nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2017‒10‒22
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Ethical Voting in Multicandidate Elections By Laurent Bouton; Benjamin G. Ogden
  2. Targeted Campaign Competition, Loyal Voters, and Supermajorities By Pierre C. Boyer; Kai A. Konrad; Brian Roberson
  3. Spillover Effects of Institutions on Cooperative Behavior, Preferences, and Beliefs By Florian Engl; Arno Riedl; Roberto A. Weber
  4. What Are You Voting For? Proximity to Refugee Reception Centres and Voting in the 2016 Italian Constitutional Referendum By Bratti, Massimiliano; Deiana, Claudio; Havari, Enkelejda; Mazzarella, Gianluca; Meroni, Elena Claudia
  5. Democracy and compliance in public goods games By Gallier, Carlo
  6. Compulsory Voting, Voter Turnout and Asymmetrical Habit-formation By Gäbler, Stefanie; Potrafke, Niklas; Rösel, Felix
  7. Engineering Crises: Favoritism and Strategic Fiscal Indiscipline By Gilles Saint-Paul; Davide Ticchi; Andrea Vindigni
  8. Tie-Breaking Power in Committees By Wagner, Alexander K.; Granic, Dura-Georg
  9. Disentangling fiscal effects of local constitutions By Köppl-Turyna, Monika; Kantorowicz, Jarosław
  10. Internet and Politics: Evidence from U.K. Local Elections and Local Government Policies By Alessandro Gavazza; Mattia Nardotto; Tommaso Valletti
  11. NGO credibility as private or public good? A governance perspective on how to improve NGO advocacy in public discourse By Hielscher, Stefan; Winkin, Jan; Pies, Ingo
  12. The Origins of Common Identity: Division, Homogenization Policies and Identity Formation in Alsace-Lorraine By Sirus Dehdari; Kai Gehring
  13. The value of political connections in the first German democracy: Evidence from the Berlin stock exchange By Lehmann-Hasemeyer, Sibylle; Opitz, Alexander
  14. Games of Threats By Elon Kohlberg; Abraham Neyman
  15. The Emergence of Inter-Municipal Cooperation – A Hazard Model Approach By Ivo Bischoff; Eva Wolfschuetz
  16. Public Finance and Right-Wing Populism By Aggeborn, Linuz; Persson, Lovisa
  17. No Kin In The Game: Moral Hazard and War in the U.S. Congress By Eoin McGuirk; Nathaniel Hilger; Nicholas Miller
  18. Welfarism and segregation in endogenous jurisdiction formation models By Remy Oddou

  1. By: Laurent Bouton; Benjamin G. Ogden
    Abstract: We study the behavior of ethical voters in multicandidate elections. We consider two of the most-widely used electoral rules around the world: the plurality rule and the majority runoff rule. Our model delivers crisper predictions than those of the pivotal voter model. There are two types of equilibria: (i) the sincere voting equilibrium (in which voters vote for their most-preferred candidate), and (ii) Duverger's Law equilibria (in which two candidates attract all the votes). We prove that an equilibrium always exists, and that it is unique for a broad range of parameter values. Moreover, the sincere voting equilibrium never coexists with a Duverger's law equilibrium. We also identify the features of an election that favor sincere voting. Comparing plurality and majority runoff, we find that the incentives to vote sincerely are stronger under the latter. Our results are consistent with the findings of the empirical literature studying strategic voting under plurality and runoff rules.
    JEL: C72 D72
    Date: 2017–10
  2. By: Pierre C. Boyer; Kai A. Konrad; Brian Roberson
    Abstract: We consider campaign competition in which candidates compete for votes among a continuum of voters by engaging in persuasive efforts that are targetable. Each individual voter is persuaded by campaign effort and votes for the candidate who targets more persuasive effort to this voter. Each candidate chooses a level of total campaign effort and allocates their effort among the set of voters. We completely characterize equilibrium for the majoritarian objective game and compare that to the vote-share maximizing game. If the candidates are symmetric ex ante, both types of electoral competition dissipate the rents from office in expectation. However, the equilibria arising under the two electoral objectives qualitatively differ. In majoritarian elections, candidates randomize over their level of total campaign effort, which provides support for the puzzling phenomenon of the emergence of supermajorities in majoritarian systems. Vote-share maximization leads to an equilibrium in which both candidates make deterministic budget choices and reach a precise fifty-fifty split of vote shares. We also study how asymmetry between the candidates affects the equilibrium. If some share of the voters is loyal to one of the candidates, then both candidates expend the same expected efforts in equilibrium, but the advantaged candidate wins with higher probability for majoritarian voting or a higher share of voters for vote-share maximization.
