nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒10‒16
eight papers chosen by
Stan C. Weeber
McNeese State University

  1. Persuading voters By Ricardo Alonso; Odilon Câmara
  2. Truth-revealing voting rules for large populations * By Matías Núñez; Marcus Pivato
  3. Voting to Tell Others By Gautam Rao; John List; Stefano DellaVigna; Ulrike Malmendier
  4. And Yet It Grows: Crisis, Ideology, and Interventionist Policy Ratchets By Bjørnskov, Christian; Rode, Martin
  5. Does say on pay matter? Evidence from the German natural experiment By Troeger, Tobias H.; Walz, Uwe
  6. The Political Economy of Taxation: Power, Structure, Redistribution By Stanley L. Winer
  7. Do banks differently set their liquidity ratios based on their network characteristics? By Isabelle Distinguin; Aref Mahdavi-Ardekani; Amine Tarazi
  8. Inequality, Educational Choice and Public School Quality in Income Mixing Communities By Paolo Melindi-Ghidi

  1. By: Ricardo Alonso; Odilon Câmara
    Abstract: In a symmetric information voting model, an individual (politician) can influence voters' choices by strategically designing a policy experiment (public signal). We characterize the politician's optimal experiment. With a non-unanimous voting rule, she exploits voters' heterogeneity by designing an experiment with realizations targeting different winning coalitions. Consequently, under a simple-majority rule, a majority of voters might be strictly worse off due to the politician's influence. We characterize voters' preferences over electoral rules and provide conditions for a majority of voters to prefer a supermajority (or unanimity) voting rule, in order to induce the politician to supply a more informative experiment.
    Keywords: strategic experimentation; persuasion; voting
    JEL: J1
    Date: 2016
  2. By: Matías Núñez (Université Paris-Dauphine); Marcus Pivato (THEMA - université de Cergy-Pontoise -)
    Abstract: Deterministic voting rules are notoriously susceptible to strategic voting. We propose a new solution to this problem for large electorates. For any deterministic voting rule, we can design a stochastic rule that asymptotically approximates it in the following sense: for a sufficiently large population of voters, the stochastic voting rule (i) incentivizes every voter to reveal her true preferences and (ii) produces the same outcome as the deterministic rule, with very high probability.
    Keywords: Large Elections,Truth-telling,Incentives
    Date: 2016–06–30
  3. By: Gautam Rao; John List; Stefano DellaVigna; Ulrike Malmendier
    Abstract: Why do people vote? We design a field experiment to estimate a model of voting 'because others will ask'. The expectation of being asked motivates turnout if individuals derive pride from telling others that they voted, or feel shame from admitting that they did not vote, provided that lying is costly. In a door-to-door survey about election turnout, we experimentally vary (i) the informational content and use of a flyer pre-announcing the survey, (ii) the duration and payment for the survey, and (iii) the incentives to lie about past voting. The experimental results indicate significant social image concerns. For the 2010 Congressional election, we estimate a value of voting 'to tell others' of about $15, contributing 2 percentage points to turnout. Lastly, we evaluate a get-out-the-vote intervention in which we tell potential voters that we will ask if they voted.
    Date: 2016
  4. By: Bjørnskov, Christian (Aarhus University); Rode, Martin (University of Navarra)
    Abstract: Previous studies of policy responses to economic crises argue that crises may lead to more interventionist policy but also cause deregulation. The empirical evidence in previous studies is equally mixed. The present paper argues that whether or not governments implement more or less interventions depend on their core political ideology. We thus expect ideologically heterogeneous policy reactions to crises yet also note that crisis responses theoretically may cause ‘policy ratchets’ where temporary crisis policies become permanent. Employing a panel of 68 countries with Western political institutions observed between 1975 and 2010, and exploring the evolution of indicators of government size and regulatory policy, we find that crises in general cause more interventionist policies when countries have centrist or left-wing governments. We also find clear evidence of policy ratchets in all policy areas. The ideological crisis policies mainly relate to government consumption and market regulations.
    Keywords: Economic crisis; Regulation; Government consumption; Government ideology
    JEL: D72 H11 H70
    Date: 2016–10–07
  5. By: Troeger, Tobias H.; Walz, Uwe
