nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2016‒11‒20
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. Do Politicians Change Public Attitudes? By Carlsson, Magnus; Dahl, Gordon B.; Rooth, Dan-Olof
  2. Voter Motivation and the Quality of Democratic Choice By Lydia Mechtenberg; Jean-Robert Tyran
  3. Does majority voting improve board accountability? By Choi, Stephen J.; Fisch, Jill E.; Kahan, Marcel; Rock, Edward B.
  4. Experimental Evidence on Expressive Voting By Jean-Robert Tyran; Alexander K. Wagner
  5. Rain, Emotions and Voting for the Status Quo By Meier, Armando N.; Schmid, Lukas D.; Stutzer, Alois
  6. Competing cleavages in sub-Saharan Africa? How economic distance affects ethnic bloc politics By Jeffrey Conroy-Krutz
  7. Neural networks would 'vote' according to Borda's Rule By Burka, Dávid; Puppe, Clemens; Szepesváry, László; Tasnádi, Attila
  8. Electoral incentives and firm behavior: Evidence from U.S. power plant pollution abatement By Matthew Doyle; Corrado Di Maria; Ian Lange; Emiliya Lazarova
  9. Individual vs. Group Decision Making: an Experiment on Dynamic Choice under Risk and Ambiguity By Konstantinos Georgalos; Enrica Carbone; Gerardo Infante
  10. The political economy of immigration and population ageing By Dotti, Valerio
  11. Interacting Information Cascades: On the Movement of Conventions Between Groups By James C.D. Fisher; John Wooders
  12. Information Disclosure and Cooperation in a Finitely-repeated Dilemma: Experimental Evidence By Kamei, Kenju
  13. Flip a coin or vote : an Experiment on choosing group decision By Hoffmann, Timo; Renes, Sander
  14. Co-financing agreements and reciprocity: When 'no deal' is a good deal By Dooseok Jang; Amrish Patel; Martin Dufwenberg
  15. Poverty reduction strategies in Canada: A new way to tackle an old problem? By Notten, Geranda; Laforest, Rachel
  16. How Strategic Networking Impacts the Networking Outcome: A Complex Adaptive System Approach By Somayeh Koohborfardhaghighi; Jorn Altmann
  17. A Turbine is not only a Turbine: The Role of Social Context and Fairness Characteristics for the Local Acceptance of Wind Power By Ulf Liebe; Anna Bartczak; Jürgen Meyerhoff

  1. By: Carlsson, Magnus (Linnaeus University); Dahl, Gordon B. (University of California, San Diego); Rooth, Dan-Olof (Stockholm University)
    Abstract: A large theoretical and empirical literature explores whether politicians and political parties change their policy positions in response to voters' preferences. This paper asks the opposite question: do political parties affect public attitudes on important policy issues? Problems of reverse causality and omitted variable bias make this a difficult question to answer empirically. We study attitudes towards the signature policies of small parties in Sweden using panel data from 290 municipal election districts. To identify causal effects, we take advantage of large nonlinearities in the function which assigns council seats, comparing otherwise similar elections where one party either barely wins or loses an additional seat. We estimate that a one seat increase for the anti-nuclear party reduces support for nuclear energy in that municipality by 3.3 percentage points. In contrast, when an anti-immigration or far left politician gets elected, negative attitudes towards immigration decrease by 4.8 percentage points and support for a six hour workday falls by 3.2 percentage points, respectively, in opposition to each party's policy position. Mirroring these attitudinal changes, the anti-nuclear party receives more votes in the next election after gaining a seat, while the anti-immigrant and far left parties lose their incumbency advantage. Exploring two possible mechanisms, we find evidence that when the anti-immigrant party gains an extra seat, they draw in lower quality politicians and receive negative local newspaper coverage. These findings have important implications for the theory and estimation of how voter preferences enter into electoral and political economy models.
    Keywords: voter preferences, incumbency effects, media influence
    JEL: D72 H70
    Date: 2016–11
  2. By: Lydia Mechtenberg (Faculty of Business Economics and Social Sciences, University of Hamburg); Jean-Robert Tyran (Department of Economics, University of Copenhagen)
    Abstract: The quality of democratic choice critically depends on voter motivation, i.e. on voters’ willingness to cast an informed vote. If voters are motivated, voting may result in smart choices because of information aggregation but if voters remain ignorant, delegating decision making to an expert may yield better outcomes. We experimentally study a common interest situation in which we vary voters’ information cost and the competence of the expert. We find that voters are more motivated to collect information than predicted by standard theory and that voter motivation is higher when subjects demand to make choices by voting than when voting is imposed on subjects.
