nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒05‒08
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Primaries: the unifying force By Rafael Hortala-Vallve; Hannes Mueller
  2. Flexibilising the Labour Market: Who Wants to Loosen Employment Protection Legislation in Italy? By Maria Chiara Morandini
  3. Persuasion and Gender: Experimental Evidence from Two Political Campaigns By Galasso, Vincenzo; Nannicini, Tommaso
  4. Heterogeneity and the formation of risk-sharing coalitions By Fernando Jaramillo; Hubert Kempf; Fabien Moizeau
  5. Delegation and Public Pressure in a Threshold Public Goods Game: Theory and Experimental Evidence By İriş, Doruk; Lee, Jungmin; Tavoni, Alessandro
  6. Political Economy of Healthcare Provision: Evidence from India By Subham Kailthya; Uma Kambhampati
  7. The Electoral Dynamics of Human Development By Vítor Castro; Rodrigo Martins
  8. (In)visible Hands in Matching Markets. By Alcalde, José
  9. Not too close, not too far: testing the Goldilocks principle of ‘optimal’ distance in innovation networks By Rune Dahl Fitjar; Franz Huber; Andrés Rodríguez-Pose
  10. Redistributive Politics and the Tyranny of the Middle Class By Floris T. Zoutman; Bas Jacobs; Egbert L. W. Jongen
  11. Regrets, learning and wisdom By Damien Challet
  12. The Unanimity Rule and Extremely Asymmetric Committees By Ben-Yashar, Ruth; Danziger, Leif
  13. Does Trade Liberalization with China Influence U.S. Elections? By Che, Yi; Lu, Yi; Pierce, Justin R.; Schott, Peter K.; Tao, Zhigang
  14. Delay and deadlines: freeriding and information revelation in partnerships By Arthur Campbell; Florian Ederer; Johannes Spinnewijn
  15. Conditional contracts and sustainability:targeting lessons from an open access fishery By Hopfensitz, Astrid; Mantilla, Cesar; Miquel-Florensa, Josepa
  16. Welfare Effects of Endogenous Information Acquisition and Disclosure in Duopoly Markets By Kazunori Miwa
  17. Everybody's doing it: On the Emergence and Persistence of Bad Social Norms By David Smerdon; Theo Offerman; Uri Gneezy
  18. Crowdfunding in Wine By Bargain, Olivier; Cardebat, Jean-Marie; Vignolles, Alexandra

  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: Maria Chiara Morandini (Centre d'Economie de la Sorbonne)
    Abstract: This paper presents an explanatory analysis of the political economy of recent labour market reforms recently implemented in Italy. Analysing preferences for a general reduction in employment protection through 2011-13 ITANES survey data, results are partially in line with the insider-outsider theory: self-employed, retired people, managers, craft business and shop owners are in favour of such institutional change as are retired that are not concerned by this kind of reform. Support from “outsiders”, unemployed and atypical workers did not strongly emerge. Ideologically, positive opinions are widespread among right-wing voters whilst people feeling chose to trade unions oppose it. Geographically, consensus is greather in the industrialised North-East of the country. Comparing our results with findings on voting behaviour in 2013, we advance the hypothesis that the current incumbents' political strategy is not as paradoxical as it seems. At odds with the idea of socialist parties defending “insiders” unionised workers and in line with a generalised detachment between the working class and socialist parties, both the main leftist and centrist parties in the ruling coalition are in fact gaining consensus among the social groups that are the most favourable to labour market flexibilisation, making these policy consistent with an attempt to please these constituencies
    Keywords: labour market reforms; public preferences; survey analysis; italian capitalism
    JEL: P16 J08 D72
    Date: 2016–03
  3. By: Galasso, Vincenzo; Nannicini, Tommaso
    Abstract: This paper investigates the differential response of male and female voters to compet-itive persuasion in political campaigns. We implemented a survey experiment during the (mixed gender) electoral race for mayor in Milan (2011), and a field experiment during the (same gender) electoral race for mayor in Cava de' Tirreni (2015). In both cases, a sample of eligible voters was randomly divided into three groups. Two were exposed to either a positive or a negative campaign by one of the opponents. The third-control-group received no electoral information. In Milan, the campaigns were administered online and consisted of a bundle of advertising tools (videos, texts, slogans). In Cava de' Tirreni, we implemented a large scale door-to-door campaign in collaboration with one of the candidates, randomizing positive vs. negative messages. In both experiments, stark gender differences emerge. Females vote more for the opponent and less for the incumbent when they are exposed to the opponent's positive campaign. Exactly the opposite occurs for males. These gender differences cannot be accounted for by gender identification with the candidate, ideology, or other observable attributes of the voters.
