nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2017‒11‒12
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Efficiency Consequences of Affirmative Action in Politics: Evidence from India By Das, Sabyasachi; Mukhopadhyay, Abhiroop; Saroy, Rajas
  2. Political Awareness, Microtargeting of Voters, and Negative Electoral Campaigning By Burkhard Schipper; Hee Yeul Woo
  3. Institutional Choice and Cooperation in Representative Democracies: An Experimental Approach By Schories, Fanny E.
  4. Using Cheap Talk to Polarize or Unify a Group of Decision Makers By Daeyoung Jeong
  5. Towards a More Nuanced Understanding of How International Pooling of Authority May Affect the Perceived Legitimacy of Global Governance By Brilé Anderson; Thomas Bernauer; Aya Kachi
  6. Exposition to Corruption and Political Participation: Evidence from Italian Municipalities By Tommaso Giommoni
  7. Does electoral competition curb party favoritism? By Marta Curto‐Grau; Albert Solé‐Ollé; Pilar Sorribas‐Navarro
  8. Creating an efficient culture of cooperation By Ernst Fehr; Tony Williams
  9. Image Concerns and the Political Economy of Publicly Provided Private Goods By Tobias König; Tobias Lausen; Andreas Wagener
  10. Russia's 1999–2000 election cycle and the politics-banking interface By Schoors, Koen; Weill, Laurent
  11. Dream Teams and the Apollo Effect By Alex Gershkov; Paul Schweinzer
  12. Majority Rule and Selfishly Optimal Nonlinear Income Tax Schedules with Discrete Skill Levels By Craig Brett; John A Weymark
  13. Reluctant to reform? A note on risk-loving politicians and bureaucrats By Thomas, Tobias; Heß, Moritz; Wagner, Gert G.
  14. Manipulating Fiscal Forecasts: Evidence from the German States By Björn Kauder; Niklas Potrafke; Christoph Schinke
  15. The German Model of Industrial Relations: (Where) Does It Still Exist? By Oberfichtner, Michael; Schnabel, Claus
  16. Youth Enfranchisement, Political Responsiveness and Education Expenditure: Evidence from the U.S. By Bertocchi, Graziella; Dimico, Arcangelo; Lancia, Francesco; Russo, Alessia

  1. By: Das, Sabyasachi (Ashoka University); Mukhopadhyay, Abhiroop (Indian Statistical Institute); Saroy, Rajas (Indian Statistical Institute)
    Abstract: We examine how overall delivery of public goods (i.e., efficiency) is affected by affirmative action in elections, i.e., restricting candidate entry in elections to one population group. We argue that when group identities are salient, such restrictions on candidate entry need not necessarily reduce electoral competition. In fact, when group sizes are asymmetric, affirmative action may increase electoral competition and consequently, improve provision of public goods. This happens because in an open election, the (best) candidate from the large group facing a minority candidate suffers from a moral hazard problem. Affirmative action eliminates this problem and increases within-group competition. We study a randomized caste based quota policy in village elections in a large state in India to test these claims. Consistently, we find that electoral quotas for a caste group (OBCs) increased provision of public goods in villages with high OBC population shares. We show that this did not happen due to changes in politicians' preferences or quality, and the increased provision of public goods did not disproportionately benefit the OBCs. Further, using election data, we show evidence in favor of our mechanism: win margins are narrower in quota elections relative to open elections in villages where OBC group is large. Our results highlight that efficiency concerns regarding affirmative action in politics may need reevaluation.
    Keywords: electoral competition, reservation, public goods, Gram Panchayat
    JEL: D72 D78 H41 O12
    Date: 2017–10
  2. By: Burkhard Schipper; Hee Yeul Woo (Department of Economics, University of California Davis)
    Abstract: We study the informational effectiveness of electoral campaigns. Voters may not think about all political issues and have incomplete information with regard to political positions of candidates. Nevertheless, we show that if candidates are allowed to microtarget voters with messages then election outcomes are as if voters have full awareness of political issues and complete information about candidate's political positions. Political competition is paramount for overcoming the voter's limited awareness of political issues but unnecessary for overcoming just uncertainty about candidates' political positions. Our positive results break down if microtargeting is not allowed or voters lack political reasoning abilities. Yet, in such cases, negative campaigning comes to rescue.
