nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒02‒23
twelve papers chosen by
Stan C. Weeber, McNeese State University

  1. Incomplete information, proportional representation and strategic voting By Orestis Troumpounis; Dimitrios Xefteris
  2. Simple Centrifugal Incentives in Spatial Competition By Laussel, Didier; Le Breton, Michel; Xefteris, Dimitrios
  3. Could exit rules be self-enforcing in the EU? The cases of France and Germany By Kappius, Robert; Neumärker, Bernhard
  4. What is new in the ‘borderlands’? The influence of EU external policy-making on security in Tunisia and Morocco after the uprisings By Federica Zardo; Francesco Cavatorta
  5. Voluntary Cooperation in Local Public Goods Provision. An Experimental Study By Andrej Angelowski; Daniela Di Cagno; Werner Güth; Francesca Marazzi; Luca Panaccione
  6. Raising the Price of Talk: An Experimental Analysis of Transparent Leadership By Daniel Houser; David M. Levy; Kail Padgitt; Sandra J. Peart; Erte Xiao
  7. Identity-driven Cooperation versus Competition By Snower, Dennis J.; Bosworth, Steven J.
  8. Putting the Demos Back Into the Concept of Democratic Quality By Mayne, Quinton; Geissel, Brigitte
  9. Sequential decision making in merger control By Damien Neven; Vilen Lipatov; Gregor Langus
  10. Collective intertemporal choice: time consistency vs. time invariance By Antony Millner; Geoffrey Heal
  11. Economic targets and loss-aversion in international environmental cooperation By İriş, Doruk
  12. Impact of altruistic behavior on group cooperation: A mechanism working in the presence of an altruist may solve the public goods provision problem By Hiroki Ozono; Yoshio Kamijo; Kazumi Shimizu

  1. By: Orestis Troumpounis; Dimitrios Xefteris
    Abstract: We introduce incomplete information to a multiparty election under proportional representation: each voter knows her preferences and votes strategically to maximize her payoffs, but is uncertain about the number and the preferences of the other voters. Parties are assumed to be purely office motivated and, hence, the resulting governments are always minimum winning. In this framework we prove a) generic existence of equilibria where only two parties receive a positive fraction of the votes and therefore lead to single party governments and b) generic inexistence of equilibria that lead to coalition governments. That is, contrary to common wisdom, a proportional rule is found not to promote sincere voting and to be favorable towards single party governments. The existence of two-party equilibria that lead to single party governments is robust to parties having ideological concerns.
    Keywords: Proportional elections, strategic voters, incomplete information, Duverger's Hypothesis, Poisson games, Gamson's Law
    JEL: D72
    Date: 2015
  2. By: Laussel, Didier; Le Breton, Michel; Xefteris, Dimitrios
    Abstract: This paper studies the effects of introducing centrifugal incentives in an otherwise standard Downsian model of electoral competition. First, we demonstrate that a symmetric equilibrium is guaranteed to exist when centrifugal incentives are induced by any kind of partial voter participation (such as abstention due to indifference, abstention due to alienation, etc.) and, then, we argue that: a) this symmetric equilibrium is in pure strategies, and it is hence convergent, only when centrifugal incentives are sufficiently weak on both sides; b) when centrifugal incentives are strong on both sides (when, for example, a lot of voters abstain when they are su¢ ciently indi¤erent between the two candidates) players use mixed strategies - the stronger the centrifugal incentives, the larger the probability weight that players assign to locations near the extremes; and c) when centrifugal incentives are strong on one side only - say for example only on the right - the support of players'mixed strategies contain all policies except from those that are su¢ ciently close to the left extreme.
    Keywords: Electoral Competition; Spatial Model; Downs; Mixed equilibria; Centrifugal incentives; Abstention.
    Date: 2016–02
  3. By: Kappius, Robert; Neumärker, Bernhard
    Abstract: [Introduction] Exit rules allow for a temporary or permanent withdrawal from international cooperative regimes. For the ongoing crisis in the European Monetary Union (EMU), such rules are seen as a desirable solution to enhance flexibility in case of economic and political shocks in member countries and to restrict fiscal externalities in the Euro zone. As the EU acts as a union of sovereign countries, politically powerful nations like France or Germany are likely to blockade or circumvent such a rule, if it negatively affects their interest. The underlying strategic problem of self-enforceability is largely neglected with respect to an EU exit rule. This contribution to the political economy of exit and escape rules aims at assessing conditions of voluntary adherence to an exit scheme by all parties of a common currency union such as the EMU. [...]