    Keywords: competitive persuasion.; gender di erences; political campaigns; randomized controlled trials
    JEL: D72 J16 M37
    Date: 2016–04
  4. By: Fernando Jaramillo (Universidad del Rosario - Facultad de Economia); Hubert Kempf (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics); Fabien Moizeau (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We study the relationship between the distribution of individuals' attributes over the pop-ulation and the extent of risk sharing in a risky environment. We consider a society where individuals voluntarily form risk-sharing groups in the absence of financial markets. We obtain a partition of society into distinct coalitions leading to partial risk sharing. When individuals differ only with respect to risk, the partition is homophily-based: the less risky agents congreg-ate together and reject more risky ones into other coalitions. The distribution of risk affects the number and size of these coalitions. It turns out that individuals may pay a lower risk premium in more risky societies. We show that a higher heterogeneity in risk leads to a lower degree of partial risk sharing. The case of heterogenous risk aversion generates similar results. The empirical evidence on partial risk sharing can be understood when the endogenous partition of society into risk-sharing coalitions is taken into account.
    Keywords: Risk Sharing,Group Membership
    Date: 2015–05
  5. By: İriş, Doruk; Lee, Jungmin; Tavoni, Alessandro
    Abstract: The provision of global public goods, such as climate change mitigation and managing fisheries to avoid overharvesting, requires the coordination of national contributions. The contributions are managed by elected governments who, in turn, are subject to public pressure on the matter. In an experimental setting, we randomly assign subjects into four teams, and ask them to elect a delegate by a secret vote. The elected delegates repeatedly play a one shot public goods game in which the aim is to avoid losses that can ensue if the sum of their contributions falls short of a threshold. Earnings are split evenly among the team members, including the delegate. We find that delegation causes a small reduction in the group contributions. Public pressure, in the form of teammates’ messages to their delegate, has a significant negative effect on contributions, even though the messages are designed to be payoff-inconsequential (i.e., cheap talk). The reason for the latter finding is that delegates tend to focus on the least ambitious suggestion. In other words, they focus on the lower of the two public good contributions preferred by their teammates. This finding is consistent with the prediction of our model, a modified version of regret theory.
    Keywords: Delegation, Cooperation, Threshold Public Goods Game, Climate Experiment, Regret Theory, Research Methods/ Statistical Methods, C72, C92, D81, H4, Q54,
    Date: 2016–04–15
  6. By: Subham Kailthya (Department of Economics, University of Reading); Uma Kambhampati (Department of Economics, University of Reading)
    Abstract: The public provision of healthcare is common in democracies. Yet very little is known as to how political-economic factors are related to healthcare service delivery. In this paper, we examine the role of electoral participation and political competition in affecting healthcare service delivery at the sub-national level in India. However, examining this issue is less than straightforward for many reasons: first, systematic biases in health perceptions and priming of the electorate to ambient health means that existing health conditions affect expectations of the electorate from the government regarding healthcare provision; secondly, elected leaders favor providing more visible public goods vis-a-vis less visible ones to increase their chances of electoral success. And third, weak enforcement mechanisms perpetuate conditions conducive to rent-seeking. All these factors, create conditions for the presence of multiple equilibria in public provision. A least squares approach that focuses on the conditional mean alone misses this important point. We therefore employ a quantile regression method that examines the impact of political-economic factors at different points along the conditional distribution to yield a more comprehensive picture. We find signiffcant differences in the impact of political-economic variables along the conditional distributions of healthcare access and system capacity variables. Our results are also consistent with the 'visibility-effect' hypothesis in public provision: elected leaders respond differently to political-market characteristics when the public good is more, rather than less, visible. We find that health care access improves with greater electoral participation and diminishes with political competition whereas, it is the opposite for system capacity. The combined effect however limits access and increases provision of system capacity.
    Keywords: local government spending, healthcare, quantile regressions, India
    Date: 2016–04–21
  7. 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 analyses the impact of elections on the dynamics of human development in a panel of 82 countries over the period 1980-2013. The incidence of partisan and political support effects is also taken into account. A GMM estimator is employed in the empirical analysis and the results point out to the presence of an electoral cycle in the growth rate of human development. Majority governments also influence it, but no clear evidence is found regarding partisan effects. The electoral cycles have proved to be stronger in non-OECD countries, in countries with less frequent elections, with lower levels of income and human development, in presidential and non-plurality systems and in proportional representation regimes. They have also become more intense in this millennium.
    Keywords: Human development; Political cycles; Elections; Panel data models.