    Keywords: Electoral competition, campaign advertising, multidimensional policy space, microtargeting, dog-whistle politics, negative campaigning, persuasion games, unawareness
    JEL: C72 D72 D82 P16
    Date: 2017–05–02
  3. By: Schories, Fanny E.
    Abstract: This paper examines whether an institution has a differing impact on cooperation if it is introduced by a representative of the affected parties rather than exogenously imposed. The experimental design is able to control for selection effects arising from the democratic policy choice. I find evidence of a large democracy premium in the sense that endogenously implemented institutions lead to more cooperation than iden- tical exogenous institutions. Especially the subjects who initially did not prefer the policy comply if it was brought about by an elected representative. The results have implications for the analysis of decision-making processes and policy recommendations in general.
    Keywords: Laboratory Experiment,Representative Democracy,Collective Decision-Making,Social Dilemma,Legitimacy
    JEL: C9 D02 D72
    Date: 2017
  4. By: Daeyoung Jeong (Economic Research Institute, Bank of Korea)
    Abstract: We develop a model of strategic information transmission from an outside expert with informational superiority to a group of people who make a decision by voting on a proposal. An outside expert who observes the qualities of a proposal sends a cheap talk message to decision makers with limited information. A simple cheap talk strategy of the expert can be surprisingly effective in persuading decision makers by polarizing or unifying their opinions. When there is a significant informational gap, decision makers vote in the expert's interest by focusing only on the expert's message, even though they know she has her own bias.
    Keywords: Cheap Talk, Voting, Polarization
    JEL: D71 D72 D78 D82 D83
    Date: 2017–06–28
  5. By: Brilé Anderson; Thomas Bernauer; Aya Kachi (University of Basel)
    Abstract: Recent instances of political backlash against global governance efforts as well as conventional wisdom suggest that there is a link between shifting authority from the domestic to the global level, on the one hand, and the legitimacy of global governance institutions as perceived by citizens and other stakeholders on the other. We thus investigate whether and how increasing the authority of a global governance institution affects citizens' legitimacy perceptions, using a population-based survey experiment in Germany and the United States (N=1600 each). The empirical focus is on climate change, a costly and paradigmatic global governance effort. The results show that certain shifts of political authority, such as changes to majority decision making at the international level and automatic implementation of international decisions domestically, do not significantly affect "average" citizens' legitimacy perceptions of global governance institutions. This result is not due to citizens' incapacity to understand the implications of increasing authority, namely, that increasing authority results in a loss of control over climate policy in Germany and the United States. Rather, legitimacy perceptions appear to be shaped by citizens' perceptions of procedural and performance quality of such efforts as well as by their level of cognitive mobilization, namely their interest in international politics. In brief, we find that citizens relate perceived procedural and performance quality of global governance with their evaluation of its legitimacy, but that subtle shifts of authority from the domestic to the global level do not per se affect citizens' legitimacy perceptions.
    Date: 2017
  6. By: Tommaso Giommoni
    Abstract: The aim of this paper is to study the effect of local corruption on political participation which is mediated by the press. Focusing on Italy, we generate a daily measure of exposition to local corruption screening articles of main Italian press agency. Applying an event-study methodology on local elections, two results emerge. First, corruption exposition reduces citizens participation: voter turnout decreases but characteristics of elected politicians are not affected; second, politicians participation modifies: number of candidates lowers along with proportion of running freshmen. These results suggest that corruption exposition produces resignation rather than retaliation in terms of political participation.
    Keywords: corruption, media, turnout, political selection, electoral competition
    JEL: D72 D73 H70 K42
    Date: 2017
  7. By: Marta Curto‐Grau (IEB, Universitat de Barcelona); Albert Solé‐Ollé (IEB, Universitat de Barcelona); Pilar Sorribas‐Navarro (IEB, Universitat de Barcelona)
    Abstract: We study whether incumbents facing uncontested elections channel public spending towards co‐partisan officials more than is the case of incumbents that are worried about their chances of re‐election. To do so, we draw on data detailing capital transfers allocated by Spanish regions to local governments during the period 1995‐2007. Using a regression discontinuity design, we document strong and robust effects. We find that, on average, a mayor belonging to the same party as that of the regional president obtains nearly twice the amount in grants as is received by a mayor belonging to an opposition party. This effect is much greater for regional incumbents that won the previous election by a large margin, but it disappears in the case of highly competitive elections. The effects estimated by difference‐in‐differences are not so great but they point in the same direction. Overall, the results are consistent with predictions that regional incumbents focus on obtaining the most votes possible when elections are strongly contested, while they seek to increase the number of aligned mayors when their position at the ballot box is not vulnerable.