    Keywords: voting, experiment, information acquisition, information aggregation
    JEL: C91 D71 D72
    Date: 2016–09–15
  3. By: Choi, Stephen J.; Fisch, Jill E.; Kahan, Marcel; Rock, Edward B.
    Abstract: Directors have traditionally been elected by a plurality of the votes cast. This means that in uncontested elections, a candidate who receives even a single vote is elected. Proponents of "shareholder democracy" have advocated a shift to a majority voting rule in which a candidate must receive a majority of the votes cast to be elected. Over the past decade, they have been successful, and the shift to majority voting has been one of the most popular and successful governance reforms. Yet critics are skeptical as to whether majority voting improves board accountability. Tellingly, directors of companies with majority voting rarely fail to receive majority approval - even more rarely than directors of companies with plurality voting. Even when such directors fail to receive majority approval, they are unlikely to be forced to leave the board. This poses a puzzle: why do firms switch to majority voting and what effect does the switch have, if any, on director behavior? We empirically examine the adoption and impact of a majority voting rule using a sample of uncontested director elections from 2007 to 2013. We test and find partial support for four hypotheses that could explain why directors of majority voting firms so rarely fail to receive majority support: selection; deterrence/accountability; electioneering by firms; and restraint by shareholders. Our results further suggest that the reasons for and effects of adopting majority voting may differ between early and later adopters. We find that early adopters of majority voting were more shareholder-responsive than other firms even before they adopted majority voting. These firms seem to have adopted majority voting voluntarily, and the adoption of majority voting has made little difference in their responsiveness to shareholders responsiveness going forward. By contrast, for late adopters, we find no evidence that they were more shareholder-responsive than other firms before they adopted majority voting, but strong evidence that they became more responsive after adopting majority voting. Differences between early and late adopters can have important implications for understanding the spread of corporate governance reforms and evaluating their effects on firms. Reform advocates, rather than targeting the firms that, by their measures, are most in need of reform, instead seem to have targeted the firms that are already most responsive. They may then have used the widespread adoption of majority voting to create pressure on the nonadopting firms. Empirical studies of the effects of governance changes thus need to be sensitive to the possibility that early adopters and late adopters of reforms differ from each other and that the reforms may have different effects on these two groups of firms.
    Date: 2016
  4. By: Jean-Robert Tyran (Department of Economics, University of Copenhagen); Alexander K. Wagner (The Vienna Center for Experimental Economics, University of Vienna)
    Abstract: Standard economic reasoning assumes that people vote instrumentally, i.e., that the sole motivation to vote is to influence the outcome of an election. In contrast, voting is expressive if voters derive utility from the very act of expressing support for one of the options by voting for it, and this utility is independent of whether the vote affects the outcome. This paper surveys experimental tests of expressive voting with a particular focus on the low-cost theory of expressive voting. The evidence for the low-cost theory of expressive voting is mixed.
    Keywords: Expressive Voting, Experiment, Public Choice, Political Economy
    JEL: C91 C92 D72
    Date: 2016–09–12
  5. By: Meier, Armando N. (University of Basel); Schmid, Lukas D. (University of Lucerne); Stutzer, Alois (University of Basel)
    Abstract: Do emotions affect the decision between change and the status quo? We exploit exogenous variation in emotions caused by rain and analyze data on more than 400 ballot propositions in Switzerland for the years 1958 to 2014 to address this question. The empirical tests are based on administrative ballot outcomes and individual postvote survey data. We find that rain decreases the share of votes for a change. Our robustness checks suggest that changes in the composition of the electorate or changes in information acquisition do not drive this result. In addition, we provide evidence that rain might have altered the outcome of several high-stake votes. We discuss the psychological mechanism and document that rain reduces the willingness to take risks, a pattern that is consistent with the observed reduction in the support of change.