    JEL: C33 D72 I31 O15
    Date: 2016
  8. By: Alcalde, José (IUDESP, University of Alicante)
    Abstract: This paper explores sequential mechanisms for (many-to-one) two-sided matching problems. In these mechanisms, agents belonging to a side of the market determine an eligibility restriction; and the agents on the other side select their preferred mates, constrained by the above eligibility. We find out some asymmetries, as well as some coincidences, related to the mechanisms in which the first decision is made by the individuals or the institutions. In particular, for the two classes of mechanisms, it is likely that the outcome is stable. This can be interpreted as if the sequentiality in which agents decide takes the place of the coordination among the whole society. As a main difference, it is found that an extra coordination between individuals is exercised when they impose the eligibility restriction. A consequence of such an ‘over-coordination’ is that the likely outcome coincides with the individuals optimal stable matching. The dual result yielding the institutions’ optimal stable allocation does not hold when these agents are the ones to impose eligibility.
    Keywords: Sequentiality; (Pairwise) Stability; Matching Markets
    JEL: C78 D61 D61 D78
    Date: 2016–04–12
  9. By: Rune Dahl Fitjar; Franz Huber; Andrés Rodríguez-Pose
    Abstract: This paper analyses how the formation of collaboration networks affects firm-level innovation by applying the ‘Goldilocks principle’. The ‘Goldilocks principle’ of optimal distance in innovation networks postulates that the best firm-level innovation results are achieved when the partners involved in the network are located at the ‘right’ distance, i.e. ‘not too close and not too far’ from one another, across non-geographical proximity dimensions. This principle is tested on a survey of 542 Norwegian firms conducted in 2013, containing information about firm-level innovation activities and key innovation partners. The results of the ordinal logit regression analysis substantiate the Goldilocks principle, as the most innovative firms are found amongst those that collaborate with partners at medium levels of proximity for all non-geographical dimensions. The analysis also underscores the importance of the presence of a substitution-innovation mechanism, with geographical distance problems being compensated by proximity in other dimensions as a driver of innovation, whilst there is no support for a potential overlap-innovation mechanism.
    Keywords: Proximities, innovation, networks, collaboration, Goldilocks principle, Norway
    JEL: O31 O33 D85
    Date: 2016–05
  10. By: Floris T. Zoutman (NHH Norwegian School of Economics, Norway); Bas Jacobs (Erasmus University Rotterdam, the Netherlands); Egbert L. W. Jongen (CPB Netherlands Bureau for Economic Policy Analysis, The Hague; and Leiden University, the Netherlands)
    Abstract: The Netherlands has a unique tradition in which all major Dutch political parties provide CPB Netherlands Bureau for Economic Policy Analysis with highly detailed proposals for the tax-benefit system in every national election. This information allows us to quantitatively measure the redistributive preferences of political parties. For each political party we calculate social welfare weights by income level using the inverse optimal-tax method. We find that all political parties roughly give a higher social welfare weight to the poor than to the rich. Furthermore, left-wing parties attach higher social welfare weights to the poor and lower social welfare weights to the rich than right-wing parties do. However, we also discover two anomalies. First, all political parties give a much higher social welfare weight to middle incomes than to the working and non-working poor. Second, all Dutch political parties attach a slightly negative social welfare weight to the rich by setting top rates beyond the revenue-maximizing 'Laffer' rate. Finally, we detect a strong political status quo, since social welfare weights of all political parties hardly deviate from the welfare weights that are implied by the pre-existing tax-benefit system. We argue that political-economy considerations are key in understanding the political status quo and why middle-income groups are able to lower their tax burdens at the expense of both the low- and high-income groups.
    Keywords: Inverse optimal-tax method; revealed social preferences; political parties; optimal taxation; income redistribution
    JEL: C63 D63 H21
    Date: 2016–04–25
  11. By: Damien Challet
    Abstract: This contribution discusses in what respect Econophysics may be able to contribute to the rebuilding of economics theory. It focuses on aggregation, individual vs collective learning and functional wisdom of the crowds.
    Date: 2016–05
  12. By: Ben-Yashar, Ruth (Bar-Ilan University); Danziger, Leif (Ben Gurion University)
    Abstract: This paper analyzes how to allocate experts into committees that use the unanimity rule to make decisions. We show that an optimal allocation of experts is extremely asymmetric. To reach the optimal allocation, therefore, one needs only to rank the experts in terms of their abilities and then allocate adjacent experts such that an expert's ability tends to vary inversely with the size of his committee. In the special case of three-member committees, we show that the optimal allocation maximizes the sum of the products of the experts' skills in each committee.
    Keywords: unanimity rule, extremely asymmetric committees, optimal composition of committees
    JEL: D71
    Date: 2016–04
  13. By: Che, Yi; Lu, Yi; Pierce, Justin R.; Schott, Peter K.; Tao, Zhigang
    Abstract: This paper examines the impact of trade liberalization on U.S. Congressional elections. We find that U.S. counties subject to greater competition from China via a change in U.S. trade policy exhibit relative increases in turnout, the share of votes cast for Democrats and the probability that the county is represented by a Democrat. We find that these changes are consistent with Democrats in office being more likely than Republicans to support legislation limiting import competition or favoring economic assistance.
