nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒04‒09
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Primaries: the unifying force By Rafael Hortala-Vallve; Hannes Mueller
  2. Liberation Technology: Mobile Phones and Political Mobilization in Africa By Marco Manacorda; Andrea Tesei
  3. Does education increase political participation? Evidence from Indonesia By Parinduri, Rasyad
  4. Categorization and Coordination By Vessela Daskalova; Nicolaas J. Vriend; ;
  5. Political Institutions and Federalism: A "Strong" Decentralization Theorem By Raul A. Ponce-Rodriguez; Charles R. Hankla; Jorge Martinez-Vazquez; Eunice Heredia-Ortiz
  6. "Measuring the extent and implications of corporate political connections in prewar Japan" By Tetsuji Okazak; Michiru Sawada
  7. Economic and Political Inequality: The Role of Political Mobilization By Amat, Francesc; Beramendi, Pablo
  8. Legislative Bargaining with Endogenous Rules By Eguia, Jon X.; Shepsle, Kenneth A.
  9. Bureaucrats or Politicians? Political Parties and Antidumping in the US By Aquilante, Tommaso
  10. Cooperation in the Finitely Repeated Prisoner's Dilemma By Matthew Embrey; Guillaume R. Frechette; Sevgi Yuksel
  11. Robustness of Full Revelation in Multisender Cheap Talk By Margaret Meyer; Ines Moreno de Barreda; Julia Nafziger
  12. Precarious Workers? Movements and the Neoliberal State By Meyer, Rachel
  13. Domestic facilitators and impediments to EU democracy promotion in its Eastern neighbourhood: The cost-benefit balance of norm adoption By Buscaneanu, Sergiu
  14. Effciency and equilibrium in network games: An experiment By Edoardo Gallo; Chang Yan; ;
  15. Count To Ten Before YouTrade: Evidence On The Role Of Deliberation In Experimental Financial Markets By Giovanni Ferri; Matteo Ploner; Matteo Rizzolli
  16. Immunity to Credible Deviations from the Truth By Salvador Barberà; Dolors Berga; Bernardo Moreno

  1. By: Rafael Hortala-Vallve; Hannes Mueller
    Abstract: We present a formal model of intra-party politics to explain candidate selection within political parties. We think of parties as heterogeneous groups of individuals who aim to implement a set of policies but who differ in their priorities. When party heterogeneity is too great, parties are in danger of splitting into smaller yet more homogeneous political groups. In this context we argue that primaries can have a unifying role if the party elite cannot commit to policy concessions. Our model shows how three factors interact to create incentives for the adoption of primary elections, namely (1) the alignment in the preferred policies of various factions within a party, (2) the relative weight of each of these factions and (3) the electoral system. We discuss the existing empirical literature and demonstrate how existing studies can be improved in light of our theoretical predictions to provide a new, structured perspective on the adoption of primary elections.
    Keywords: political parties; primaries; candidate selection
    JEL: D71 D72
    Date: 2015
  2. By: Marco Manacorda (Queen Mary University of London, CEP (LSE), CEPR & IZA); Andrea Tesei (Queen Mary University of London & CEP (LSE);)
    Abstract: Can digital information and communication technology (ICT) foster mass political mobilization? We use a novel geo-referenced dataset for the entire African continent between 1998 and 2012 on the coverage of mobile phone signal together with geo-referenced data from multiple sources on the occurrence of protests and on individual participation in protests to bring this argument to empirical scrutiny. We find that mobile phones are instrumental to mass mobilization during economic downturns, when reasons for grievance emerge and the cost of participation falls. Estimated effects are if anything larger once we use an instrumental variable approach that relies on differential trends in coverage across areas with different incidence of lightning strikes. The results are in line with insights from a network model with imperfect information and strategic complementarities in protest provision. Mobile phones make individuals more responsive to both changes in economic conditions - a mechanism that we ascribe to enhanced information - and to their neighbors' participation - a mechanism that we ascribe to enhanced coordination. Empirically both effects are at play, highlighting the channels through which digital ICT can alleviate the collective action problem.
    Keywords: Mobile phones, Collective action, Africa, Geo-referenced data
    JEL: D70 O55 L96
    Date: 2016–03
  3. By: Parinduri, Rasyad
    Abstract: I examine whether education increases voter turnout and makes better voters using an exogenous variation in education induced by an extension of Indonesia's school term length, which fits a fuzzy regression discontinuity design. The longer school year increases education, but I do not find evidence that education makes people more likely to vote in elections or changes whether they consider political candidates' religion, ethnicity, or gender important when they vote. If anything, education seems to make voters more likely to think candidates' development programs are important.