    Keywords: emotions, voting, status quo, risk aversion, rain, direct democracy, turnout
    JEL: D03 D72
    Date: 2016–11
  6. By: Jeffrey Conroy-Krutz
    Abstract: Does economic standing cross-cut ethnicity in African electoral politics? In many countries in the region, ethnicity appears to be a major consideration in individuals’ political decision-making. However, there is significant variation in the extent to which coethnics support parties en bloc; while some ethnic groups exhibit high rates of similarity in terms of members’ preferred parties, others are more fractionalized. One factor that might affect the probability that an individual will support the plurality-choice party of his or her ethnic group is relative economic standing. I expect that, as the distance between an individual’s level of wealth and his or her ethnic group’s median level of wealth increases, the probability of the member supporting the most-favoured party of their coethnics decreases. In other words, economic considerations can cross-cut ascriptive identities. I test this expectation with data from 27 countries included in the fifth round of the Afrobarometer and find that individuals who are significantly different, in terms of wealth, from other members of their ethnic group are significantly less likely to support their group’s plurality-choice party. Specifically, economic difference increases non-partisanship and support for out-parties (i.e., those not their group’s plurality choice). Further, being a member of a group that has greater levels of within-group inequality reduces support for a plurality-choice party, while living in a country with higher levels of between-group inequality increases support for a plurality-choice party. The results suggest that some ethnic groups’ propensity towards bloc voting can be explained, at least partially, by group-level similarities in economic interests.
    Keywords: Africa, elections, ethnicity, inequality, parties
  7. By: Burka, Dávid; Puppe, Clemens; Szepesváry, László; Tasnádi, Attila
    Abstract: Can neural networks learn to select an alternative based on a systematic aggregation of convicting individual preferences (i.e. a 'voting rule')? And if so, which voting rule best describes their behavior? We show that a prominent neural network can be trained to respect two fundamental principles of voting theory, the unanimity principle and the Pareto property. Building on this positive result, we train the neural network on profiles of ballots possessing a Condorcet winner, a unique Borda winner, and a unique plurality winner, respectively. We investigate which social outcome the trained neural network chooses, and find that among a number of popular voting rules its behavior mimics most closely the Borda rule. Indeed, the neural network chooses the Borda winner most often, no matter on which voting rule it was trained. Neural networks thus seem to give a surprisingly clear-cut answer to one of the most fundamental and controversial problems in voting theory: the determination of the most salient election method.
    Keywords: voting, social choice, neural networks, machine learning, Borda count
    JEL: D71
    Date: 2016–10–31
  8. By: Matthew Doyle (Colorado School of Mines); Corrado Di Maria (University of East Anglia); Ian Lange (Colorado School of Mines); Emiliya Lazarova (University of East Anglia)
    Abstract: Researchers have utilized the fact that many states have term limits (as opposed to being eligible for re-election) for governors to determine how changes in electoral incentives alter state regulatory agency behavior. This paper asks whether these impacts spill over into private sector decision-making. Using data from gubernatorial elections in the U.S., we find strong evidence that power plants spend less in water pollution abatement if the governor of the state where the plant is located is a term-limited democrat. We show that this evidence is consistent with compliance cost minimization by power plants reacting to changes in the regulatory enforce- ment. Finally, we show that the decrease in spending has environmental impacts as it leads to increased pollution.
    Keywords: political economy, electoral incentives, term limits, environmental policy, pollution abatement, compliance costs, power plants, water pollution, regression discontinuity
    JEL: H32 H76 Q25 Q53 Q58
    Date: 2016–09–30
  9. By: Konstantinos Georgalos; Enrica Carbone; Gerardo Infante
    Abstract: This paper focuses on comparing individual and group decision making, in a stochastic inter-temporal problem in two decision environments, namely risk and ambiguity. Using a consumption/saving laboratory experiment, we investigate behaviour in four treatments: (1) individual choice under risk; (2) group choice under risk; (3) individual choice under ambiguity and (4) group choice under ambiguity. Comparing decisions within and between decision environments, we find an anti-symmetric pattern. While individuals are choosing on average closer to the theoretical optimal predictions, compared to groups in the risk treatments, groups tend to deviate less under ambiguity. Within decision environments, individuals deviate more when they choose under ambiguity, while groups are better planners under ambiguity rather than under risk. We argue that the results might be driven by differences in the levels of ambiguity and risk attitudes between individuals and groups, extending the frequently observed pattern of groups behaving closer to risk and ambiguity neutrality, to its dynamic dimension.
