nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒08‒14
eight papers chosen by
Stan C. Weeber, McNeese State University

  1. The Political Economy of Public Debt: A Laboratory Study By Marco Battaglini; Salvatore Nunnari; Thomas R. Palfrey
  2. Efficiency of Flexible Budgetary Institutions By T. Renee Bowen; Ying Chen; Hülya K. Eraslan; Jan Zápal
  3. Rising to the occasion? Youth political knowledge and the voting age By Rosenqvist, Olof
  4. Gender Differences in Cooperative Environments? Evidence from the U.S. Congress By Stefano Gagliarducci; M. Daniele Paserman
  5. Psychic Punishment Costs and Deterrence By Bakó, Barna; Isztin, Péter
  6. The Valley of Death, the Technology Pork Barrel, and Public Support for Large Demonstration Projects By Gregory F. Nemet; Martina Kraus; Vera Zipperer
  7. Learning to Coordinate: Co-Evolution and Correlated Equilibrium By Alejandro Lee-Penagos
  8. Information and Preferences for Public Spending: Evidence from Representative Survey Experiments By Lergetporer, Philipp; Schwerdt, Guido; Werner, Katharina; Woessmann, Ludger

  1. By: Marco Battaglini; Salvatore Nunnari; Thomas R. Palfrey
    Abstract: This paper reports the results from a laboratory experiment designed to study political distortions in the accumulation of public debt. A legislature bargains over the levels of a public good and of district specific transfers in two periods. The legislature can issue or purchase risk-free bonds in the first period and the level of public debt creates a dynamic linkage across policymaking periods. In line with the theoretical predictions, we find that public policies are inefficient and efficiency is increasing in the size of the majority requirement, with higher investment in public goods and lower debt associated with larger majority requirements. Also in line with the theory, we find that debt is lower when the probability of a negative shock to the economy in the second period is higher, evidence that debt is used to smooth consumption.
    JEL: C92 H11 H41
    Date: 2016–07
  2. By: T. Renee Bowen; Ying Chen; Hülya K. Eraslan; Jan Zápal
    Abstract: Which budgetary institutions result in efficient provision of public goods? We analyze a model with two parties bargaining over the allocation to a public good each period. Parties place different values on the public good, and these values may change over time. We focus on budgetary institutions that determine the rules governing feasible allocations to mandatory and discretionary spending programs. Mandatory spending is enacted by law and remains in effect until changed, and thus induces an endogenous status quo, whereas discretionary spending is a periodic appropriation that is not allocated if no new agreement is reached. We show that discretionary only and mandatory only institutions typically lead to dynamic inefficiency and that mandatory only institutions can even lead to static inefficiency. By introducing appropriate flexibility in mandatory programs, we obtain static and dynamic efficiency. An endogenous choice of mandatory and discretionary programs, sunset provisions and state-contingent mandatory programs can provide this flexibility in increasingly complex environments.
    JEL: C73 C78 D61 D78 H61
    Date: 2016–07
  3. By: Rosenqvist, Olof (IFAU - Institute for Evaluation of Labour Market and Education Policy)
    Abstract: Voting is a fundamental human right. Yet, individuals that are younger than 18 do typically not have this right since they are considered uninformed. However, recent evidence tentatively suggests that the political knowledge of youths is endogenous to the voting age. I test for the existence of such dynamic adjustments utilizing voting age discontinuities caused by Swedish laws. I employ a regression discontinuity strategy on Swedish register data to estimate the causal effect of early age voting right on political knowledge around age 18. The results do not support the existence of positive causal effects of early age voting right on political knowledge. Thus, we should not expect that 16-year-olds respond by acquiring more political knowledge if they are given the right to vote. This finding weakens the case for a lowering of the voting age from 18 to 16.
    Keywords: voting age; political knowledge; civic interest; tertiary education; regression discontinuity design
    JEL: D04 D72 I21 I29 P16
    Date: 2016–03–16
  4. By: Stefano Gagliarducci; M. Daniele Paserman
    Abstract: This paper uses data on bill sponsorship and cosponsorship in the U.S. House of Representatives to estimate gender differences in cooperative behavior. We employ a number of econometric methodologies to address the potential selection of female representatives into electoral districts with distinct preferences for cooperativeness, including regression discontinuity and matching. After accounting for selection, we find that among Democrats there is no significant gender gap in the number of cosponsors recruited, but women-sponsored bills tend to have fewer cosponsors from the opposite party. On the other hand, we find robust evidence that Republican women recruit more cosponsors and attract more bipartisan support on the bills that they sponsor. This is particularly true on bills that address issues more relevant for women, over which female Republicans have possibly preferences that are closer to those of Democrats. We interpret these results as evidence that cooperation is mostly driven by a commonality of interest, rather than gender per se.