    Keywords: education, political participation, regression discontinuity design, Asia, Indonesia
    JEL: D72
    Date: 2016–03
  4. By: Vessela Daskalova; Nicolaas J. Vriend; ;
    Abstract: The use of coarse categories is prevalent in various situations and has been linked to biased economic outcomes, ranging from discrimination against minorities to empirical anomalies in financial markets. In this paper we study economic rationales for categorizing coarsely. We think of the way one categorizes one's past experiences as a model of the world that is used to make predictions about unobservable attributes in new situations. We first show that coarse categorization may be optimal for making predictions in stochastic environments in which an individual has a limited number of past experiences. Building on this result, and this is a key new insight from our paper, we show formally that cases in which people have a motive to coordinate their predictions with others may provide an economic rationale for categorizing coarsely. Our analysis explains the intuition behind this rationale.
    Keywords: categorization, prediction, decision-making, coordination, learning.
    JEL: D83 C72
    Date: 2014–06–30
  5. By: Raul A. Ponce-Rodriguez (Department of Economics, Universidad Autonoma de Ciudad Juarez); Charles R. Hankla (Department of Political Science, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University Author-Workplace-Homepage:; Eunice Heredia-Ortiz (Developemtn Alternatives Inc., DAI)
    Abstract: In this article, we investigate how differences in the political institutions necessary for implementing decentralization reform may affect the efficiency and welfare properties of decentralization itself. We incorporate insights from political science and economics into a rigorous and formal extension of the influential “decentralization theorem” first developed by Oates in 1972. In our analysis, we go beyond Oates by producing a strong decentralization theorem that identifies the political conditions under which democratic decentralization dominates centralization even in the presence of interjurisdictional spillovers. More specifically, we find that beneficial outcomes for public service delivery will obtain when democratic decentralization (i.e. the creation of popularly elected sub-national governments) is combined with party centralization (i.e. the power of national party leaders to nominate candidates for sub-national office). We also find that the participation rules of primaries, whether closed or open, have important implications for the expected gains from decentralization. Most notably, we find that, when primaries are closed, even Oates’ convhaentional decentralization theorem does not hold. In summary, our theory shows that political institutions matter considerably in determining the welfare gains of decentralization outcomes.
    Date: 2016–03
  6. By: Tetsuji Okazak (Faculty of Economics, The University of Tokyo); Michiru Sawada (College of Economics, Nihon University)
    Abstract: This paper explores the extent of political connections of firms, and examines their implications on firm values, using firm-level data from prewar Japan. We collect the data of directors, their positions in the House of Representatives, stock prices and financial performance, on publicly traded companies in late 1920s and early 1930s Japan. It is found that almost 20% of the publicly traded companies had political connections through politician directors. Especially, firms in the regulated industries such as the electric power and railroad, were more likely to have political connections. Overall, there is no evidence that connections with politics added firm values. On the other hand, with respect to those firms that newly obtained political connections, we found that the stock returns improved from the pre-election period to the post-election period.
  7. By: Amat, Francesc (Universitat Pompeu Fabra); Beramendi, Pablo (Duke University)
    Abstract: This paper analyzes the relationship between economic and political inequality. Beyond the view that inequality reduces turnout we document a non-linear relationship between them. To explain these patterns we argue that parties' strategies to target and mobilize low income voters re ect the level of economic inequality and development. Under high inequality and low development, clientelism becomes the dominant form of political competition and turnout in- equality declines. As societies grow and inequality recedes, clientelism becomes suboptimal and parties turn to mobilize voters around programmatic o erings. As a result, turnout inequality increases. Empirically, we produce two analyses. First, we identify the relationship between political mobilization strategies, inequality and turnout by exploiting the randomized allocation of anti-fraud measures across Brazilian municipalities in the early 2000s. Second, we address the generalizability of our ndings by carrying out a cross-national multilevel analysis of the relationship between inequality, strategies for political mobilization, and turnout inequality.
    Keywords: JEL Classification:
    Date: 2016
  8. By: Eguia, Jon X. (Michigan State University and University of Bristol); Shepsle, Kenneth A. (Harvard University)
    Abstract: We study repeated legislative bargaining in an assembly that chooses its bargaining rules endogenously and whose members face an election after each legislative term. An agenda protocol or bargaining rule assigns to each legislator a probability of being recognized to make a policy proposal in the assembly. We predict that the agenda protocol chosen in equilibrium disproportionately favors more senior legislators, granting them greater opportunities to make policy proposals, and it generates an incumbency advantage to all legislators.