    Keywords: Political parties, intergovernmental transfers, distributive politics, regression discontinuity
    JEL: C2 D72
    Date: 2017–11
  8. By: Ernst Fehr; Tony Williams
    Abstract: Throughout human history, informal sanctions by peers were ubiquitous and played a key role in the enforcement of social norms and the provision of public goods. However, a considerable body of evidence suggests that informal peer sanctions cause large collateral damage and efficiency costs. This raises the question whether peer sanctioning systems exist that avoid these costs and whether other, more centralized, punishment systems are superior and will be preferred by the people. Here, we show that efficient peer sanctioning without much need for costly punishment emerges quickly if we introduce two relevant features of social life into the experiment: (i) subjects can migrate across groups with different sanctioning institutions and (ii) they have the chance to achieve consensus about normatively appropriate behavior. We also show that subjects universally reject peer sanctioning without a norm consensus opportunity –an institution that has hitherto dominated research in this field – in favor of our efficient peer sanctioning institution or an equally efficient institution where they delegate the power to sanction to an elected judge. Migration opportunities and normative consensus building are key to the quick emergence of an efficient culture of universal cooperation because the more prosocial subjects populate the two efficient institutions first, elect prosocial judges (if institutionally possible), and immediately establish a social norm of high cooperation. This norm appears to guide subjects’ cooperation and punishment choices, including the virtually complete removal of antisocial punishment when judges make the sanctioning decision.
    Keywords: Cooperation, punishment, endogenous institutions, public goods
    JEL: D02 D03 D72 H41
    Date: 2017–10
  9. By: Tobias König; Tobias Lausen; Andreas Wagener
    Abstract: Governments often provide their citizens with goods and services that are also supplied in markets: education, housing, nutritional assistance, etc. We analyze the political economy of the public provision of private goods when individuals care about their social image. We show that image concerns motivate richer individuals to vote for the public provision of goods they themselves buy in markets, the reason being that a higher provision level attracts more individuals to the public system, enhancing the social exclusivity of market purchases. In effect, majority voting may lead to a public provision that only a minority of citizens use. Users in the public system may enjoy better provision than users in the private system. We characterize the coalitions that can prevail in a political equilibrium.
    Keywords: in-kind provision, status preferences, majority voting
    JEL: H42 D72
    Date: 2017
  10. By: Schoors, Koen; Weill, Laurent
    Abstract: We investigate whether lending by the dominant Russian state bank, Sberbank, contributed to Vla-dimir Putin’s ascent to power during the presidential elections of March 2000. Our hypothesis is that Sberbank corporate loans could have been used as incentives for managers at private firms to mobilize employees to vote for the incumbent regime. In line with our proposed voter mobilization mechanism, we find that the regional growth of Sberbank corporate loans in the months before the presidential election is related to the regional increase in votes for Putin and to the regional increase in voter turnout between the Duma election of December 1999 and the presidential election of March 2000. The effect of Sberbank firm lending on Putin votes was most pronounced in regions where the governor was affiliated with the regime and in regions with extensive private employ-ment. The effect was less apparent in regions with many single-company towns, where voter intim-idation is sufficient to get the required result. Additional robustness checks and placebo regressions confirm the main findings. Our results support the view that additional Sberbank corporate loans granted prior to the March 2000 presidential election facilitated Putin’s early electoral success.
    JEL: G21 P34
    Date: 2017–11–01
  11. By: Alex Gershkov; Paul Schweinzer
    Abstract: We model leadership selection, competition, and decision making in teams with heterogeneous membership composition. We show that if the choice of leadership in a team is imprecise or noisy—which may arguably be the case if appointment decisions are made by non-expert administrators—then it is not necessarily the case that the best individuals should be selected as team members. On the contrary, and in line with what has been called the “Apollo effect,†a “dream team†consisting of unambiguously higher performing individuals may perform worse in terms of team output than a group composed of lower performers. We characterize the properties of the leadership selection and production processes which lead to the Apollo effect and clarify when the opposite effect occurs in which supertalent performs better than comparatively less qualified groups.
    Keywords: team composition, leadership, mistakes
    JEL: C70 D70 J80
    Date: 2017
  12. By: Craig Brett (Mt. Allison University); John A Weymark (Vanderbilt University)
    Abstract: Röell (unpublished, 2012) shows that Black's Median Voter Theorem for majority voting with single-peaked preferences applies to voting over nonlinear income tax schedules that satisfy the constraints of a finite type version of the Mirrlees optimal income tax problem when voting takes place over the tax schedules that are selfishly optimal for some individual and preferences are quasilinear. An alternative way of establishing Röell's median voter result is provided that offers a different perspective on her findings, drawing on insights obtained by Brett and Weymark (GEB, 2017) in their analysis of a version of this problem with a continuum of types. In order to characterize a selfishly optimal schedule, it is determined how to optimally bunch different types of individuals.