    Keywords: campaign competition, continuous general lotto game, vote buying, flexible budgets, supermajorities, loyal voters
    JEL: D72 D78 D82
    Date: 2017
  3. By: Florian Engl; Arno Riedl; Roberto A. Weber
    Abstract: Institutions are an important means for fostering prosocial behaviors, but in many contexts their scope is limited and they govern only a subset of all socially desirable acts. We use a laboratory experiment to study how the presence and nature of an institution that enforces prosocial behavior in one domain affects behavior in another domain and whether it also alters prosocial preferences and beliefs about others’ behavior. Groups play two identical public good games. We vary whether, for only one game, there is an institution enforcing cooperation and vary also whether the institution is imposed exogenously or arises endogenously through voting. Our results show that the presence of an institution in one game generally enhances cooperation in the other game thus documenting a positive spillover effect. These spillover effects are economically substantial amounting up to 30 to 40 percent of the direct effect of institutions. When the institution is determined endogenously spillover effects get stronger over time, whereas they do not show a trend when it is imposed exogenously. Additional treatments indicate that the main driver of this result is not the endogeneity but the temporal trend of the implemented institution. We also find that institutions of either type enhance prosocial preferences and beliefs about others’ prosocial behavior, even toward strangers, suggesting that both factors are drivers of the observed spillover effects.
    Keywords: public goods, institutions, spillover effect, social preferences, beliefs
    JEL: C92 D02 D72 H41
    Date: 2017
  4. By: Bratti, Massimiliano (University of Milan); Deiana, Claudio (University of Essex); Havari, Enkelejda (European Commission, Joint Research Centre); Mazzarella, Gianluca (University of Padova); Meroni, Elena Claudia (European Commission, Joint Research Centre)
    Abstract: In December 2016, in the middle of the "European refugee crisis", the Italian electorate voted for a referendum on crucial constitutional reform promoted by the governing party. The official aims of the reform were both to improve the country's governability and stability and to simplify the institutional setup. Despite not strictly being a political vote, as in the case of Brexit, the referendum was largely perceived as an assessment of the Prime Minister's work and the activity of his government. Using Italian municipality data, we provide novel empirical evidence on the impact of geographical proximity to refugee reception centres on voting behaviour. Our analysis demonstrates that being closer to refugee centres increased (1) the referendum turnout and (2) the proportion of anti-government votes. This evidence is consistent with the fact that the main opposition parties exploited the anti-immigration sentiments that were mounting in the population to influence people's voting. It also casts doubts on the political choice to put key decisions, such as changes in the Constitution of the Italian Republic (or leaving the European Union, as in the case of Brexit), to the popular vote at times when there are significant political emergencies to be faced.
    Keywords: proximity, voting, refugee reception centres, referendum, Constitution, Italy
    JEL: P16 R23 D72
    Date: 2017–09
  5. By: Gallier, Carlo
    Abstract: I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants' contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.
    Keywords: laboratory experiment,public good,democracy,endogenous institutions,voting,contribution rule,compliance
    JEL: C91 D02 D72 K42
    Date: 2017
  6. By: Gäbler, Stefanie; Potrafke, Niklas; Rösel, Felix
    Abstract: We examine whether compulsory voting (CV) influences habit-formation in voting asymmetrically across parties. We use a Differences-in-Differences and a Differences-in-Discontinuity approach to investigate the long-term effects of CV on turnout and party vote shares in Austria. The results show that CV increased turnout. When CV was abolished, turnout returned to the pre-compulsory level. We conclude that CV was not habit-forming and may have crowded out intrinsic motivation.