    Keywords: JEL Classification:
    Date: 2016
  9. By: Aquilante, Tommaso
    Abstract: Antidumping (AD) is the most widely used contingent protection measure. In the United States, key decisions on AD are delegated to the International Trade Commission (ITC), an independent agency composed of six non-elected commissioners. Using a newly collected dataset, I study the determinants of all final ITC votes on AD during the 1980-2010 period. Contrary to the view that ITC commissioners are bureaucrats who simply follow technical rules, I find that their decisions crucially depend on which party has appointed them (the selection effect) and on the trade policy interests of key senators in that party (the pressure effect): whether (Democratic) Republican-appointed commissioners vote in favor of AD depends crucially on whether the petitioning industry is key (in terms of employment) in the states represented by leading (Democratic) Republican senators.
    Keywords: Antidumping policy, Political parties
    JEL: D72 F10 F13 F14 P16
    Date: 2015–11
  10. By: Matthew Embrey (University of Sussex); Guillaume R. Frechette (NYU); Sevgi Yuksel (UCSB)
    Abstract: More than half a century after the first experiment on the finitely repeated prisoner's dilemma, evidence on whether cooperation decreases with experience, as suggested by backward induction, remains inconclusive. This paper provides a meta-analysis of prior experimental research and reports the results of a new experiment to elucidate how cooperation varies with the environment in this canonical game. We describe forces that affect initial play (formation of cooperation) and unraveling (breakdown of cooperation). First, contrary to the backward induction prediction, the parameters of the repeated game have a signifcant effect on initial cooperation. We identify how these parameters impact the value of cooperation - as captured by the size of the basin of attraction of Always Defect- to account for an important part of this effect. Second, despite these initial differences, the evolution of behavior is consistent with the unraveling logic of backward induction for all parameter combinations. Importantly, despite the seemingly contradictory results across studies, the paper establishes a systematic pattern of behavior: Subjects converge to using threshold strategies that conditionally cooperate until a threshold round; and conditional on establishing cooperation, the first defection round moves earlier with experience. Simulation results generated from a learning model estimated at the subject level provide insights on the long-term dynamics and the forces slowing down the unravelling of cooperation.
    Keywords: repeated games, prisoners dilemma, threshold strategies, basin of attraction
    JEL: C73 C92
    Date: 2016–02
  11. By: Margaret Meyer; Ines Moreno de Barreda; Julia Nafziger
    Abstract: Abstract: This paper studies information transmission in a two-sender, multidimensional cheap talk setting where there are exogenous restrictions on the feasible set of policies for thereceiver. Such restrictions, which are present in most applications, can, by limiting the punishments available to the receiver, prevent the existence of fully revealing equilibria(FRE). We focus on FRE that are i) robust to small mistakes by the senders, in that small differences between the senders’ messages result in only small punishments by the receiver, and ii) independent of the magnitudes of the senders’ bias vectors. For convex policy spaces in an arbitrary number of dimensions, we prove that if there exists a FRE satisfying property ii), then there exists one satisfying both i) and ii). Thus the requirement of robustness is, under these assumptions, not restrictive. For convex policy spaces in two dimensions, we provide a simple geometric condition, the Local Deterrence Condition, on the directions of the senders’ biases relative to the frontier of the policy space, that is necessary and sufficient for the existence of a FRE satisfying i) and ii). We also provide a specific policy rule, the Min Rule, for the receiver that supports a FRE satisfying i) and ii) whenever one exists. The Min Rule is the anonymous rule that punishes incompatible reports in the least severe way, subject to maintaining the senders’ incentives for truthtelling, no matter how large their biases. We characterize necessary and sufficient conditions for collusion-proofness of a FRE supported by the receiver using the Min Rule and show that if such a FRE is not collusion-proof, then no other FRE satisfying ii) can be collusion-proof. We extend our existence results to convex policy spaces in more than two dimensions and to non-convex two-dimensional spaces. Finally, our necessary and sufficient condition, as well as our specific policy rule, can be easily adapted if the receiver is uncertain about the directions of the biases and/or if the biases vary with the state of the world.
