nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒01‒01
seven papers chosen by
Stan C. Weeber, McNeese State University

  1. Information aggregation with continuum of types By Bozbay, Irem; Peters, Hans
  2. Can More Information Lead to More Voter Polarization? Experimental Evidence from Turkey By Ceren Baysan
  3. Housing booms and busts and local fiscal policy By Albert Solé-Ollé; Elisabet Viladecans-Marsal
  4. What's in a Name? Information, Heterogeneity, and Quality in a Theory of Nested Names By Bouamra-Mechemache, Zohra; Yu, Jianyu; Zago, Angelo
  5. Client Service and the Growth of Government By Jean Guillaume Forand
  6. Blood and Oil in the Orient, Redux By Bichler, Shimshon; Nitzan, Jonathan
  7. Governing innovation projects in firms: The role of competition between innovation projects and interdepartmental collaboration By Iferd, Younes; Schubert, Torben

  1. By: Bozbay, Irem (university of surrey); Peters, Hans (QE / Mathematical economics and game the)
    Abstract: We consider an information aggregation problem where a group of voters wants to make a `yes' or `no' decision over a single issue. Voters have state-dependent common preferences, but hold possibly conflicting private information about the state in the form of types (signals). We assume that types are distributed from a state-dependent continuous distribution. In this model, Bayesian equilibrium voting and efficient voting coincide, and informative voting means that a voter votes in favor of the issue if and only if the signal exceeds a cut-point level. Our main result is an answer, in the form of a condition on the parameters of the model, to the question when informative voting is efficient.
    Keywords: private information, efficient information aggregation, strategic voting
    JEL: C70 D70 D71 D80 D82
    Date: 2017–12–12
  2. By: Ceren Baysan
    Abstract: Many claim that increased availability of information via both old and new media drives political polarization, possibly undermining democratic institutions. However, rigorous evidence on this topic remains limited. I address this gap by conducting two experiments during a recent Turkish referendum that was on an important institutional change to weaken constraints on the executive. First, I designed a randomized door-to-door campaign. In this campaign, the opposition party gave uniform information on poor economic performance and increased terrorist activity under the incumbent's leadership to more than 130,000 voters. I show that voters, despite receiving the same information, diverged further in their vote choice on aggregate, leading to a significant increase in ideological polarization. The result is consistent with a model where polarization in vote choice is driven by differences in reaction to the same information and not self-segregation to different information sources, as others have assumed. The opposition failed to increase its vote share in this campaign, on aggregate, because it lacked the necessary data to target the subset of constituents that interpreted the information in their favor. In a second experiment with politicians, I confirm that the opposition had inadequate data on voters relative to the incumbent based on an analysis of roughly one million of their tweets. The evidence from both experiments, taken together, suggests that the incumbent party can exploit its access to higher quality data on voters to maintain its grip on power and advance an agenda that weakens democratic checks and balances.
    JEL: D80 D83 D72 P26
    Date: 2017–12–06
  3. By: Albert Solé-Ollé (IEB, Universitat de Barcelona); Elisabet Viladecans-Marsal (IEB, Universitat de Barcelona)
    Abstract: This paper examines how local governments adjust their spending, savings and taxes in response to a temporary revenue windfall generated by a housing boom and how they cope with the inevitable shortfall that appears during the bust. We focus on Spanish local governments given the intensity of the last housing boom-bust experienced there and the large share of construction-related revenues they obtain. We find, first, that just a small share of the boom windfall was saved, with revenues being used primarily to increase spending (above all, current spending) and (to a lesser extent) cut taxes. Second, we find that the failure to save during the boom is higher in places with less informed voters and more contested elections. Third, we also examine what happens during the bust, and find that these governments had to cut abruptly their spending (above all, capital), raise taxes, and allow deficits to grow. Finally, in places wit less informed voters and more contested elections local governments had more trouble in adjusting during the bust, and they tend to rely more on spending cuts than on tax increases.
    Keywords: Tax volatility, forward-looking behavior, policy myopia
    JEL: E62 H72 R5
    Date: 2017–12
  4. By: Bouamra-Mechemache, Zohra; Yu, Jianyu; Zago, Angelo
