective in overcoming coordination challenges.
    JEL: C70 C90 D80
    Date: 2015–12
  14. By: Carlo Zappia
    Abstract: Even though Daniel Ellsberg’s 1961 article “Risk, ambiguity and the Savage axioms” is well-known and increasingly quoted in current decision theory, introducing the counterexample to Bayesian decision-making that got the normative value of Savage’s theory into trouble, its philosophical background remains totally unknown. This paper examines Ellsberg’s motivations in presenting his critique first to his fellow decision theorists at Harvard and RAND in the late 1950s and it goes into his reasons for giving a philosophical justification and defence of the paradox in his doctoral thesis of 1962. By concentrating mainly on Ellsberg’s all-encompassing analysis of decision-making in his thesis, the paper shows that a number of relevant issues connected to the paradox can be thrown light on. These range from its historical background to the way to test the normative value of decision theory through experiments, and a taxonomy of decision rules based on alternative probabilistic set-ups. Crucially, the paper argues that Ellsberg subscribed to a generalised version of the Bayesian approach, one that informs the developments of the multiple prior approach in current decision theory, but finds its origins in Keynes’s Treatise on Probability
    Keywords: Ambiguity, Ellsberg Paradox, decision theory
    JEL: B21 D21
    Date: 2015–09
  15. By: Zhou, Wen (School of Computer Engineering and Science); Koptyug, Nikita (Research Institute of Industrial Economics (IFN)); Ye, Shutao (School of Computer Engineering and Science); Jia, Yifan (School of Computer Engineering and Science); Lu, Xiaolong (School of Computer Engineering and Science)
    Abstract: As computer science and complex network theory develop, non-cooperative games and their formation and application on complex networks have been important research topics. In the inter-firm innovation network, it is a typical game behavior for firms to invest in their alliance partners. Accounting for the possibility that firms can be resource constrained, this paper analyzes a coordination game using the Nash bargaining solution as allocation rules between firms in an inter-firm innovation network. We build an extended inter-firm n-player game based on nonidealized conditions, describe four investment strategies and simulate the strategies on an inter-firm innovation network in order to compare their performance. By analyzing the results of our experiments, we find that our proposed greedy strategy is the best-performing in most situations. We hope this study provides a theoretical insight into how firms make investment decisions.
    Keywords: Complex Networks; Game Theory; Innovation; Innovation Network; Nash Equilibrium
    JEL: C72 C81 C82 D81 L14
    Date: 2015–12–15
  16. By: Timo Gschwind (Johannes Gutenberg University Mainz); Stefan Irnich (Johannes Gutenberg University Mainz); Fabio Furini (Université Paris Dauphine); Roberto Wol?er Calvo (Universit´e de Paris Nord)
    Abstract: In social network analysis (SNA), relationships between members of a network are encoded in an undirected graph where vertices represent the members of the network and edges indicate the existence of a relationship. One important task in SNA is community detection, that is, clustering the members into communities such that relatively few edges are in the cutsets but relatively many are internal edges. The clustering is intended to reveal hidden or reproduce known features of the network, while the structure of communities is arbitrary. We propose decomposing a graph into the minimum number of relaxed cliques as a new method for community detection especially conceived for cases in which the internal structure of the community is important. Cliques, that is, subgraphs with pairwise connected vertices, can model perfectly cohesive communities, but often they are overly restrictive because many real communities form dense but not complete subgraphs. Therefore, different variants of relaxed cliques have been de?ned in terms of vertex degree and distance, edge density, and connectivity. They allow to impose application-speci?c constraints a community has to ful?ll such as familiarity and reachability among members and robustness of the communities. Standard compact formulations fail in ?nding optimal solutions even for small instances of such decomposition problems. Hence, we develop exact algorithms based on Dantzig-Wolfe reformulation and branch-and-price techniques. Extensive computational results demonstrate the e?ectiveness of all components of the algorithms and the validity of our approach when applied to social network instances from the literature.
    Keywords: Graph decomposition, community detection, clique relaxations, social network analysis, branch-and-price
    Date: 2015–12–11

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