    Keywords: Cheap talk, information transmission, multisender, full revelation, robustness
    JEL: D83 D82 C72
    Date: 2016–03–23
  12. By: Meyer, Rachel
    Abstract: How can we best conceptualize working-class mobilization in the post-Fordist regime of flexible accumulation? With the increasing precariousness of employment, how do workers press their demands? While the emphasis thus far has been on the melding of workplace and community organizing, which is a hallmark of ?social movement unionism,? I argue that there is a countervailing trend afoot that has received far less attention?that is, a bifurcation of strategies. Only those select workers who are in powerful structural locations, such as transportation and distribution workers, are in a position to take the economic route while the swelling ranks of the precariat have turned instead to the political sphere to press their demands. Additionally, I address what this bifurcation means for labor's power and working-class formation. Does the separation of economic and political protest lead to a weakened working class? Such a separation has been thought to undermine class-based solidarities, with community identities undermining workplace-based ones. I argue, however, that the contemporary context is different in that precarious workers? mobilizations in the community have become explicitly class-based. In contrast to the long-standing notion of the workplace as the hotbed of working-class consciousness, the community has emerged as a locus of class-based perspectives and solidarities. Throughout I emphasize not just strategy and material gain for the working class, but also shifts in civil society, organizations, and subjectivity. My argument is developed through a case study of the Chicago Jobs and Living Wage Campaign, which is then compared to other cases of precarious worker mobilization around the globe. Examining the tensions inherent in precarious workers? political mobilization in the context of the post-Fordist neoliberal state, the study has implications for labor and social movements, class formation, citizenship, and contemporary capitalism
  13. By: Buscaneanu, Sergiu
    Abstract: This paper argues that the balance between the size of EU incentives and the costs of democratic transformation has impeded democratic consolidation in Eastern ENP countries. Whereas the cost-benefit balance of norm adoption appears to be a relevant predictor of regime trajectories in this region, patterns of economic development do not match those of political regimes. Institutional design seems to fit better regime dynamics in Eastern ENP countries, but it is also possible that the nature of main political institutions depends on the regime. The road from institutions to the regime is a two-way road. Finally, the number of parties in power within executives does not say much about regime trajectories. The degree of a pro-European (Western) stance of the governing party or coalition must be incorporated into the analysis. To this end, a coalitional government that had a strong pro-EU identity proved to be a promising facilitator of external democracy promotion efforts.
    Keywords: cost-benefit balance,structures,institutions,actors,regimes,Eastern ENP countries
    Date: 2016
  14. By: Edoardo Gallo; Chang Yan; ;
    Abstract: The tension between efficiency and equilibrium is a central feature of economic systems. In many contexts, social networks mediate this trade-off: an individual's network position determines equilibrium play, and social relations allow coordination on an efficient norm. We examine this trade-o in a network game with a unique Nash equilibrium, but such that agents can achieve a higher payoff by following a "collaborative norm". Subjects establish and maintain a collaborative norm in the circle, but the norm weakens with the introduction of one asymmetric node in the wheel. In complex and asymmetric networks of 15 and 21 nodes, the norm disappears and subjects' play converges to Nash on every node. We provide evidence that subjects base their decisions on their degree, rather than the overall network structure. Methodologically, the paper shows the capabilities of UbiquityLab: a novel platform to conduct interactive experiments online with a large number of participants.
    Keywords: network, online experiment, network game, strategic complements.
    JEL: C99 D03 D85 Z13
    Date: 2015–02–09
  15. By: Giovanni Ferri (LUMSA University); Matteo Ploner (University of Trento); Matteo Rizzolli (LUMSA University)
    Abstract: Financial bubbles cause misallocation of resources and even systemic crises. Experimental finance has long tested both the determinant of financial bubbles’ formation and institutional designs meant at solving such bubbles. In line with this literature we explore whether the dual process theory proposed by Kahneman (2011) can explain bubbles’ formation. As compared with our benchmark FAST treatment, we deliberately slow down the decision making process in our SLOW treatment and thus we induce more System-2 type reasoning. We show that high volatility and extreme realizations are greatly reduced and average prices remain consistently aligned with the expected fundamental value once risk-aversion is considered. We also show that the main differences are driven by abnormal ask prices in the FAST treatment that are consistently withdrawn in the SLOW treatment. We also show that the SLOW condition clears out the hot-hand fallacy. We finally derive some tentative policy implications concerning slowing down finance.
    Keywords: Rational vs. emotional choice; Slow vs. fast trading; Dual process theory; System-1 and System-2; Speculative bubbles; Behavioral finance.
    Date: 2016–03
  16. By: Salvador Barberà; Dolors Berga; Bernardo Moreno
    Abstract: We introduce a new notion of non-manipulability by groups, based on the idea that some of the agreements among a set of potential manipulators may be credible, while others may not. The derived notion of immunity to credible manipulations by groups is intermediate between individual and group strategy-proofness. We show that our new concept has bite, by applying it to the analysis of a large family of public good decision problems in separable environments, where there exist many attractive strategy-proof rules that are, however, manipulable by groups. In these environments we show that some of these rules are indeed, immune to credible group manipulations, while others are not. We provide characterization results that separate these two classes.
    Keywords: group strategy-proofness, credibility, Implementation, voting
    JEL: D71
    Date: 2016–04

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