    JEL: D72 P16
    Date: 2017
  7. By: Gilles Saint-Paul; Davide Ticchi; Andrea Vindigni
    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: political economy, fiscal crises, favoritism, entitlements, public debt, inequality, state capacity
    JEL: E62 F34 H12 H60 O11 P16
    Date: 2017
  8. By: Wagner, Alexander K.; Granic, Dura-Georg
    Abstract: We investigate the effects of voting power in a committee in which one member (the chairman) holds, on top of a regular vote, also the power to break ties. The chairman is able to induce her preferred outcome much more often than predicted by theory, but only partially because of exercising tie-breaking power directly. The advantage of the chairman is largely determined by the limited strategic sophistication of committee members.
    JEL: C91 C92 D71 D72
    Date: 2017
  9. By: Köppl-Turyna, Monika; Kantorowicz, Jarosław
    Abstract: We apply the difference-in-discontinuities design to disentangle the fiscal effects the governance system conditional on electoral systems. We take advantage of a natural experiment, which involves two institutional reforms in Poland. Our results indicate that a change from parliamentary to presidential form led to lower vertical fiscal imbalance predominantly in the jurisdictions with majoritarian elections and to a lesser extent in municipalities governed by proportional elections.
    JEL: D72 D78 H72
    Date: 2017
  10. By: Alessandro Gavazza; Mattia Nardotto; Tommaso Valletti
    Abstract: We empirically study the effects of broadband internet diffusion on local election outcomes and on local government policies using rich data from the U.K. Our analysis suggests that the internet has displaced other media with greater news content (i.e., radio and newspapers), thereby decreasing voter turnout, most notably among less-educated and younger individuals. In turn, we find suggestive evidence that local government expenditures and taxes are lower in areas with greater broadband diffusion, particularly expenditures targeted at less-educated voters. Our findings are consistent with the idea that voters' information plays a key role in determining electoral participation, government policies and government size.
    Keywords: Internet, newspaper, media, elections, policy
    JEL: D72 C50 L86
    Date: 2017
  11. By: Hielscher, Stefan; Winkin, Jan; Pies, Ingo
    Abstract: Though research in the field of business and society is increasingly involved with the sector of Non-Governmental Organizations (NGOs) and their advocacy function, in particular in relation to business corporations, the literature remains largely silent on how feasible reforms can help establish public trust in and credibility of NGOs by improving the quality and reliability of their contributions to real-life public discourses. In an effort to fill this gap, we argue that fostering the collective credibility of NGO advocacy requires focusing on the level of governance of NGO accountability. Based on a fundamental conceptual distinction between a private-goods dimension and a public-goods dimension of NGO accountability, we can show that semantic confusion can complicate functional solutions to establish collective NGO credibility and public trust. We illustrate our argument with a case study of a worldwide governance initiative in this sector, the „INGO-Accountability Charter“, including qualitative-empirical results on five expert interviews with representatives of NGO member organizations.
    Keywords: Business-NGO Relations,NGO Accountability,Public Discourse,Governance,Ordonomics,Business-NGO-Beziehungen,NGO Accountability,Öffentliche Diskurse,Governance,Ordonomik
    Date: 2016
  12. By: Sirus Dehdari; Kai Gehring
    Abstract: We exploit the fact that disagreements in the German leadership after the Franco-Prussian War in 1870 led to a quasi-exogenous division of Alsace and Lorraine to provide rare evidence of group identity formation within historically homogeneous regions. In line with the rejection-identification hypothesis, people in the treated area which experienced a change in nation-status and were exposed to repressive homogenization policies express a stronger regional identity and support more regional autonomy today. On average, subjects with a stronger regional also express a stronger European identity, which we exploit in a regression discontinuity design at the municipal level to reveal whether these identity differences are causal. We find that support for the European Union is significantly stronger in two crucial referenda, a result that is robust across different specifications and bandwidths, and not driven by language differences, large agglomerations or distance to foreign countries. The effect seems to be the strongest for the first two age cohorts after World War II and diminishes for later generations.
    Keywords: group identity, identity formation, homogenization policies, assimilation, rejection-identification hypothesis, persistence of preferences, Alsace-Lorraine
    JEL: D91 H70 H80 N40 Z19
    Date: 2017
  13. By: Lehmann-Hasemeyer, Sibylle; Opitz, Alexander
    Abstract: In this paper, we provide the first overview over all political connections for all firms listed on the Berlin stock exchange in 1924 and for the same sample of firms four years later. In contrast to anecdotal evidence which suggest that these political connections had a positive effect on firms' performance, an event study based on the election in December 1924 and May 1928 shows only little evidence that political connections had a positive impact on firm value. These results complement previous research emphasizing that political connections might have mattered less in democracies. Indeed, this seems true for Germany's first democracy - even though it was a very unstable one.
