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

  1. The Alma Mater Effect. Does Foreign Education of Political Leaders Influence Foreign Policy? By Dreher, Axel; Yu, Shu
  2. Democracy, redistribution and optimal tax structures By Santanu Gupta; Raghbendra Jha
  3. The Marginal Voter's Curse By Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
  4. Elections, protest and trust in government: A natural experiment from Russia By Frye, Timothy; Borisova, Ekaterina
  5. Economic Growth and Property Rights on Natural Resources By Kirill Borissov; Mikhail Pakhnin
  6. Are groups 'less behavioral'? The case of anchoring By Meub, Lukas; Proeger, Till
  7. A Theory of Community Formation and Social Hierarchy By Susan Athey; Emilio Calvano; Saumitra Jha
  8. The number of parties and decision making in legislatures By Bannikova, Marina; Jelnov, Artyom
  9. The Tragedy of Corruption By Chen, Yefeng; Jiang, Shuguang; Villeval, Marie Claire
  10. Market competition for decision rights: An experiment based on the “Hat Puzzle Problem” By Choo, Lawrence
  11. Does the obligation to bargain make you fit the mould? An experimental analysis. By Eve-Angéline Lambert; Jean-Christian Tisserand

  1. By: Dreher, Axel; Yu, Shu
    Abstract: We study whether national leaders' foreign education influences their foreign policy, measured by voting behavior at the United Nations General Assembly (UNGA). We hypothesize that "affinity"' - pre-existing or developed while studying abroad - makes leaders with foreign education more likely to vote with their host country. At the same time, such leaders need to show sufficient distance to their host country and demonstrate "allegiance"' to their own one, which will reduce voting coincidence. To test this theory we make use of data on the educational background of 831 leaders and the voting affinity between the countries they govern and those in which they studied. Over the 1975-2011 period, we find that foreign-educated leaders are less likely to vote in line with their host countries but more likely to vote in line with (other) G7 countries. We identify the causal effect of "allegiance" by investigating the differential effect of foreign education on voting in pre-election years compared to other years. The difference-in-difference-like results show that G7-educated leaders vote less in line with their host countries when facing an election. Overall, both "allegiance" and "affinity" affect foreign policy.
    Keywords: Foreign Education; leaders; United Nations General Assembly voting
    JEL: D78 F51 F53
    Date: 2016–08
  2. By: Santanu Gupta; Raghbendra Jha
    Abstract: In a probabilistic voting model with three jurisdictions and residents with different incomes, we analyze inefficiencies in local public good allocation that emerge from trying to satisfy the median voter. The median voter and the rich may gain but the poor lose out. We analyze a uniform tax rate and progressive two and three bracket tax structures. If the government extracts part of tax revenues as political rents and maximizes expected payoff there is a possibility of taxing away all private income with no allocation of public good, if electoral uncertainty is high, especially when the government is risk neutral.
    Keywords: median voter, local public good, income redistribution
    JEL: H11 H50
    Date: 2016
  3. By: Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
    Abstract: This paper proposes a rational model of voter participation by generalizing a common-value model of costless voting to include not just pivotal voting but also marginal voting incentives. A new strategic incentive for abstention arises in that case, to avoid the marginal voter's curse of pushing the policy outcome in the wrong direction. The marginal voter's curse presents a larger disincentive for voting than the swing voter's curse. Moreover, marginal motivations are shown to dominate pivotal motivations in large elections. Model predictions are confirmed in a laboratory experiment and applied in a comparative analysis of electoral rules.
    Keywords: Experiment; information aggregation; Turnout; Underdog effect
    JEL: C72 C92 D70
    Date: 2016–08
  4. By: Frye, Timothy; Borisova, Ekaterina
    Abstract: How do flawed elections and post-election protest shape political attitudes? Taking advantage of the largely exogenous variation in the timing of a survey conducted in Moscow, we examine the short-term impact of the parliamentary election of December 4th, and the large protest of December 10th on trust in the Russian government. The fraud-marred parliamentary election had little effect on attitudes toward government, perhaps because allegations of vote improprieties were not new information. In contrast, the large protest of December 10th increased trust in government. Heightened trust arises largely from non-supporters of the ruling party updating their beliefs rather than from social desirability bias, a perceived improvement in government performance, or a “halo” effect. This finding is consistent with the view that autocrats can increase trust in government by unexpectedly allowing protest without repression. It also suggests that when evaluating trust in government citizens may cue not off the content of the protest, but off the holding of the protest itself.
    Keywords: trust in government, protest, elections, partisanship
    JEL: P26 D72
    Date: 2016–08–18
  5. By: Kirill Borissov; Mikhail Pakhnin
    Abstract: We consider two models of economic growth with exhaustible natural resources, exogenous technical progress and agents heterogeneous in their time preferences. In the first model we assume private ownership of natural resources. We show that every competitive equilibrium in this model converges to a balanced-growth equilibrium. The long-run extraction rate and the rate of growth are determined by the discount factor of the most patient agents. The second model assumes public ownership of natural resources. The resource revenue is equally distributed among agents, who choose the resource extraction rate by voting. We define an intertemporal voting equilibrium and show that it also converges to a balanced-growth equilibrium. The long-run voting equilibrium extraction rate and the rate of growth are determined by the median discount factor. Our results suggest that, other things being equal, the growth rate in the case of private ownership is higher than that of public ownership if the most patient agents do not constitute the majority in population; otherwise there is no difference in the growth rates between the two regimes. However, in the long run private ownership leads to a higher level of inequality than public ownership. If we take into account the detrimental effect of inequality on economic growth, then the public property regime will likely result in a higher long-run rate of growth compared to the private property regime.
