nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2017‒01‒22
twelve papers chosen by
Stan C. Weeber, McNeese State University

  1. Cooperative Games with Externalities and Probabilistic Coalitional Beliefs By Paraskevas Lekeas; Giorgos Stamatopoulos
  2. The Effect of Labor Migration on the Diffusion of Democracy: Evidence from a Former Soviet Republic By Toman Barsbai; Hillel Rapoport; Andreas Steinmayr; Christoph Trebesch
  3. Ties that bind: how business connections affect mutual fund activism By Dragana Cvijanović; Amil Dasgupta; Konstantinos Zachariadis
  4. Asymmetric social norms By Camera, Gabriele; Gioffré, Alessandro
  5. Assessing the unidimensionality of political opinions. An indirect test of the persuasion bias By Lionel Page
  6. Historical Roots of Political Extremism: The E ffects of Nazi Occupation of Italy By Fontana, Nicola; Nannicini, Tommaso; Tabellini, Guido
  7. De-constitutionalization and majority rule: A democratic vision for Europe By Scharpf, Fritz W.
  8. The market for talent: Competition for resources and self governane in teams By Abhijit Ramalingam; Brock V. Stoddard; James M. Walker
  9. Behavioural types in public goods games: A re-analysis by hierarchical clutering By Francesco Fallucchi; R. Andrew Luccasen; Theodore L. Turocy
  10. Labor unrest and incipient collective bargaining in China By Sarosh Kuruvilla; Hao Zhang
  11. Political Instability and Lessons for Pakistan: Case Study of 2014 PTI Sit in Protests By Javed, Rabbia; Mamoon, Dawood
  12. Re-imaging Capitalism through Social Entrepreneurship By Chatterjee, Susmita; Datta Gupta, Sangita

  1. By: Paraskevas Lekeas; Giorgos Stamatopoulos (Department of Economics, University of Crete, Greece)
    Abstract: Cooperative game theory studies situations where groups or coalitions of players act collectively by signing binding agreements. The starting point of the theory is to determine the worth each coalition can achieve when its members act independently of the players outside the coalition. In games with orthogonal coalitions, i.e., coalitions that do not affect one another, this task is quite straightforward, as it suffices to study the actions of the insiders only. However, when orthogonality is absent, or in other words, when there are inter-coalitional externalities, the specification of the worth of a coalition requires the studying of the actions of the players in all coalitions. Therefore, when a number of players contemplate to form a coalition in an environment with externalities they need to have a theory, or a conjecture, about the actions of the players outside the proposed coalition. Clearly, different conjectures lead to different specifications of the worth or value of the coalition, which in turn affects the outcome of the game. In particular, these conjectures determine the core of the cooperative game. The core is the set of all outcomes (allocations of the value that the entire society of players generates) that no coalition has incentive to block and act on its own. Non-emptiness of the core means that cooperation among all players in the game is feasible. The literature on cooperative games with externalities has proposed a number of such coalitional conjectures, each giving rise to a specific core notion. According to α and β-conjectures (Aumann 1959), the members of a coalition compute their worth assuming that the outside players select their strategies so as to minimize the payoff of the coalition; the α and β-core are then defined with respect to the resulting coalitional payoffs. According to γ-conjectures (Chander&Tulkens 1997), it is assumed that the outsiders select individual best strategies, i.e., they form only singleton coalitions; the γ-core is then accordingly defined. The same approach can be followed under the additional assumption that each coalition assumes for itself the role of Stackelberg leader (Currarini&Marini 2003). The r-theory (Huang&Sjostrom 2003; Koczy 2007) proposes that the members of a coalition compute their worth by looking recursively on the sub-games played among the outsiders; the r-core arises when the solution concept employed in these sub-games is the core itself. Economists often restore to cooperative games with externalities to model various economic environments. Applications include the use of α and β-core in oligopolistic markets (Zhao 1999; Norde et al. 2002; Lardon 2010); the use of γ-core in economies with production externalities (Chander&Tulkens 1997; Chander 2007; Helm 2012), in oligopolies (Rajan 1989; Lardon 2010; Lardon 2012) or in extensive-form games (Chander&Wooders 2012); the use of sequential γ-core for cooperative games with strategic complements (Currarini&Marini 2003) or for economies with enviromental externalities (Marini 2013), etc. The main focus of these papers is to find conditions under which the core is non-empty. The current paper focuses too on cooperative games with externalities but takes a different route. It assumes that when a group of players S contemplate to break off from the rest of the society, they are uncertain about the partition that the players outside S will form. Hence, they assign various probability distributions on the set of all possible partitions. These probabilistic beliefs do not necessarily reflect the behavior of the outsiders, i.e., beliefs need not be consistent with actual choices. Given the beliefs, no natter how they form, one can compute the expected worth of S and define the core of the resulting cooperative game. The task that arises then is to find conditions on the data of the game (i.e., payoff functions and probability distributions) that guarantee the non-emptiness of the core, or, in other words, guarantee that the cooperation of all players in the game is feasible. The motivation of our paper is twofold. First, we are intersted in generalizing (some of) the existing approaches on the definition of the core. For example, the γ-core notion is a special case of our approach that arises when each coalition assigns probability one to the event that the outsiders will form only singleton coalitions. Secondly, our paper could be read as a work on bounded rationality in its relation to cooperative games. The assignment of a (non-equilibrium) probability distribution on the set of parititions of the outsiders may reflect the cognitive inability of the members of a coalition to accurately deduce the outsiders' equilibrium partition. In this sense, probabilistic beliefs act as a rule of thumb. This approach is particularly relevant for games with a large number of players, where the number of different partitions can be very large. We apply the above framework to cooperative games generated by (symmetric) aggregative normal form games, i.e., games where the payoff of a player depends on his strategy and on the sum of the strategies of all players. Many economic models have an aggregative structure, such as oligopoly models, rent-seeking games, contest games, etc. We focus, in particular, on aggregative games that satisfy the following properties: (a) each player's payoff function has a bilinear form (this gives us the family of linear aggregative games introduced by Martimort&Stole 2010); (b) each player's payoff and marginal payoff decrease in the aggregate value of all players' strategies. The bilinear form assumption, in particular, is used as it allows us to simplify considerably the objective function of each coalition.
