nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2017‒05‒07
ten papers chosen by
Stan C. Weeber, McNeese State University

  1. The Imperfect Beliefs Voting Model By Benjamin Ogden
  2. Voters and Representatives: How Should Representatives Be Selected? By Thomas Braendle; Alois Stutzer
  3. A Model of Focusing in Political Choice By Salvatore Nunnari; Jan Zapal
  4. Social identity and political polarization: Evidence on the impact of identity on partisan voting trade By Duell, Dominik; Valasek, Justin Mattias
  5. Institutions as Causes and Effects: North African Electoral Systems during the Arab Spring By Carey, John M.; Masoud, Tarek; Reynolds, Andrew S.
  6. The Political Economy of Heterogeneity and Conflict By Enrico Spolaore; Romain Wacziarg
  7. Financial literacy and bank runs: an experimental analysis By Eloisa Campioni; Vittorio Larocca; Loredana Mirra; Luca Panaccione
  8. Is Transparency an Anti-Corruption Myth? By Murray, Cameron K.; Frijters, Paul; Schaffner, Markus
  9. Conspiracy against the public - an experiment on collusion By Johnsen, Åshild Auglænd
  10. A Model of Influence on Trade Policy in a Computable General Equilibrium Model By Franck Viroleau

  1. By: Benjamin Ogden
    Abstract: In real-life elections, voters do not have full information over the policy platforms proposed by political parties. Instead, they form (imprecise) beliefs. I propose a new model of partisan competition to represent the interaction of these beliefs with platform selection. Both parties gain more from appealing to the voters with more precise beliefs over their platform. Minority candidates viewed with less precision overall gain relatively more from outliers. Therefore, the Median Voter Theorem is recovered if and only if voters’ policy preferences are uncorrelated with the precision of their beliefs about each candidate, and preferences are distributed symmetrically. Otherwise, even election-motivated parties diverge away from each other. As the population becomes polarized in how they form beliefs about politics, they will become polarized on political grounds as well, providing a new explanation for recent political polarization in the United States which, under reasonable assumptions, is more in line with the stylized facts than models with perfect observability.
    Keywords: cultural distance; imperfect communication; inequality; polarization; policy divergence; redistribution; social groups; voter beliefs
    Date: 2017–04
  2. By: Thomas Braendle; Alois Stutzer
    Abstract: Institutions systematically affect which individuals gain positions in the different branches of democratic government. Given agents' discretion in decision-making, their characteristics matter for policy choices. This perspective of political selection replaces the representative political agent by a heterogeneous set of political decision makers with different skills and motivations. Selecting political agents becomes a means to align the interests of the elected delegates with those of the citizens. Our comparative analysis reviews demand- and supplyside conditions in the market for competent and honest politicians. On the demand side, parties and electoral rules (including reservations and quotas) play an important role in determining who is recruited, nominated and finally elected. On the supply side, we focus on the various types of compensations associated with political office. Finally, institutions affecting the attractiveness of a political mandate for people with a specific professional background are considered and related to policy outcomes.
    Keywords: Political selection; electoral rules; political parties; paying politicians; incompatibility; citizen-candidates model
    JEL: D72 D73 H11
    Date: 2017–04
  3. By: Salvatore Nunnari; Jan Zapal
    Abstract: This paper develops a theoretical model of voters' and politicians' behavior based on the notion that voters focus disproportionately on, and hence overweight, certain attributes of policies. We assume that policies have two attributes and that voters focus more on the attribute in which their options differ more. First, we consider exogenous policies and show that voters' focusing polarizes the electorate. Second, we consider the endogenous supply of policies by office-motivated politicians who take voters' distorted focus into account. We show that focusing leads to inefficient policies, which cater excessively to a subset of voters: social groups that are larger, have more distorted focus, are more moderate, and are more sensitive to changes in a single attribute are more in uential. Finally, we show that augmenting the classical models of voting and electoral competition with focusing can contribute to explain puzzling stylized facts as the inverse correlation between income inequality and redistribution or the backlash effect of extreme policies.
    Keywords: focus; attention; salience; political polarization; probabilistic voting model; electoral competition; behavioral political economy; income inequality; redistribution;
    JEL: D03 D72 D78
    Date: 2017–04
  4. By: Duell, Dominik; Valasek, Justin Mattias
    Abstract: While scholars and pundits alike have been pointing to a trend of increasing partisan affect in the US, there has been very little analysis as to how partisan affect impacts the decisions of voters. We hypothesize that affective polarization may effect voting both through an expressive channel, as voters become more likely to vote instinctively, and through an instrumental channel, as voters expect candidates to take decisions that are more favorable towards their partisan in-group. To explore this hypothesis, we conduct a laboratory experiment designed to separate between the expressive and instrumental impact of affective polarization, and find evidence that affect significantly impacts subjects' voting decision through both channels. Importantly, however, we show that the instrumental impact of affective polarization depends on the underlying degree of polarization in policy preferences. Additionally, in contrast to the existing literature, our study demonstrates that affective polarization has a clear negative impact on social welfare by decreasing the likelihood that high valence candidates win elections. Lastly, we compare the impact of affect between groups that are formed using a neutral prime (minimal groups) and groups that are formed using the subjects' stated partisan identity. Surprisingly, we find no difference in voting behavior between the two treatments, implying that among a group of individuals that are otherwise relatively homogenous (university students) the impact of partisan identity is no greater than an arbitrary label.