    Abstract: Collective labels are widespread in food markets, either separated or nested with private brands; the latter known as nested names. We propose a model to explain the rationale of nested names, with collective labels being effective in reaching unaware consumers while individual brands help firms to reach aware consumers. We also incorporate the decision-making within the group of producers joining collective labels, taking into account their heterogeneity in providing quality. We show that nested names emerge when consumers become more aware of information on the label's quality and when producers become more heterogeneous. Welfare may decrease, however, when the group switches to nested names, because nested names may lead to lower quality incentives for the majority producers. The results also provide insights into the historical and recent trends in food industries, such as within-label differentiation and label fragmentation, and their welfare implications.
    Keywords: nested names; individual brands; collective labels; consumers' awareness; producer heterogeneity; quality provision
    JEL: D71 D83 L15 L66 Q13
    Date: 2017–11
  5. By: Jean Guillaume Forand (Department of Economics, University of Waterloo)
    Abstract: I study a dynamic model of electoral accountability which links the scale of government activity to the presence of civil service protections. In the model, voters with a demand for public goods forward tax revenue to the government and office-motivated governing parties delegate public spending to career-concerned civil servants. Governments always have power over civil service compensation, but civil service protections limit their ability to hire and fire civil servants. If civil servants are unprotected, civil service turnover matches government turnover and civil servants' interests are aligned with those of the party that hires them. To avoid wasteful partisan spending, voters only consent to minimal taxation. If civil servants are protected, they have no incentive to favour one party over another and governments produce only public goods, so that, in turn, voters consent to high taxes. However, because higher tax revenues increase the corruptibility of civil servants through favourable compensation policies, large-scale government activity is only achieved by inefficiently high wages in the civil service, which increase the frictions in the relationship between politicians and civil servants.
    JEL: H11 D73 H41
    Date: 2017–09
  6. By: Bichler, Shimshon; Nitzan, Jonathan
    Abstract: This research note updates selected charts from three previous papers. The new data present a rather startling picture, suggesting that the Middle East – and the global political economy more generally – might face an important crossroads. Our assessment here rests on the analysis of capital as power, or CasP. Beginning in the late 1980s, we suggested that, since the late 1960s, the Middle East was greatly influenced by the capitalized power of a Weapondollar-Petrodollar Coalition – a loose coalition comprising the leading oil companies, the OPEC cartel, armament contractors, engineering firms and large financial institutions – whose differential accumulation benefitted from and in turn helped fuel and sustain Middle East ‘energy conflicts’. These conflicts, we argued, reverberated far beyond the region: they affected the ups and downs of global growth, the gyrations of inflation and, in some important respects, the very evolution of the capitalist mode of power. And this impact, it seems to us, is now being called into question.
    Keywords: conflict,differential accumulation,energy,Middle East
    Date: 2017
  7. By: Iferd, Younes; Schubert, Torben
    Abstract: The existing literature shows that interdepartmental collaboration within companies en-hances innovativeness due to easier access to and integration of knowledge spread over dispersed actors. As companies are well aware of these benefits they also use competi-tion between innovation projects to organize their innovation projects. Such competitive mechanisms have often been regarded as problematic because of their adverse effects on collaboration and knowledge sharing. At the same time, they have the power to expe-dite innovation processes. Based on German CIS data, we use a stochastic frontier ap-proach to show that competition across innovation projects tends to increase innovation efficiency for firms faced by predatory product market competition, while interdepartmental collaboration is efficiency increasing when competition is low. Furthermore, we were also able to show that with increasing innovation radicalness interdepartmental collaboration enhances the innovation process and that with increasing innovation incrementality com-petition across innovation projects becomes beneficial.
    Date: 2017

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