    Keywords: aggregative game; cooperative game; core; stochastic dominance
    JEL: C71
    Date: 2016–09–22
  2. By: Toman Barsbai; Hillel Rapoport; Andreas Steinmayr; Christoph Trebesch
    Abstract: Migration contributes to the circulation of goods, knowledge, and ideas. Using community and individual-level data from Moldova, we show that the emigration wave that started in the aftermath of the Russian crisis of 1998 strongly affected electoral outcomes and political preferences in Moldova during the following decade, eventually contributing to the fall of the last Communist government in Europe. Our results are suggestive of information transmission and cultural diffusion channels. Identification relies on the quasi-experimental context and on the differential effects arising from the fact that emigration was directed both to more democratic Western Europe and to less democratic Russia.
    Keywords: Emigration;Political institutions;Elections;Social networks;Information transmission;Cultural diffusion
    JEL: F22 D72 O1
    Date: 2016–09
  3. By: Dragana Cvijanović; Amil Dasgupta; Konstantinos Zachariadis
    Abstract: We investigate whether business ties with portfolio firms influence mutual funds’ proxy voting using a comprehensive data set spanning 2003 to 2011. In contrast to prior literature, we find that business ties significantly influence pro-management voting at the level of individual pairs of fund families and firms after controlling for ISS recommendations and holdings. The association is significant only for shareholder-sponsored proposals and stronger for those that pass or fail by relatively narrow margins. Our findings are consistent with a demand-driven model of biased voting in which company managers use existing business ties with funds to influence how they vote.
    Keywords: mutual funds; activism; business ties; proxy vote disclosure
    JEL: D72 G23 G34 G38 K22
    Date: 2016–12
  4. By: Camera, Gabriele; Gioffré, Alessandro
    Abstract: Studies of cooperation in infinitely repeated matching games focus on homogeneous economies, where full cooperation is efficient and any defection is collectively sanctioned. Here we study heterogeneous economies where occasional defections are part of efficient play, and show how to support those outcomes through contagious punishments
    Keywords: cooperation,repeated games,social dilemmas
    JEL: C6 C7
    Date: 2017
  5. By: Lionel Page
    Abstract: In an influential paper, DeMarzo, Vayanos, and Zwiebel propose a model of persuasion bias whereby people are overly influenced by repetitive information. Such a persuasion bias leads political opinions to be unidimensional with individuals converging to a single "left-right" dimension on every issues. Using a large dataset on political opinions on a wide range of issues just before a presidential election in France, I test whether political opinions are indeed unidimensional. I find that political opinions are far from being unidimensional and I discuss what it means for the persuasion model.
    Keywords: social preferences, voting behavior, online survey
    JEL: A13 D72
    Date: 2017–01–12
  6. By: Fontana, Nicola; Nannicini, Tommaso; Tabellini, Guido
    Abstract: The Italian civil war and the Nazi occupation of Italy occurred at a critical juncture, just before the birth of a new democracy and when, for the first time in a generation, Italians were choosing political affiliations and forming political identities. In this paper we study how these traumatic events shaped the new political system. We exploit geographic heterogeneity in the intensity and duration of the civil war, and the persistence of the battlefront along the "Gothic line" cutting through Northern-Central Italy. We find that the Communist Party gained votes in the post-war elections where the Nazi occupation and the civil war lasted longer, mainly at the expense of the centrist and catholic parties. This effect persists until the early 1990s. Evidence also suggests that this is due to an effect on political attitudes. Thus, the foreign occupation and the civil war left a lasting legacy of political extremism and polarization on the newborn Italian democracy.
