nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2017‒10‒01
eight papers chosen by
Stan C. Weeber, McNeese State University

  1. What Determines Preferences for an Electoral System? Evidence from a Binding Referendum By Riambau, Guillem; Stillman, Steven; Boe-Gibson, Geua
  2. 2018 FIFA World Cup qualification can be manipulated By Csató, László
  3. Engineering Crises: Favoritism and Strategic Fiscal Indiscipline By Saint-Paul, Gilles; Ticchi, Davide; Vindigni, Andrea
  4. Unethical Behavior and Group Identity in Contests By Julien Benistant; Marie Claire Villeval
  5. The Political Impact of the Internet on US Presidential Elections By Valentino Larcinese; Luke Miner
  6. Policy Choices in Assembly versus Representative Democracy : Evidence from Swiss Communes By Patricia Funk; Stephan Litschig
  7. Multidimensional Group Identity and Redistributive Allocation: An Experimental Study By Fuhai HONG; Yohanes E. RIYANTO; Ruike ZHANG
  8. Games of Threats By Elon Kohlberg; Abraham Neyman

  1. By: Riambau, Guillem (Yale-NUS College); Stillman, Steven (Free University of Bozen/Bolzano); Boe-Gibson, Geua (University of Waikato)
    Abstract: Much has been written about politicians' preferences for electoral systems, yet little is known about the preferences of voters. In 1993, New Zealand had a binding electoral referendum on the same day as the general election where voters chose between keeping a single plurality system (First Past the Post) or introducing a pure proportional one (Mixed Member Proportional). This paper merges data from all nationwide polling stations to Census data on local voters to examine what drives citizens' preferences for an electoral system. We find that strategic partisan interest was a key driver; voters overwhelmingly preferred the system that most benefited their favorite party. However, socioeconomic characteristics and social values also mattered; people who held more progressive values, were outside the dominant religion and lived in urban areas were much more likely to vote to change to a proportional system. Survey data show that these findings hold at the individual level and further that individuals who were angry with the economy were much more likely to vote against the status quo, regardless of their background, party preferences or social values. This behavior is likely to have ultimately balanced the result in favor of Mixed Member Proportional.
    Keywords: elections, electoral systems, voting behavior, referendum, New Zealand
    JEL: D72 D73 H11
    Date: 2017–09
  2. By: Csató, László
    Abstract: In the European section of the 2018 FIFA World Cup qualification, 13 national teams, which are members of the Union of European Football Associations (UEFA), can qualify for the final competition. The 54 teams are divided into nine groups to play home-and-away round-robin matches in 10 matchdays. The winners of each group qualify, while the eight best second-placed teams advance to play-offs such that the four winners of play-offs also qualify. Ranking of second-placed teams differs from ranking in groups since group matches against the sixth-placed team are discarded. It is shown that this feature opens a way for manipulation: it may happen that a team is eliminated if it wins in the last matchday of group stage, but it advances to play-offs by playing a draw, provided that all other results are fixed. An example reveals that this situation might even occur in October 2017, after eight matchdays are already played in the qualification. Furthermore, by adjusting the result of only two matches played before October 2017 with an addition of one goal each, a team can strictly prefer a draw over a win in its last match as the former may advance it to play-offs, but the latter certainly leads to its elimination.
    Keywords: OR in sport, tournament ranking, football, soccer, 2018 FIFA World Cup, UEFA, axiomatic approach, manipulation
    JEL: C44 D71
    Date: 2017–09–16
  3. By: Saint-Paul, Gilles; Ticchi, Davide; Vindigni, Andrea
    Abstract: If people understand that some macroeconomic policies are unsustainable, why would they vote for them in the first place? We develop a political economy theory of the endogenous emergence of fiscal crises, based on the idea that the adjustment mechanism to a crisis favors some social groups, that may be induced ex-ante to vote in favor of policies that are more likely to lead to a crisis. People are entitled to a certain level of a publicly provided good, which may be rationed in times of crises. After voting on that level, society votes on the extend to which it will be financed by debt. Under bad enough macro shocks, a crisis arises: taxes are set at their maximum but despite that some agents do not get their entitlement. Some social groups do better in this rationing process than others. We show that public debt -- which makes crises more likely -- is higher, as is the probability of a crisis, the greater the level of favoritism. If the favored group is important enough to be pivotal when society votes on the entitlement level, favoritism also leads to greater public expenditure. We show that the favored group may strategically favor a weaker state in order to make crises more frequent. Finally, the decisive voter when choosing expenditure may be different from the one when voting on debt. In such a case, constitutional limits on debt may raise the utility of all the poor, relative to the equilibrium outcome absent such limits.
    Keywords: Entitlements; favoritism; Fiscal Crises; inequality; political economy; public debt; State Capacity.