    Keywords: economic growth, exhaustible resources, heterogeneous agents, voting
    JEL: Q32 E13 D91 O40
    Date: 2016–06–07
  6. By: Meub, Lukas; Proeger, Till
    Abstract: Economic small group research points to groups as more rational decision-makers in numerous economic situations. However, no attempts have been made to investigate whether groups are affected similarly by behavioral biases that are pervasive for individuals. If groups were also able to more effectively avoid these biases, the relevance of biases in actual economic contexts dominated by group decision-making might be questioned. We consider the case of anchoring as a prime example of a well-established, robust bias. Individual and group biasedness in three economically relevant domains are compared: factual knowledge, probability estimates and price valuations. In contrast to previous anchoring studies, we find groups to successfully reduce, albeit not eliminate, anchoring in the factual knowledge domain. For the other two domains, groups and individuals are equally biased by external anchors. Group cooperation thus reduces biases for predominantly intellective tasks only, while no such reduction is achieved when judgmental aspects are involved.
    Keywords: anchoring bias,group decision-making,heuristics and biases,incentives,laboratory experiment
    JEL: C91 C92 D8
    Date: 2016
  7. By: Susan Athey (Stanford GSB); Emilio Calvano (Università di Bologna and CSEF); Saumitra Jha (Stanford GSB)
    Abstract: We analyze the classic problem of sustaining trust when cheating and leaving trading partners is easy, and outside enforcement is difficult. We construct equilibria where individuals are loyal to smaller groups – communities - that allow repeated interaction. Hierarchies provide incentives for loyalty and allow individuals to trust agents to extent that the agents are actually trustworthy. We contrast these with other plausible institutions for engendering loyalty that require inefficient withholding of trust to support group norms, and are not robust to coalitional deviations. In communities whose members randomly match, we show that social mobility within hierarchies falls as temptations to cheat rise. In communities where individuals can concentrate their trading with pre-selected members, hierarchies where senior members are favored for trade sustain trust even in the presence of proximate non-hierarchical communities. We link these results to the emergence of trust in new market environments and early human societies
    Date: 2016–08–26
  8. By: Bannikova, Marina; Jelnov, Artyom
    Abstract: This paper proposes a model of a legislature, formed by several parties, which have to vote for or against a certain bill in the presence of a lobbyist who is interested in a certain outcome of the vote. We show that the ease of manipulating a legislature decision by the lobbyist is increasing with the number of parties. A high threshold leads to fewer parties represented, and consequently, decreases the ease of changing a legislature decision by the lobbyist. On the other hand, a high threshold may cause a misrepresentation of voters. We show that if the threshold is higher that 6%, the impact of the misrepresentation effect becomes significant.
    Keywords: Ciències polítiques -- Presa de decisions, Partits polítics, Grups de pressió, 32 - Política,
    Date: 2016
  9. By: Chen, Yefeng (Zhejiang University); Jiang, Shuguang (Zhejiang University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We investigate corruption as a social dilemma by means of a bribery game in which a risk of collective sanction of the public officials is introduced when the number of officials accepting a bribe from firms reaches a certain threshold. We show that, despite the social risk, the pursuit of individual interest prevails and leads to the elimination of honest officials over time. Reducing the size of the groups while increasing the probability of collective sanction diminishes the officials' corruptibility but is not sufficient to eliminate the Tragedy of corruption that leads both firms and officials to earn less than in the absence of corruption.
    Keywords: corruption, social dilemma, collective risk, sanction, experiment
    JEL: C92 D73 H41
    Date: 2016–08
  10. By: Choo, Lawrence
    Abstract: This paper investigates the conventional wisdom that market competition for the rights to perform decision-making tasks improves aggregate performances in all relevant tasks by diverting decision rights to individuals who are better able to utilise them. To do so, I use an experiment that embeds asset markets into the Hat Puzzle Problem game. I show that players’ performances in the game will depend on their ability to employ sophisticated counterfactual reasoning and provide a behavioural framework that illustrates how market competition can improve aggregate performances in the game. Contradictory to the conventional wisdom, I find that market competition exacerbates aggregate performances and diverts decision rights to players who are less able to utilise them. I provide some evidence that the failure of markets can be linked to the formation of price “bubbles”, which distort the markets’ allocation of decision rights.
    Keywords: Market Competition, Game Theory, Sophistication, Decision Rights.
    JEL: C70 C90 G10 L11
    Date: 2016–08–29
  11. By: Eve-Angéline Lambert; Jean-Christian Tisserand
    Abstract: In a lot of real-life legal disputes, the parties have the obligation to nego- tiate before an external solution is imposed to them. We investigate theoret- ically and experimentally the impact of such a constraint on the behavior of bargainers and on the outcome of this bargaining. Individuals initially choose whether to bargain over the division of a pie, and if one of them refuses, then the bargaining may be imposed to them with some probability. We show that individuals who are forced to bargain are significantly more aggressive than those who initially choose to bargain, and this behavior is indeed partly due to the constraint. This implies that the fact to be constrained does not bring individuals to behave as if they had freely made this decision, which proves that the way the bargaining process is enforced is not neutral, and affects the outcome of this process. This feature should be taken into account for the design of legal procedures of resolution of individual and collective conflicts.
    Keywords: Bargaining; Conflicts; Enforcement; Forced negotiation.
    JEL: C78 C91
    Date: 2016

This nep-cdm issue is ©2016 by Stan C. Weeber. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.