    Keywords: Civil War; political extremism; World War II
    Date: 2017–01
  7. By: Scharpf, Fritz W.
    Abstract: European integration has come to constrain the capacity for democratic political action in EU member states through the judicial constitutionalization of "economic liberties," whereas the capacity for effective political action at the European level is narrowly constrained by the multiple-veto character of the Union's "ordinary legislative procedure." Since both of these constraints have institutional causes, they might be loosened by institutional reforms that shift the competence for negative integration from the sphere of judicial legislation to European political legislation and would allow legislation by majority rule at the European level. In order to ensure democratic legitimacy, however, majoritarian legislation would have to allow national opt-outs.
    Keywords: EU,democracy,legitimacy,consensus,majority,negative integration,liberalization,constitutionalization,Demokratie,Legitimität,Konsens,Mehrheit,negative Integration,Liberalisierung,Konstitutionalismus
    Date: 2016
  8. By: Abhijit Ramalingam (University of East Anglia); Brock V. Stoddard (University of South Dakota); James M. Walker (Indiana University)
    Abstract: We experimentally investigate the effect of naturally occurring competition for the resources of team members with ‘divided loyalties’ on the ability of teams to overcome the free-rider problem associated with the provision of public goods. We find that such competition alone creates ‘winners’ and ‘losers’. However, if groups are able to determine their membership, they are able to attract the ‘loyalties’ of all team members. By eschewing the study of additional mechanisms that require external intervention or alterations of payoff functions, our work highlights the role played by implicit market competition and endogenous self-governance of membership in promoting cooperation.
    Keywords: public goods, experiment, divided loyalties, competition, resources, endogenous membership
    JEL: C72 C91 C92 H41
    Date: 2016–10–05
  9. By: Francesco Fallucchi (University of East Anglia); R. Andrew Luccasen (Mississippi University for Women); Theodore L. Turocy (University of East Anglia)
    Abstract: We re-analyse participant behaviour in standard economics experiments studying voluntary contributions to a public good. Previous approaches were based in part on a priori models of decision-making, such as maximising personal earnings, or reciprocating the behaviour of others. Many participants however do not conform to one of these models exactly, requiring ad hoc adjustments to the theoretical baselines to identify them as belonging to a given behavioural type. We construct a typology of behaviour based on a similarity measure between strategies using hierarchical clustering analysis. We identify four clearly distinct behavioural types which together account for over 90% of participants in six experimental studies. The resulting type classification distinguishes behaviour across groups more consistently than previous approaches.
    JEL: C65 C71 H41
    Date: 2017–01–12
  10. By: Sarosh Kuruvilla; Hao Zhang
    Abstract: In this paper, we argue that both labor unrest and collective bargaining are increasing in China. Using McAdam’s political process theory, we argue that Chinese workers are striking more and offensively in support of their economic demands. We identify the state’s interests in promoting collective bargaining, and through an analysis of union and employers organizations, attempt to predict the future trajectory of collective bargaining in China. Using new data about strikes, we confirm our argument that strikes in China are increasing. Based on very limited past and current research, we create a taxonomy of baseline collective bargaining in China against which future developments can be compared.
    Keywords: collective bargaining; employment relations; strikes
    JEL: N0 R14 J01 J50
    Date: 2016–04–01
  11. By: Javed, Rabbia; Mamoon, Dawood
    Abstract: It’s a short allegory to present the case for the importance of Political stability in the economic progress of a country. The Arab spring protests were seen as strengthening democracy in the Arab world. Notwithstanding the surprise Arab spring brought in shape of further destabilizing Middle East, a similar environment of unrest and protests in a practicing democracy like Pakistan capture same dynamics of uncertainty that dampen economic destabilization. The paper briefly covers PTI’s sit in protests in year 2014 to make a case for how political instability stifled economic progress in Pakistan though momentarily.
    Keywords: Political Economy, Economic Development
    JEL: O1
    Date: 2017–01–07
  12. By: Chatterjee, Susmita; Datta Gupta, Sangita
    Abstract: Abstract: Social Entrepreneurship focuses on activities that make world a better place to live in Social Entrepreneurship addresses various social issues. One such issue is rural development and poverty eradication. One way to achieve this is through self-Help groups. Self –Help group ( SHG) is a unique concept in India Self Help group is a homogenous group of people who have come together with the intention of increasing their income, improve their standard of living and status in society. Self –Help groups is a tool to eradicate poverty and encourage rural development. This study looks into journey of two women from two self-help groups of West Bengal. One SHG is located in rural area and another is in urban area. Self help groups helped them in developing their enterprise. These two micro entrepreneurs in turn provided livelihood to many women in their locality. They have been instrumental in providing other women in their locality with decent income. Self-Help groups not only helped in eradication of poverty but also helped in empowerment of women by providing them with income and social recognition.
    Keywords: Social Entrepreneurship, Micro-Entrepreneurs, SHG, India,
    JEL: O2
    Date: 2016–12–29

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