    Keywords: nonlinear income taxation, political economy of taxation, optimal bunching, redistributive taxation, voting over tax schedules
    JEL: H2 D7
    Date: 2017–11–05
  13. By: Thomas, Tobias; Heß, Moritz; Wagner, Gert G.
    Abstract: From a political economy perspective, politicians often fail to implement structural reforms. In this contribution we investigate if the resistance to reform is based on the differences in the risk preferences of voters, politicians, and bureaucrats. Based on three surveys among the German electorate, 175 members of the Federal German Parliament and 106 officials from German ministries, this is not the case. Since both politicians and bureaucrats have a higher risk appetite than the voters, their risk preferences cannot be seen as an explanation for the resistance to structural reform. Hence, it must be caused by other reasons. These could be interventions by veto players, wars of attrition by powerful interest groups, or reform logjams initiated. However, as during times of populist campaigns, the election process can put forth candidates with very high risk appetites, the constitutions of democracies turn out to be rather smart if hazardous actions and measures by political rookies and gamblers are inhibited by checks and balances.
    Keywords: political reforms,political decision-making,principal agent-theory,risk aversion,German,SOEP
    JEL: D71 D78 H11 H70 P16 Z13
    Date: 2017
  14. By: Björn Kauder; Niklas Potrafke; Christoph Schinke
    Abstract: We examine whether German state governments manipulated fiscal forecasts before elections. Our data set includes three fiscal measures over the period 1980-2014. The results do not show that electoral motives influenced fiscal forecasts in West German states. By contrast, East German state governments underestimated spending in pre-election years (compared to other years) by about 0.20 percent of GDP, tax revenues by about 0.36 percent of GDP, and net lending by 0.30 percent of GDP. Predicting low levels of spending and tax revenues, East German state governments thus underestimated the size of government in pre-election years.
    Keywords: fiscal forecasts, electoral cycles, East and West Germany
    JEL: H68 E32 E62
    Date: 2017
  15. By: Oberfichtner, Michael (University of Erlangen-Nuremberg); Schnabel, Claus (University of Erlangen-Nuremberg)
    Abstract: Using data from the representative IAB Establishment Panel, this paper charts changes in the two main pillars of the German IR model over the last 20 years. It shows that collective bargaining coverage and worker representation via works councils have substantially fallen outside the public sector. Less formalized and weaker institutions such as voluntary orientation of uncovered firms towards sectoral agreements and alternative forms of employee representation at the workplace have partly attenuated the overall erosion in coverage. Multivariate analyses indicate that the traditional German IR model (with both collective agreements and works council presence) is more likely to be found in larger and older establishments, and it is less likely in establishments managed by the owner, in single and foreign-owned establishments, in individually-owned firms or partnerships, and in exporting establishments. In contrast, more than 60 percent of German establishments did not exhibit bargaining coverage or orientation or any kind of worker representation in 2015. Such a complete absence of the main institutional features of the German IR model is predominantly found in small and medium-sized establishments, in particular in the service sector and in eastern Germany, and its extent is increasing dramatically.
    Keywords: collective bargaining, bargaining coverage, works council, worker participation, industrial relations, Germany
    JEL: J50 J52 J53
    Date: 2017–10
  16. By: Bertocchi, Graziella (University of Modena and Reggio Emilia); Dimico, Arcangelo (Queen's University Belfast); Lancia, Francesco (University of Salerno); Russo, Alessia (Norwegian Business School (BI))
    Abstract: This paper studies the effect of preregistration laws on government spending in the U.S. Preregistration allows young citizens to register before being eligible to vote and has been introduced in different states in different years. Employing a difference-in-differences regression design, we first establish that preregistration shifts state-level government spending toward expenditure on higher education. The magnitude of the increase is larger when political competition is weaker and inequality is higher. Second, we document a positive effect of preregistration on state-provided student aid and its number of recipients by comparing higher education institutions within border-county pairs. Lastly, using individual-level data on voting records, we show that preregistration promotes a de facto youth enfranchisement episode. Consistent with a political economy model of distributive politics, the results collectively suggest strong political responsiveness to the needs of the newly-enfranchised constituent group.
    Keywords: education expenditure, political responsiveness, preregistration, voter turnout, youth enfranchisement
    JEL: D72 H52 P16
    Date: 2017–10

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