    Date: 2015
  4. By: Federica Zardo; Francesco Cavatorta
    Abstract: The struggle between the contradictory objectives of security and democratic governance has dominated EU discourse, policies and practices when it comes to the southern bank of the Mediterranean since 1995. Ultimately, there is a scholarly consensus on the substantial failure of what had been the normative drive for setting up the partnership: no shared area of prosperity and democracy exists today because security concerns prevailed. As reliable partners for the EU on security issues, Tunisia and Morocco were crucial in entrenching the securitisation of the relationship. This holds true also after the uprisings, as encouraging premises quickly turned into considerable instability in the Middle East and North Africa. This study employs a borderlands approach to analysing the ways in which the EU outsources the management of key ‘border functions’ while attempting to connect the periphery in other issue-areas. More specifically, it examines the implications of the EU’s post-2011 revision of its security ‘cooperation’ with Tunisia and Morocco for two aspects of the relationship. First, it looks at the way in which domestic political reconfigurations have occurred and how these reconfigurations have influenced relations with the EU. Second, it explores the asymmetries of power between the two parties and the degree of ‘leverage’ Tunisia and Morocco have vis-à-vis the EU.Our main contention is that the soul-searching and reflective mode of EU officials was short-lived, and that the rhetoric about past mistakes and new beginnings in the early days of the uprisings has not been matched over time. As enthusiasm for the Arab Spring faded on both sides of the Mediterranean, the EU reverted to a business as usual approach, demanding and obtaining the cooperation of both Tunisia and Morocco, irrespective of the diverging post-uprising trajectories of the two countries.
    Keywords: European Union, Mediterranean, Arab Spring, Security, Neighborhood
    Date: 2016–01
  5. By: Andrej Angelowski (LUISS Guido Carli, Rome); Daniela Di Cagno (LUISS Guido Carli, Rome); Werner Güth (Luiss Guido Carli, Rome; Frankfurt School of Finance and Management, Frankfurt; Max Planck Institute on Collective Goods, Bonn); Francesca Marazzi (Università degli Studi di Roma Tor Vergata); Luca Panaccione (Università degli Studi di Roma Tor Vergata)
    Abstract: In a circular neighborhood with each member having a left and a right neighbor, individuals choose two contribution levels, one each for the public good shared with the left, respectively right, neighbor. This allows for general free riders, who do not contribute at all, and general cooperators, who contribute to both local public goods, as well as for differentiating contributors who contribute in a discriminatory way. Although the two-person local public good games are structurally independent, we investigate whether intra- as well as interpersonal spillover effects arise. We find that participants do not behave as if they are playing two separate public good games, hence that both inter-personal and intrapersonal behavioral spillovers occur. To investigate more clearly motives for voluntary cooperation via analyzing individual adaptations in playing two structurally independent games, we design treatments differing in cooperation incentives (i.e. different MPCR) and structural (a)symmetry of local public goods. We find that when the MPCR is asymmetric, free-riding occurs less, and contributions are more stable over time. We also find that contributions in the asymmetric treatment when MPCR is low are higher than contributions in symmetric treatments with higher MPCR.
    Keywords: Public goods, experiments, voluntary contribution mechanism
    JEL: C91 C72 H41
    Date: 2015–12
  6. By: Daniel Houser (Interdisciplinary Center for Economic Science and Department of Economics, George Mason University); David M. Levy (Center for the Study of Public Choice and Department of Economics, George Mason University); Kail Padgitt (Tax Foundation); Sandra J. Peart (University of Richmond); Erte Xiao (Department of Social and Decision Sciences Carnegie Mellon University)
    Abstract: Does transparent leadership promote cooperative groups? We address this issue using a public goods experiment with exogenously selected leaders who are able to send non-binding contribution suggestions to the group. To investigate the effect of transparency in this setting we vary the ease with which a leader’s actions are known by the group. We find leaders’ suggestions encourage cooperation in all treatments, but that both leaders and their group members are more likely to follow leaders’ recommendations when institutions are transparent so that non-leaders can easily see what the leader does. Consequently, transparency leads to significantly more cooperation, higher group earnings and reduced variation in contributions among group members. Length: 46
    Keywords: experimental economics
    Date: 2014–06
  7. By: Snower, Dennis J. (Kiel Institute for the World Economy); Bosworth, Steven J. (Kiel Institute for the World Economy)
    Abstract: This paper seeks to extend the domain of identity economics by exploring motivational foundations of in-group cooperation and out-group competition. On this basis, we explore the reflexive interaction between individual economic decisions and social identities in response to technological change in market economies. Our analysis explores how technological change falling on marketable goods and services, rather than nonmarket caring relationships, leads to a restructuring of identities, which increases the scope of individualism and promotes positional competition at the expense of caring activities. Since positional competition generates negative externalities while caring activities create positive ones, these developments have important welfare implications.
