nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒08‒21
nine papers chosen by
Stan C. Weeber, McNeese State University

  1. Strategic sequential voting By González-Díaz, Julio; Herold, Florian; Domínguez, Diego
  2. The Influence of Political Pressure Groups on the Stability of International Environmental Agreements By Achim Hagen; Juan-Carlos Altamirano-Cabrera; Hans-Peter Weikard
  3. Threshold Bank-run Equilibrium in Dynamic Games By Romeo Matthew Balanquit
  4. Deflecting my burden, hindering redistribution: How elites influence tax legislation in Latin America By Juan A. Bogliaccini; Juan Pablo Luna
  5. Electoral Stability and Rigidity By Michael Y. Levy
  6. Intertemporal strategic investment-consumption model: An example By Alex Barrachina; Eduardo Jiménez-Fernández
  7. Turning a blind eye: a Regression Discontinuity Design Analysis of Party-Based Support for Corruption in Brazil By Louis Graham
  8. The Mobile Phone in the Diffusion of Knowledge for Institutional Quality in Sub-Saharan Africa By Asongu, Simplice; Nwachukwu, Jacinta
  9. A test of the Law of 1/n for Belgium: Does “more politicians” mean “more public spending”? By Geert Jennes

  1. By: González-Díaz, Julio; Herold, Florian; Domínguez, Diego
    Abstract: In this paper, we study the potential implications of a novel yet natural voting system: strategic sequential voting. Each voter has one vote and can choose when to cast his vote. After each voting period, the current count of votes is publicized enabling subsequent voters to use this information. Given the complexity of the general model, in this paper we study a simplified two-period setting. We find that, in elections involving three or more candidates, voters with a strong preference for one particular candidate have a strategic incentive to vote in an early period to signal that candidate's viability. Voters who are more interested in preventing a particular candidate from winning have an incentive to vote in a later period, when they will be better able to tell which other candidate will most likely beat the one they dislike. Strategic sequential voting may therefore result in voters coordinating their choices, mitigating the problem of a Condorcet loser winning an election due to mis-coordination. Furthermore, a (relatively) strong intensity of preferences for the preferred candidate can be partially expressed by voting early, possibly swaying the choice of remaining voters.
    Keywords: sequential voting,elections,endogenous timing,strategic timing
    JEL: D72 D71 C72
    Date: 2016
  2. By: Achim Hagen (Carl von Ossietzky University, Department of Economics); Juan-Carlos Altamirano-Cabrera (Economics Center, World Resources Institute, Washington DC); Hans-Peter Weikard (Wageningen University, The Netherlands)
    Abstract: This paper examines the effects of political pressure groups (lobbies) on the emissions abatement decisions of countries and on the stability of international environmental agreements. We consider two types of lobbies, industry and environmentalists. We determine the influence of lobby-groups on the abatement decisions of countries. This influence affects members of an international environmental agreement as well as outsiders. However, in the case of agreement members, the effects of lobbying are not restricted to the lobby’s host-country but spill over to other member countries and have ambiguous effects on the agreement stability.
    Keywords: interest groups, coalition theory, environmental policy making, international environmental agreements
    JEL: C72 D72 D78 H41 Q28 Q54
    Date: 2016–08
  3. By: Romeo Matthew Balanquit (School of Economics, University of the Philippines Diliman)
    Abstract: This study sets a bank-run equilibrium analysis in a dynamic and incomplete information environment where agents can reconsider attempts to run on the bank over time. The typical static bank-run model is extended in this paper to capture the learning dynamics of agents through time, giving bank-run analysis a more realistic feature. Apart from employing a self-fullling framework in this model, where agents' actions are strategic complements, we allow agents to update over time their beliefs on the strength of the fundamentals that is not commonly known. In particular, we extend the bank-run model analyzed by Goldstein and Pauzner (Journal of Finance 2005) and build it on a dynamic global games framework studied by Angeletos (Econometrica 2007). We present here how a simple recursive setup can generate a unique monotone perfect Bayesian Nash equilibrium and show how the probability of bank-run is a¤ected through time by the inow of information and the knowledge of previous state outcome. Finally, it is also shown that when an unobservable shock is introduced, multiplicity of equilibria can result in this dynamic learning process.
    Keywords: threshold bank-run, monotone perfect Bayesian Nash equilibrium, dynamic global games
    JEL: C73 D82 G10
    Date: 2016–08
  4. By: Juan A. Bogliaccini; Juan Pablo Luna
    Abstract: This paper proposes to understand a singular but salient factor that enables the wealthy to deflect their tax burden downwards: elites. political leverage to shape legislation via their capacity to influence political actors and policy outcomes. The analysis sheds light on alternative mechanisms used by economic elites over time and space. Our analysis of the political economy of taxing upper-income groups in Chile and Uruguay reveals the importance of continuous political agency on the part of organized elite interest groups. Our results show how even centre-left parties competing on a redistributive programmatic platform confront and concede to the interests of wealthy elites, especially when sustained interaction between political leaders and economic elites becomes routinized in the long run.
    Keywords: tax policy, Latin America, elites, tax avoidance, redistribution, case study
    Date: 2016
  5. By: Michael Y. Levy