    Keywords: Risk, Ambiguity, Inter-temporal Optimisation, Group Decision Making, Learning, Experiment
    JEL: C91 C92 D11 D91 E21
    Date: 2016
  10. By: Dotti, Valerio
    Abstract: I investigate the effects of population ageing on immigration policies. Voters' attitude towards immigrants depends on how the net gains from immigration are divided up in the society by the fiscal policy. In the theoretical literature this aspect is treated as exogenous to the political process because of technical constraints. This generates inconsistent predictions about the policy outcome. I adopt a new equilibrium concept for voting models to analyse the endogenous relationship between immigration and fiscal policies and solve this apparent inconsistency. I show that the elderly and the poor have a common interest in limiting immigration and in increasing public spending. This exacerbates the effects of population ageing on public finances and results in a high tax burden on working age individuals and further worsens the age profile of the population. Moreover, I show that if the share of elderly population is suffciently large, then a society is unambiguously harmed by the tightening in the immigration policy caused by the demographic change. The implications of the model are consistent with the patterns observed in UK attitudinal data and in line with the findings of the empirical literature about migration.
    Keywords: Immigration , Ageing , Policy , Voting
    JEL: D72 C71 J61 H55
    Date: 2016
  11. By: James C.D. Fisher (Department of Economics, University of Arizona); John Wooders (Economics Discipline Group, University of Technology, Sydney)
    Abstract: When a decision maker is a member of multiple social groups, her actions may cause information to spill overfrom one group to another. We study the nature of these spillovers in an observational learning game where two groups interact via a common player, and where conventions emerge when players follow the decisions of the members of their own groups rather than their own private information. We show that: (i) if a convention develops in one group but not the other group, then the convention spills over via the common player; (ii) when conventions disagree, then the common players decision breaks the convention in one group; and (iii) when no conventions have developed, then the common players decision triggers conventions on the same action in both groups. We also nd that information spillovers may reduce welfare.
    Date: 2015–01–16
  12. By: Kamei, Kenju
    Abstract: A large volume of theoretical and experimental studies have suggested that making information on people’s past behaviors visible to others may lead to the evolution of cooperation in finitely-repeated environments. But, do people endogenously cooperate with randomly-matched peers by revealing their past when they have an option to hide it? This paper experimentally shows that cooperation does not evolve in a random-matching environment because a large fraction of people do not choose to reveal their past behavior. However, when a costly sorting mechanism (where disclosers are matched with other disclosers; and likewise non-disclosers with other non-disclosers) is present, a stable number of subjects decide to costly disclose their past to join the reputation community and cooperate with other disclosers. Our study at the same time shows that when the sorting process is free, the high efficiency in the reputation community decreases as strategic subjects tend to join the reputation community and attempt to exploit cooperators. These findings suggest an important role of costly sorting mechanisms in the formation of communities (including online platforms) in order for people to sustain a high level of cooperation norms.
    Keywords: experiment, cooperation, finitely-repeated dilemma, repeated games, reputation
    JEL: C73 C9 D0 H41
    Date: 2016–09–25
  13. By: Hoffmann, Timo; Renes, Sander
    Abstract: Before a group can take a decision, its members must agree on a mechanism to aggregate individual preferences. In this paper we present the results of an experiment on the influence of private payoff information and the role of the available alternatives on individuals’ mechanism choices in such group choice situations. While efficient mechanisms are desirable, we experimentally show that participation constraints can prevent their implementation. We find strong indications that individual preferences for choice rules are sensitive to individual expected payoffs. Our results highlight the importance of considering participation constraints when designing choice institutions.
    JEL: C91 C92 D70 D82
    Date: 2016
  14. By: Dooseok Jang (Korea Advanced Institute of Science and Technology); Amrish Patel (University of East Anglia); Martin Dufwenberg (University of Arizona)
    Abstract: Institutions for co-financing agreements often exist to encourage public good investment. Can such frameworks deliver maximal investment when agents are motivated by reciprocity? We demonstrate that indeed they can, but not in the way one might expect. If maximal investment is impossible in the absence of the institution and public good returns are high, then an agreement signed by all parties cannot lead to full investment. However, if all parties reject the co-financing agreement, then an informal deal to invest can lead to full investment. Agreement institutions may thus do more than just facilitate the signing of formal agreements; they may play a critical role in igniting informal cooperation underpinned by reciprocity.