    Keywords: political polarization,social identity,affective polarization
    Date: 2017
  5. By: Carey, John M. (Dartmouth College); Masoud, Tarek (Harvard University); Reynolds, Andrew S. (University of NC)
    Abstract: From late 2010 through 2011, popular uprisings toppled authoritarian regimes in Tunisia, Egypt, and Libya. In each country, a key component of the new regime's "founding moment" was the selection of rules for the first democratically elected assembly. This paper asks how the design of electoral systems affected the outcomes of the founding elections. We are interested in whether the rules of competition were consequential in determining winners and losers, and to the quality and trajectory of democratization. Our conclusions are based on analysis of district level results from the list proportional representation component of each election and on first person interviews with actors in who participated in the design of electoral rules.
    Date: 2015–08
  6. By: Enrico Spolaore; Romain Wacziarg
    Abstract: We present a conceptual framework linking cultural heterogeneity to inter-group conflict. When conflict is about control of public goods, more heterogeneous groups are expected to fight more with each other. In contrast, when conflict is about rival goods, more similar groups are more likely to engage in war with each other. We formalize these ideas within an analytical model and discuss recent empirical studies that are consistent with the model's implications.
    JEL: D74 H56 N40
    Date: 2017–03
  7. By: Eloisa Campioni (DEF and CEIS, Università di Roma "Tor Vergata",); Vittorio Larocca (Luiss Guido Carli); Loredana Mirra (DEF, Università di Roma "Tor Vergata",); Luca Panaccione (DEF and CEIS, Università di Roma "Tor Vergata",)
    Abstract: In this experimental study on the determinants of bank run, participants anonymously interact via an experimental bank deciding whether to withdraw or not their deposit. As in Diamond and Dybvig (1983), runs result from a fundamental coordination problem. We elicit subjects’ financial literacy and study whether revealing this information helps in solving the equilibrium coordination in such games with multiple equilibria. As a control we also use information about elicited general knowledge. Within the same framework, we let the bank size vary to investigate how it affects coordination on bank run. We find that, when no information is revealed, the likelihood of runs increases with bank size. Whereas, when information on financial literacy is revealed, the likelihood of runs increases in small and decreases in large banks. Our analyses also show that subjects react to information on financial literacy and general knowledge in a different way. Getting to know that a group has higher financial literacy reduces the probability of run. While, when information about general knowledge is revealed, risk aversion at group level becomes relevant and positively affects the probability of bank run. In all specifications, bank run occurrence is positively affected by short-run withdrawal history and by subjects’ experience.
    Keywords: Bank runs,Experimental studies,Financial literacy,Coordination games
    JEL: C70 C92 D80 G21
    Date: 2017–04–20
  8. By: Murray, Cameron K. (University of Queensland); Frijters, Paul (London School of Economics); Schaffner, Markus (Queensland University of Technology)
    Abstract: We look at the effect of transparency on the incidence of costly back-scratching in a laboratory setting by implementing player identification via photographs. In our experimental design players have an incentive to form bilateral alliances in which they favour their partner at the expense of others. We find no improvement in overall group payoffs from transparency. A plausible story that fits our results is that there may be two countervailing forces at play. First, more rapid alliance formation due to social cues from the photographs being used as a coordination device to facilitate faster alliance formation between some players. Second, shorter alliances due to prosocial forces at the group level. We draw out lessons for policy makers about the limits of transparency in curtailing "grey" types of corruption.
    Keywords: experiment, alliance, corruption, transparency
    JEL: C92 D7 D8
    Date: 2017–03
  9. By: Johnsen, Åshild Auglænd (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: Cooperation is usually presented as prosocial and for the common good. But collusion is also a form of cooperation, where the gains from cooperation are at the public’s expense. How is collusion affected by this public aspect? Social preferences can mean caring for the public. But it can also mean caring for the bilateral relationship with one’s partner. This paper investigates cooperation when it is at the expense of the public, and compares it to cooperation when it is not at the public’s expense. I do so by running two versions of an infinitely repeated prisoner’s dilemma game: One version with and one without a public aspect. I find that there is more collusion when collusion is at the expense of the public conspiracy against the public.
    Keywords: Infinitely repeated prisoner’s dilemma game; Negative externality; Cooperation; Collusion; Experiment
    JEL: C91 D03 D62 H41
    Date: 2017–05–03
  10. By: Franck Viroleau
    Abstract: This paper aims at making explicit the micro foundations of the government's preference function in an influence-driven political economy model. It also addresses the behavior functions of domestic and foreign firms in their attempts to gain policy favors. These favors are granted by means of subsidies. In our model, the government simultaneously chooses three interdependent policy instruments under the political influence of domestic and foreign firms. Thus, we create a political market characterized by utility-maximizing and profit-maximizing behaviors of its actors, which takes place in a computable general equilibrium model. Endowed with these features, this model fills a gap in the literature. However, our results demonstrate that the model is only valid under a reasonable set of constraints on its parameters. Finally, this paper formally shows the key role of the subsidy elasticity of political cost in limiting the distortions created by the influence of interest groups.
    Keywords: Lobbying, Public Policies, Computable General Equilibrium Model.
    JEL: C68 D72 D78 F13 H32 P16
    Date: 2017

This nep-cdm issue is ©2017 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.