    Abstract: Some argue that political stability is best served through a two-party system. This study refutes this. The author mathematically defines the stability and rigidity of electoral systems comprised of any quantity of electors and parties. In fact, stability is a function of the quantity of electors - i.e., the number of occupied seats at the table. As the number of electors increases, the properties of an electorate are increasingly well resolved, and well described by those of an electorate that is least excessive -- that is to say an electorate that is closest to equilibrium. Further, electoral rigidity is a function of the quantity of parties and their probabilities of representation. An absolutely rigid system admits no fluctuations -- whatever happens to one elector will happen to all electors. As the quantity of parties increases so does the number of party lines, and with it the quantity of alternatives with which to respond to an external stimulus. Rigidity is significant in a social system that places high value on party loyalty. In conclusion, (i) electoral stability is best served by increasing the quantity of electors; (ii) electoral rigidity is best served by decreasing the quantity of parties, and by increasing the representation of some parties at the expense of others; and (iii) the less stable a branch of government, the more concern is placed on those who would hold those offices for the people.
    Date: 2016–08
  6. By: Alex Barrachina (LEE and Department of Economics, Universitat Jaume I, Castellón, Spain); Eduardo Jiménez-Fernández (Department of Economics, Universitat Jaume I, Castellón, Spain)
    Abstract: In this paper we analyze the effect of the proportional profit-sharing rule on investment and consumption decisions in a two-period economy. We provide a particular example of an intertemporal consumption model with k ≥ 2 agents in which they have the opportunity to invest in a project, the profit from which is shared by all the agents according to their percentage participation. We show that the equilibrium investment is unique and in pure strategies but not Pareto efficient.
    Keywords: Proportional profit-sharing rule; Intertemporal consumption; Consumption-investment decisions; Strategic investment; Nash equilibrium
    JEL: C72 D1 D9
    Date: 2016
  7. By: Louis Graham
    Abstract: While corruption has long been conceptualised using the Principal-Agent framework, recent academic literature has proposed that in many countries, corruption is used as a political tool by 'unprincipled principals'. Using data from a corruption audit programme in Brazil and an RDD design, I study whether a state governor and municipal mayor being of the same party increases corruption linked to the mayor. I find evidence that when the governor's party wins the municipal mayoral election, corruption declines by 60-80% of the mean corruption level, and by 100-120% for larger municipalities. This is consistent with a model in which governors use corruption to gain control over mayors through potential blackmail, and in which governors want to prevent their party being associated with corruption to protect their re-election chances. I find further evidence consistent with the first argument. Much weaker evidence is found consistent with the second.
    Keywords: Corruption; Political Networks; Regression Discontinuity Design
    JEL: C31 D72 D73
    Date: 2016
  8. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: This study assesses the mobile phone in the diffusion of knowledge for better governance in sub-Saharan Africa for the period 2000-2012. For this purpose we employ Generalised Method of Moments with forward orthogonal deviations. The empirical evidence is based on three complementary knowledge diffusion variables (innovation, internet penetration and educational quality) and ten governance indicators that are bundled and unbundled. The following are the main findings. First, there is an unconditional positive effect of mobile phone penetration on good governance. Second, the net effects on political, economic and institutional governances that are associated with the interaction of the mobile phone with knowledge diffusion variables are positive for the most part. Third, countries with low levels of governance are catching-up their counterparts with higher levels of governance. The above findings are broadly consistent with theoretical underpinnings on the relevance of mobile phones in mitigating bad governance in Africa. The evidence of some insignificant net effects and decreasing marginal impacts may be an indication that the mobile phone could also be employed to decrease government quality. Overall, this study has established net positive effects for the most part. Five rationales could elicit the positive net effects on good governance from the interaction between mobile phones and knowledge diffusion, among others, the knowledge variables enhance: reach, access, adoption, cost-effectiveness and interaction. In a nut shell, the positive net effects are apparent because the knowledge diffusion variables complement mobile phones in reducing information asymmetry and monopoly that create conducive conditions for bad governance. The contribution of the findings to existing theories and justifications of the underlying positive net effects are discussed.
    Keywords: Mobile phones; Governance; Africa
    JEL: G20 O38 O40 O55 P37
    Date: 2016–03
  9. By: Geert Jennes
    Abstract: We investigate if a more populous or fragmented executive or legislative increases public spending, an effect known as “the Law of 1/n”. We test this for the supra-local governments of Belgium. On the basis of our dataset –including rather few “cross-sections” as well as rather few changes in our political variables of interest over time- we find few indications that more politicians or more fragmented governments lead to an increase in overall public expenditures. We find weak evidence in favour of a positive effect of a change in the size of the executive, more in particular of the number of ministers composing the governing coalition, on public spending. Our identification is based on an IV regression approach, instrumenting the number of ministers overall with their resp. number in governments in charge of a decentralisation round. Belgian governments in charge of a decentralisation round are constitutionally obliged to rely on broad parliamentary support, and therefore tend to be larger. We also find that there is no effect of a change in the size or fragmentation of the legislative on public spending.
    Keywords: distributive politics;, public expenditures, fiscal federalism, politicians, political institutions
    Date: 2015

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