    Abstract: We analyze a hand-collected dataset of 1669 executive compensation packages at 34 firms included in the main German stock market index (DAX) for the years 2006- 2014 in order to investigate the impact of the 2009 say on pay legislation. First, we observe that the compensation packages of management board members of Germany's DAX30-firms are closely linked to key performance measures such as return-onassets and EBIT. Second, our analysis indicates that ownership concentration has no significant effect on compensation, which can be read as support of the view that managerial self-serving by usurping the payroll is largely absent even where companies exhibit dispersed share ownership. Third, and most important for our topic, our findings suggest that it pays a lot to take a closer look to the contractual set-up of the compensation schemes. When considering only the overall board members' compensation, the hypothesis of lower remuneration in case of low shareholder support for compensation packages in say on pay-votes can be rejected. Our findings do not support this view, which is not at all surprising given the rather rigid contractual framework for the compensation of management board members. However, we find that the supervisory board seems to be responsive to say on pay-votes when it comes to the design of newly entering candidates.
    Keywords: executive compensation,say on pay,Germany
    JEL: D23 G30 G34 J33 K22
    Date: 2016
  6. By: Stanley L. Winer (Department of Economics, Carleton University)
    Abstract: In this chapter I provide an overview of the political economy of taxation in democratic states by considering the three most important issues in the field: (1) the evolution of the power to tax in (what are now) the mature constitutional democracies; (2) the nature and determinants of modern tax structures; and (3) redistribution in pluralistic societies over various horizons and in the face of economic shocks. The discussion considers the ideas and models that have arisen as scholars have grappled with these related issues, and points to some of the outstanding problems that may be worth pursuing in future research.
    Keywords: Taxation, Oxford Handbook, political economy, public choice, power to tax, tax structure, fiscal redistribution
    JEL: D72 D78 H2 H24
    Date: 2016–10–01
  7. By: Isabelle Distinguin (LAPE - Laboratoire d'Analyse et de Prospective Economique - UNILIM - Université de Limoges - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société); Aref Mahdavi-Ardekani (LAPE - Laboratoire d'Analyse et de Prospective Economique - UNILIM - Université de Limoges - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - UNILIM - Université de Limoges - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société)
    Abstract: This paper investigates the impact of interbank network topology on bank liquidity ratios. Whereas more emphasis has been put on liquidity requirements by regulators since the global financial crisis of2007-2008, how differently shaped interbank networks impact individual bank liquidity behavior remains an open issue. We look at how bank interconnectedness within interbank loan and deposit networks affects their decision to hold more or less liquidity during normal times and distress times and depending on the overall size of the banking sector. Our results show that taking into account the way that banks are linked to each other within a network adds value to traditional liquidity models. Our findings have critical implications with regards to the implementation of Basel III liquidity requirements and bank supervision more generally. JEL Classification: G32, G21, G28 and G01
    Keywords: Interbank network topology,Basel III,Liquidity risk,Financial Crisis
    Date: 2016–06–23
  8. By: Paolo Melindi-Ghidi (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: Why, in some urban communities, do rich and poor households cohabit while, in others, we observe sorting by income? To answer this question I develop a two-community general equilibrium framework of school quality, residential choice and tax decision with probabilistic voting. The model predicts that in highly unequal societies in which households segregate by schooling, low- and high-income households choose to live in the same community. When there is less inequality, we observe the typical sorting by income across communities. The theoretical model suggests that the effect of inequality on the quality of public schooling is ambiguous and depends on the relative endowments of housing in the two communities. When inequality increases, if housing in the community where rich and poor households cohabit is affordable, then an inflow of high-income middle class households towards this community emerges. As a consequence, inequality negatively impacts the quality of public schooling due to an ends-against-the-middle coalition that pushes tax rates down.
    Keywords: Inequality, probabilistic voting, segregation, income mixing equilibrium
    JEL: D72 I24 I28 R21
    Date: 2016–10

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