    JEL: E62 F34 H12 H6 O11 P16
    Date: 2017–09
  4. By: Julien Benistant (Univ Lyon, Université Lumière Lyon 2, GATE L-SE UMR 5824, F-69130 Ecully, France); Marie Claire Villeval (Univ Lyon, CNRS, GATE L-SE UMR 5824, F-69130 Ecully, France)
    Abstract: Using a real-effort experiment, we studied how minimal group identity affects unethical behavior in a contest game. We varied (i) whether individuals had to report their own output or the output of their competitor, (ii) whether group identity was induced or not, and (iii) whether pairs of competitors shared the same group identity or not. We show that individuals misreported in the same proportion and to the same extent by inflating their output or by decreasing their opponent’s output. Misreporting was affected neither by the competitor’s group identity nor by the individual’s beliefs about misreporting. This suggests that in such competitive settings, unethical behavior is mainly driven by an unconditional desire to win.
    Keywords: Unethical behavior, lying, group identity, competition, experiment
    JEL: C92 M54 D63
    Date: 2017
  5. By: Valentino Larcinese; Luke Miner
    Abstract: What are the political consequences of the diffusion of broadband internet? We address this question by studying the 2008 US presidential election, the first political campaign where the internet played a key role. Drawing on data from the FEC and the FCC, we provide robust evidence that internet penetration in US counties is associated with an increase in turnout, an increase in campaign contributions to the Democrats and an increase in the share of Democratic vote. We then propose an IV strategy to deal with potential endogeneity concerns: we exploit geographic discontinuities along state borders with different right-of-way laws, which constitute the main determinant of the cost of building new infrastructure. IV estimates confirm a positive impact of broadband diffusion on turnout, while the pro-Democratic Party effect of the internet appears to be less robust.
    Keywords: internet diffusion, political economy of the media, United States elections, turnout, campaign contributions
    JEL: D72 L86
    Date: 2017–06
  6. By: Patricia Funk (Department of Economics, Universita della Svizzera italiana); Stephan Litschig (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: This paper investigates whether the form of the legislative institution - assembly versus parliament - affects the level and composition of local public expenditure. We collect data at the commune level in Switzerland over the period 1945-2010 and use two research designs: fixed-effects and regression discontinuity (RD) based on local population. Analyzing communes that switched the form of their legislative institution over time, we find that introducing a parliament leads to a 12 percent increase in both general administration and education spending per capita and an increase in total spending and revenue of about 6 percent. In contrast, regression discontinuity estimates cannot be distinguished from zero for any spending category or overall. These contrasting results highlight the local nature of discontinuity estimates since population is an order of magnitude larger in our switcher sample compared to the RD sample. To understand the mechanism at play, we run a survey among assembly participants and document a sizeable under-representation of 20- to 40-year-olds as well as of women in town meetings compared to both the electorate and to voters in elections. Switching from assembly democracy to parliament thus increases the representation of two demographics that are known for their relatively high preference for education spending.
    Date: 2017–09
  7. By: Fuhai HONG (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.); Yohanes E. RIYANTO (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.); Ruike ZHANG (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)
    Abstract: Social identity is embedded in social structures, generated by various social processes, and has multiple dimensions. We report ?ndings from a laboratory experiment eliciting two-dimensional social identities: a horizontal identity determined either randomly or by preferences and a vertical identity de?ned by income status and determined either by luck or performance. We also vary income gaps between vertical identity groups. Participants make redistributive allocation decisions between two others di¤ering in identity attributes. We ?nd robust evidence of in-group favoritism and that both the identity distance between the allocator and the in-group recipient and income gaps in?uence the degree of in-group favoritism.
    Keywords: Social Identities, Horizontal and Vertical Identity Attributes, In-group Favoritism, Income Inequality
    JEL: C91 D03
    Date: 2016–12
  8. By: Elon Kohlberg (Harvard Business School, Strategy Unit); Abraham Neyman (The Hebrew University of Jerusalem)
    Abstract: A game of threats on a finite set of players, N, is a function d that assigns a real number to any coalition, S ? N, such that d(S) = -d(N\S). A game of threats is not necessarily a coalitional game as it may fail to satisfy the condition d(Ø) = 0. We show that analogs of the classic Shapley axioms for coalitional games determine a unique value for games of threats. This value assigns to each player an average of the threat powers, d(S), of the coalitions that include the player.
    Date: 2017–09

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