    Keywords: motivation, reflexivity, cooperation, identity, technological progress, bowling alone
    JEL: A13 D03 D62 D71 I31 O10
    Date: 2016–02
  8. By: Mayne, Quinton; Geissel, Brigitte
    Abstract: In this paper, we argue that the concept of democratic quality consists of two necessary, but independently insufficient, components. The first is an opportunity-structure component, which includes the institutional and structural opportunities that allow for democratic rule. The second is a citizen component, which refers to the ways in which citizens can and do breathe life into existing institutional opportunities for democratic rule. Based on work from political theory we show how different ontologies or models of democracy place different demands on citizens as much as they do on institutions. We demonstrate the need for quality-of-democracy research to engage with work in political behavior and political psychology, from which it has traditionally been disconnected. In doing so, we provide a parsimonious analytic framework for a theory-driven selection of indicators related to three key citizen dispositions: namely, democratic commitments, political capacities, and political participation. The paper ends with a brief discussion of important implications of our argument for the future study of democratic quality.
    Date: 2016
  9. By: Damien Neven (IHEID, The Graduate Institute of International and Development Studies, Geneva); Vilen Lipatov; Gregor Langus
    Abstract: We model merger control procedures as a process of sequential acquisition of information and compare US and EU procedures. In the US, the authorities do not have to justify their decision to require further information (issue a second request), whereas in the EU, the authorities face a di_erent (enforceable) standard of proof in phase I relative to phase II. We _nd that in the absence of remedies, the US procedure is always superior in terms of expected consumer welfare. When we allow for remedies, we _nd that, compared to the US, merging parties in the EU have more scope to propose remedies in phase I that will preempt the authorities from uncovering unfavorable information in phase II, and this might reduce expected consumer welfare. However, the higher standard of proof in phase I can also in some circumstances act as a commitment not to accept remedies below some threshold and yield a higher expected consumer welfare in the EU. Our model also shows that for global mergers that have the same effect in the two jurisdictions, a decision to trigger a Phase II in the EU yields the same expected consumer welfare as a clearance in Phase I with remedies in the US. However, the converse is not true.
    Keywords: merger procedure, competition policy
    JEL: K21 K40 L40
    Date: 2014–11
  10. By: Antony Millner; Geoffrey Heal
    Abstract: We study collective choice when individuals have heterogeneous discounted utilitarian preferences. Two attractive properties of intertemporal preferences are indistinguishable for individuals, but have dramatically different implications for collective choice. Time Consistency requires a plan that is optimal at one evaluation date to be optimal at all later evaluation dates, while Time Invariance requires preferences to be unchanged under translations of the time axis. We study the implications of these two properties in a tractable dynamic model that captures both common resource and public goods problems. Utilitarian social planners implement the first best if collective preferences are time consistent, but not if they are time invariant. Decentralized alternatives { property rights (for common resources) and voting (for public goods) { can strictly improve on the planning equilibrium if social preferences are time invariant. We reflect on the implications of these fndings for dynamic welfare economics. Revealed preference cannot determine which property we should adopt, but each property is normatively attractive in some contexts.
    Date: 2015–12
  11. By: İriş, Doruk
    Abstract: In the standard emission problem, each country’s ruling party decides on an optimal level of emissions by analyzing the cost and benefit to the country. However, such policy decisions are often influenced by political parties’ incentives to be elected. Voters tend to give higher priority to economic issues than they do to environmental ones. As a result, political parties have additional incentives to reach a critical economic benefit level, at a cost of higher emission level, in order to satisfy voters’ expectations in economic issues. Therefore, this study explores the implications of political parties being averse to insufficient economic performance relative to a critical economic target level on sustaining an international environmental agreement on emission levels. In doing so, we allow countries to have asymmetric concerns about economic targets, as well as asymmetric technology levels. We find that stronger concerns about economic targets deter the most cooperative emission levels countries could jointly sustain. Furthermore, technological asymmetry could either deepen or offset this impact. These results suggest that efforts on achieving substantial international environmental agreements should be supported at the citizen level to eliminate the adverse effects.
    Keywords: Emission Problem; Economic Targets; Loss-Aversion; International Environmental Agreements; Repeated Game
    JEL: D03 Q50 Q58
    Date: 2015–09–15
  12. By: Hiroki Ozono (Faculty of Law, Economics and Humanities, Kagoshima University); Yoshio Kamijo (Department of Management, Kochi University of Technology); Kazumi Shimizu (School of Political Science and Economics, Waseda University)
    Abstract: In this paper, we propose a new mechanism to achieve cooperation in public goods provision. The mechanism is named GEM, which stands for gradualism, endogeneity, and modification, its important properties. In a public goods game with GEM, spread over 20 periods, a target contribution is presented to the players in each period. The target is gradually increased when all members reach it. If players contribute less than the target in a certain period, the minimum contribution will be treated as the next period’s target. In the experiment, the GEM mechanism achieved a high level of cooperation when the participants’contributions were restricted to the target. However, when participants were allowed to contribute more than the target, cooperation was not achieved because of the presence of“excessive altruists”—participants who contributed more than the target.This is because excessive cooperation facilitated free riding by other members. Finally,we discuss the limitation and possibilities of the GEM mechanism.
    Keywords: cooperation, public goods game, altruist, experiment
    JEL: C72 C91 C92 M54
    Date: 2014–08

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