    Keywords: Political Connections,Interwar Germany,Stock Market Performance
    Date: 2017
  14. By: Elon Kohlberg; Abraham Neyman
    Abstract: A game of threats on a finite set of players, $N$, is a function $d$ that assigns a real number to any coalition, $S \subseteq N$, such that $d \left( S \right) = - d \left( N \setminus S \right)$. A game of threats is not necessarily a coalitional game as it may fail to satisfy the condition $d \left( \emptyset \right) = 0$. We show that analogs of the classic Shapley axioms for coaltional games determine a unique value for games of threats. This value assigns to each player an average of the threat powers, $d \left( S \right)$, of the coalitions that include the player.
    Date: 2017–09
  15. By: Ivo Bischoff (University of Kassel); Eva Wolfschuetz (University of Kassel)
    Abstract: We use a hazard model to identify the factors that drive the emergence of inter-municipal cooperation (IMC). We focus on IMC in tasks of internal administration in West-Germany between 2001 and 2014 – tasks where IMC may generate economies of scale while regional spillovers are negligible. Our results support the homophily-hypothesis and the relevance of political transaction costs. Municipalities situated in clusters of small and shrinking municipalities are more likely to start IMC. At odds with the previous literature, IMC is more likely to emerge among municipalities in fiscally strong clusters. We find no evidence that IMC is more likely in certain phases of the election cycle while state subsidies for IMC are an important driving force behind IMC.
    Keywords: Inter-municipal cooperation, hazard model, Germany, survey
    JEL: H77 D72
    Date: 2017
  16. By: Aggeborn, Linuz (Department of Government); Persson, Lovisa (Research Institute of Industrial Economics (IFN))
    Abstract: We build a public finance model that explains why voters vote for right-wing populists, and also under which conditions established politicians will adopt a right-wing populist policy platform. Voters with lower private income have a stronger demand for basic public services at the expense of spending on a global good; generosity of refugee support systems, foreign aid, and environmental protection. Low income voters are thus more prone to support right-wing populists who oppose spending on such global goods. We conclude that established politicians that are challenged by right-wing populists will implement a policy with no global good spending if the relative cost of the global good is high enough. Additionally, adoption of right-wing populist policy is more likely when the economy is in a recession.
    Keywords: Right-wing populism; Agency; Immigration
    JEL: D70 D72 H39
    Date: 2017–10–05
  17. By: Eoin McGuirk; Nathaniel Hilger; Nicholas Miller
    Abstract: Why do wars occur? We exploit a natural experiment to test the longstanding hypothesis that leaders declare war because they fail to internalize the associated costs. We test this moral hazard theory of conflict by compiling data on the family composition of 3,693 US legislators who served in the U.S. Congress during the four conscription-era wars of the 20th century: World War I, World War II, the Korean War, and the Vietnam War. We test for agency problems by comparing the voting behavior of congressmen with draft-age sons versus draft-age daughters. We estimate that having a draft-age son reduces legislator support for pro-conscription bills by 10-17%. Legislators with draft-age sons are also more likely to win reelection, suggesting that support for conscription is punished by voters. Our results provide new evidence that agency problems contribute to political violence, and that elected officials can be influenced by changing private incentives.
    JEL: N42
    Date: 2017–10
  18. By: Remy Oddou
    Abstract: This paper analyses how welfarism affects the segregative properties of endogenous jurisdiction formation, in a model where local jurisdictions produce a local public good and distribute an allowance to their households, both financed by a proportional tax based on the households' wealth. A jurisdiction is composed of all the households that live in the same place. Local wealth tax rates and the level of the allowance are determined to maximize a social welfare function. Households can "vote with their feet", which means that they can choose to move to the jurisdiction that offers the package "tax rate - amount of public good - allowance" that provides the highest utility level. The main result of this article is the proof that the maximin criterium is more segregative than the utilitarian one.
    Keywords: Jurisdiction, Segregation, Welfare
    JEL: C78
    Date: 2017

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