    Keywords: China ; Voting ; Elections ; Import Competition ; Normal Trade Relations ; World Trade Organization
    JEL: F13 F16 D72
    Date: 2016–03
  14. By: Arthur Campbell; Florian Ederer; Johannes Spinnewijn
    Abstract: We study two sources of delay in teams: freeriding and lack of communication. Partners contribute to the value of a common project, but have private information about the success of their own efforts. When the deadline is far away, unsuccessful partners freeride on each others' efforts. When the deadline draws close, successful partners stop revealing their success to maintain their partners' motivation. We derive comparative statics results for common team performance measures and find that the optimal deadline maximizes productive efforts while avoiding unnecessary delays. Welfare is higher when information is only privately observable rather than revealed to the partnership.
    JEL: D82 D83 M54 O30
    Date: 2014–05
  15. By: Hopfensitz, Astrid; Mantilla, Cesar; Miquel-Florensa, Josepa
    Abstract: We design and conduct a lab-in-the-field experiment to test the effect of a conditional contract on the sustainability of an open access fishery, where unit prices are conditional on aggregate catch. The contract provides collective incentives to decrease extraction but maintain the individual incentives of extraction maximization. We conduct the experiment with two communities of artisanal fishermen differing in their market and technological restrictions. We find that the conditional contract, compared to a fixed price scheme, increases efficiency, the duration of the resource and the total yield. The contract has a greater effect upon groups from the less restricted community.
    Keywords: artifactual field experiment, dynamic resource, artisanal fishery, stochastic production function
    JEL: C92 Q22
    Date: 2016–03
  16. By: Kazunori Miwa (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper investigates the interaction between firms' information acquisition decisions and disclosure of internally acquired information in a Cournot duopoly market. The results are as follows. Given that the precision of firms' private information is constant, mandatory disclosure of information about the industry-wide demand uncertainty can enhance social welfare. However, when the precision of firms' private information is endogenously determined, mandatory disclosure is not always desirable. This is because when disclosure is mandated, firms acquire less precise information compared to the case where acquired information is not disclosed, and hence their internal information environments are deteriorated. This can lead to "unintended consequences," such that disclosure regulation strictly decreases social welfare on the whole.
    Keywords: Information acquisition, Disclosure, Duopoly, Social welfare
    JEL: L13 M41 M48
    Date: 2016–03
  17. By: David Smerdon (University of Amsterdam, the Netherlands); Theo Offerman (University of Amsterdam, the Netherlands); Uri Gneezy (UC San Diego, United States)
    Abstract: Social norms permeate society across a wide range of issues and are important to understanding how societies function. In this paper we concentrate on 'bad' social norms - those that are inefficient or even damaging to a group. This paper explains how bad social norms evolve and persist; our theory proposes a testable model of bad norms based on anecdotal evidence from real-world examples. We then experimentally test the model and find empirical support to its main predictions. Central to the model is the role of a person's social identity in encouraging compliance to a norm. The strength of this identity is found to have a positive effect on bad norm persistence. Additionally, while the size of the social group does not have a long run effect, smaller groups are more likely to break a bad norm in the short term. Furthermore, the results suggest that both anonymous communication and increasing information about others' payoffs are promising intervention policies to counter bad norms.
    Keywords: Social norms; Experiment; Identity; Behavioral Economics
    JEL: D03 Z13 C92
    Date: 2016–04–05
  18. By: Bargain, Olivier; Cardebat, Jean-Marie; Vignolles, Alexandra
    Abstract: Crowdfunding has recently emerged as a novel way of financing new ventures. This coincides with a growing interest in wine as an investment good and with a search for new funding opportunities by wine makers. In this study, we first suggest a brief review of the literature on wine and finance as well as on how crowdfunding is entering the wine sector. In particular, we question who are the potential investors willing to engage in wine crowdfunded projects, and what kind of revenue could attract them. To go further, we also exploit an original survey where interviewees are asked about their wine consumption and purchase, their knowledge about crowdfunding, their relation to the Internet, their investment and project related to wine crowdfunding and their expectations concerning the returns from this type of contribution. We suggest that, among all forms of crowdfunding, the donation/voluntary contribution side, driven by intrinsic motivation, is likely to remain marginal compared to crowdfunding as an investment or a form of early purchase - a retail form of the “en primeur” sales. More generally, we ask how the public can help finance this sector and diversify the way wine is sold.
    Keywords: crowdfunding, wine sector, alternative assets, Agribusiness, Agricultural Finance, G11, G12, L17, G21, L26,
    Date: 2016–04

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