    Keywords: co-financing agreements, informal agreements, public goods, reciprocity
    JEL: C72 D03 F53 H41
    Date: 2016–11–09
  15. By: Notten, Geranda (UNU‐MERIT, and Graduate School of Public and International Affairs, University of Ottawa); Laforest, Rachel (School of Policy Studies, Queen’s University)
    Abstract: Since the end 1990s, jurisdictions across the world have adopted an innovative governance process called a Poverty Reduction Strategy (PRS). PRS processes are a perfect example of a new governance dynamics in which collaboration between the public sector and the community sector is leveraged to develop policy solutions to complex problems such as poverty. Jurisdictions argue that this new process helps ensure continued prioritisation, improved information for decision making, and improved coordination between different units of government and other partners. In Canada nearly all provinces and territories now engage in a PRS process. This paper asks whether the PRS processes, as implemented by four Canadian provinces (Manitoba, Newfoundland and Labrador, Ontario and Quebec), have the potential to deliver on the expected governance benefits. This research is the first to connect theory to a widespread yet under-researched practice in government. We review the collaborative governance and performance management literatures for theories and empirical evidence on the costs and benefits of similar practices. We use official documents to identify a theory of change which explains how PRS processes could result in more poverty reduction. We use public information to describe and compare PRS processes in the four provinces. Our research shows that each province makes quite different choices in implementing its process and that such differences likely influence the degree to which aspired governance benefits are realised. When legislation supports the PRS process, provinces have more continuous activities and, where legislation details the role of non-government stakeholders, stakeholder involvement is more substantive and visible. There is now more public information on government’s actions but also still much scope for improvement, especially in linking fiscal expenses, effects of policy actions, and wellbeing outcomes. Whether new coordination mechanisms have been sufficient to yield substantive benefits in coordination is unclear.
    Keywords: poverty reduction strategy (PRS), poverty reduction, collaborative governance, performance management, social policy
    JEL: I30 I39 O15
    Date: 2016–10–24
  16. By: Somayeh Koohborfardhaghighi (College of Engineering, Seoul National University); Jorn Altmann (College of Engineering, Seoul National University)
    Abstract: In this study, we provide an interaction model based on complex adaptive system theory, to explain how different methods of network growth and strategic responses of existing network members towards them impact the outcome of networked individuals (i.e., utility gain at the individual level or a society’s collective utility known as social welfare). The proposed interaction model allows us to perform our experiments with dynamic utility computation, while individuals act strategically in response to what other individuals do in the network. We utilized the formulation of the co-author model, as it augments the concept of network structure for modeling individuals’ utilities. The experimental results show that different methods of a network growth lead to different networking outcome for its members. We observed that total networking outcome is the highest (with respect to the co-author model), if newly entered individuals establish their links strategically to other existing members in a way to maximize their own payoffs. We believe that reduction in the total utility due to strategic responses within the network is acceptable in exchange of having a homogenous utility distribution within the population. Our observations give us the idea that, with the help of strategic responses, central network members can be prevented from gaining very high utilities compared to others. Furthermore, network structures can be prevented, in which the utilities of network members are widely dispersed. In such a setting, individuals experience no discrimination in utility gain against other people in their community.
    Keywords: Co-Author Model; Social Welfare; Strategic Behavior; Utility Maximization; Network Growth Models; Complex Adaptive System Approach; Agent-based Modeling and Simulation.
    JEL: A13 C02 C15 C63 C73 D85
    Date: 2016–08
  17. By: Ulf Liebe (Institute of Sociology, University of Bern); Anna Bartczak (Faculty of Economic Sciences, University of Warsaw); Jürgen Meyerhoff (Institute for Landscape and Environmental Planning, Technische Universität Berlin)
    Abstract: To gain acceptance for renewable energy production sites it is not sufficient just to develop the appropriate technology without taking the social context and fairness concerns into account. Using a factorial survey experiment we investigate the influence of both on the local acceptance of wind turbine developments in Germany and Poland, two countries differing in installed wind power capacity. Respondents were confronted with hypothetical situations describing the construction of wind farms varying, among others, in the opportunity to participate in the planning process (participatory justice), the distribution of turbines across regions (distributive justice) and ownership. We find higher acceptance levels in Poland than in Germany. Respondents in both countries are willing to accept new turbines in their vicinity if they can participate in decision making, the turbines are owned by a group of citizens and if the generated electricity is consumed in the region instead of being exported. Overall, participatory justice is more important than distributive justice. Confirming previous results, we also find that respondents who have already turbines in their vicinity show higher acceptance levels than those who are not yet affected. Thus, the negative externalities are likely to be overestimated in the planning and implementation process.
    Keywords: Distributive Justice, Factorial Survey Experiment, Participatory Justice, Wind Power
    JEL: Q42 Q48 Q54 Q56 R11 R12
    Date: 2016

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