    JEL: D70 D72 H50 J16 M50
    Date: 2016–08
  5. By: Bakó, Barna; Isztin, Péter
    Abstract: In this paper we analyze criminal deterrence in the presence of specific psychic costs of punishments. We consider a dynamic model with three players, analyzing the choices of a representative lawmaker, potential criminal and judge. In our setting the lawmaker decides whether to introduce a fixed punishment enhancement above a chosen threshold of crime level, depending on its popularity among the voters. In reaction, the judge, who is influenced by her own preferences as well as the opinion of her peer group, might change the probability of punishment, through affecting the standard of reasonable doubt. Our results suggest that large discontinuous and mandatory increases in punishment can have unintended effects that are contrary to the stated goal of such punishment enhancements. In equilibrium, when either the judge or her peer group is "anti-punishment" enough, the level of criminal activity might increase in response to the punishment enhancement. This perverse effect is less likely to occur if there is a higher number of peer groups within the "elite", so that a greater extent of self-selection by judges can occur. Our results have relevance for a number of areas outside the traditional criminal justice system as well, such as special courts (such as ecclesiastical or military courts), or the strictness and enforcement of regulations.
    Keywords: crime, deterrence, punishment, peer effects
    JEL: D81 K12 K42
    Date: 2016–08–01
  6. By: Gregory F. Nemet; Martina Kraus; Vera Zipperer
    Abstract: Moving non-incremental innovations from the pilot scale to full commercial scale raises questions about the need and implementation of public support. Heuristics from the literature put policy makers in a dilemma between addressing a market failure and acknowledging a government failure: incentives for private investments in large scale demonstrations are weak (the valley of death) but the track record of governance in large demonstration projects is poor (the technology pork barrel). We reassess these arguments in the literature, particularly as to how they apply to sup- porting demonstration projects for decarbonizing industry. Conditions for the valley of death exist with: low appropriability, large chunky investments, unproven reliability, and uncertain future markets. We build a data set of 511 demonstration projects in nine technology areas and code characteristics for each project, including timing, motivations, and scale. We argue that the literature and the results from the case studies have five main implications for policy makers in making decisions about demonstration support. Policy makers should consider: 1) prioritizing learning, 2) iterative upscaling, 3) private sector engagement, 4) broad knowledge dissemination, and 5) making demand pull robust.
    Keywords: Demonstrations, technology push, demand pull
    JEL: Q55 O31 O38
    Date: 2016
  7. By: Alejandro Lee-Penagos (School of Economics, University of Nottingham)
    Abstract: In a coordination game such as the Battle of the Sexes, agents can condition their plays on external signals that can, in theory, lead to a Correlated Equilibrium that can improve the overall payoffs of the agents. Here we explore whether boundedly rational, adaptive agents can learn to coordinate in such an environment. We find that such agents are able to coordinate, often in complex ways, even without an external signal. Furthermore, when a signal is present, Correlated Equilibrium are rare. Thus, even in a world of simple learning agents, coordination behavior can take on some surprising forms.
    Keywords: Battle of the Sexes, Correlated Equilibrium, Evolutionary Game Theory, Learning Algorithms, Coordination Games, Adaptive Agents
    Date: 2016–11
  8. By: Lergetporer, Philipp (University of Munich); Schwerdt, Guido (University of Konstanz); Werner, Katharina (University of Munich); Woessmann, Ludger (University of Munich)
    Abstract: The electorates’ lack of information about the extent of public spending may cause misalignments between voters’ preferences and the size of government. We devise a series of representative survey experiments in Germany that randomly provide treatment groups with information on current spending levels. Results show that such information strongly reduces support for public spending in various domains from social security to defense. Data on prior information status on school spending and teacher salaries shows that treatment effects are strongest for those who initially underestimated spending levels, indicating genuine information effects rather than pure priming effects. Information on spending requirements also reduces support for specific education reforms. Preferences on spending across education levels are also malleable to information.
    Keywords: public spending, information, preferences, education spending, survey experiment JEL Classification: H11, D83, D72, H52, I22, P16
    Date: 2016

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