nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒01‒29
twelve papers chosen by
Stan C. Weeber, McNeese State University

  1. Norms in bargaining: evidence from government formation in Spain By Thomas Fujiwara; Carlos Sanz
  2. Symmetric vs asymmetric equilibria and stochastic stability in a dynamic game of legislative lobbying By Raouf Boucekkine; Fabien Prieur; Benteng Zou
  3. Social Network Analysis and Community Detection by Decomposing a Graph into Relaxed Cliques By Timo Gschwind; Stefan Irnich; Fabio Furini; Roberto Wolfler Calvo
  4. The Political Boundaries of Ethnic Divisions By Bazzi, Samuel; Gudgeon, Matthew
  5. Meaningful Learning in Weighted Voting Games: An Experiment By Eric Guerci; Nobuyuki Hanaki; Naoki Watanabe
  6. Linear voting rules By Hans Peter Grüner; Thomas Tröger
  7. Taxes and Turnout By Felix Bierbrauer; Aleh Tsyvinski; Nicolas D. Werquin
  8. Distrust and Political Turnover By Nunn, Nathan; Qian, Nancy; Wen, Jaya
  9. Soft clustering by convex electoral model By NESTEROV, Yurii,
  10. Collusive Benchmark Rates Fixing By Nuria Boot; Timo Klein; Maarten Pieter Schinkel
  11. Inferring the Ideological Affiliations of Political Committees via Financial Contributions Networks By Yiran Chen; Hanming Fang
  12. Contests for public goods By Heine, Florian

  1. By: Thomas Fujiwara (Princeton, CIFAR, and NBER); Carlos Sanz (Banco de España)
    Abstract: Theories of multilateral bargaining and coalition formation applied to legislatures predict that parties’ seat shares determine their bargaining power. We present findings that are difficult to reconcile with this prediction. We use data from 2,898 municipal Spanish elections in which two parties tie in the number of seats. The party with slightly more general election votes is substantially more likely to appoint the mayor (form the government). Since tied parties should, on average, have equal bargaining power, this identifies the effect of being the most voted due to a norm prescribing that “the most voted should form government.” The effect of being most voted is comparable in size to the effect of obtaining an additional seat. This norm binds behavior even when the second and third most voted parties can form a winning coalition that prefers the most voted not to appoint the mayor. Voters punish, in future elections, second most voted parties that appoint mayors, suggesting that they enforce the norm. We document a similar second-versus-third most voted effect and provide suggestive evidence of similar norms from 28 national European parliaments. A model where elections play a dual role (aggregating information and disciplining incumbents) and different equilibria (norms) can occur is consistent with our results and yields additional predictions.
    Keywords: keyword, bargaining, elections, government formation, political economy, regression discontinuity
    JEL: C7 D7 D9
    Date: 2017–11
  2. By: Raouf Boucekkine (Aix-Marseille University); Fabien Prieur (Paris-X Nanterre University); Benteng Zou (CREA, Université du Luxembourg)
    Abstract: We study a 2-players stochastic dynamic symmetric lobbying differential game. Players have opposite interests; at any date, each player invests in lobbying ac- tivities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, an asymmetric MPE only emerges when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. Interestingly enough, the implications for the rent dissipation problem are much more involved than in the deterministic coun- terpart: the symmetric MPE still yields a limited social cost while the asymmetric may yield significant losses. We also characterize the most likely asymptotic state, in particular regarding the level of uncertainty.
    Keywords: Political lobbying, symmetric versus asymmetric equilibrium, stochastic differential games, stochastic stability, social cost of lobbying
    JEL: D72 C73
    Date: 2018
  3. By: Timo Gschwind (Johannes Gutenberg-Universität Mainz, Germany); Stefan Irnich (Johannes Gutenberg-University Mainz, Germany); Fabio Furini (LAMSADE Université Paris Dauphine, France); Roberto Wolfler Calvo (LIPN Université Paris, France)
    Abstract: In social network analysis (SNA), relationships between members of a network are encoded in an undirected graph where vertices represent the members of the network and edges indicate the existence of a relationship. One important task in SNA is community detection, that is, clustering the members into communities such that relatively few edges are in the cutsets, but relatively many are internal edges. The clustering is intended to reveal hidden or reproduce known features of the network, while the structure of communities is arbitrary. We propose decomposing a graph into the minimum number of relaxed cliques as a new method for community detection especially conceived for cases in which the internal structure of the community is important. Cliques, that is, subsets of vertices inducing complete subgraphs, can model perfectly cohesive communities, but often they are overly restrictive because many real communities form dense, but not complete subgraphs. Therefore, di erent variants of relaxed cliques have been defined in terms of vertex degree and distance, edge density, and connectivity. They allow to impose application-specific constraints a community has to fulfill such as familiarity and reachability among members and robustness of the communities. By discussing the results obtained for some very prominent social networks widely studied in the SNA literature we demonstrate the applicability of our approach.
    Keywords: Community detection, graph decomposition, clique relaxations, social network analysis
    Date: 2017–12–20
  4. By: Bazzi, Samuel; Gudgeon, Matthew
    Abstract: Policymakers in diverse countries face the persistent challenge of managing ethnic divisions. We argue that redrawing subnational political boundaries can fundamentally reshape these divisions. We use a natural policy experiment in Indonesia to show that changes in the political relevance of ethnic divisions have significant effects on conflict in the short- to medium-run. While redistricting along group lines can increase social stability, these gains are undone and even reversed in newly polarized units. Electoral democracy further amplifies these effects given the large returns to initial control of newly created local governments in settings with ethnic favoritism. Overall, our findings show that the ethnic divisions underlying widely-used diversity measures are neither fixed nor exogenous and instead depend on the political boundaries within which groups are organized. These results illustrate the promise and pitfalls of redistricting policy in diverse countries where it is not feasible for each group to have its own administrative unit.
    Keywords: conflict; Decentralization; Ethnic Divisions; Polarization; Political Boundaries
    JEL: D72 D74 H41 H77 O13 Q34
    Date: 2018–01
  5. By: Eric Guerci (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Nobuyuki Hanaki (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis - UCA - Université Côte d'Azur - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur); Naoki Watanabe (Faculty of Engineering, Information and Systems, University of Tsukuba - University of Tsukuba)
    Abstract: By employing binary committee choice problems, this paper investigates how varying or eliminating feedback about payoffs affects: (1) subjects' learning about the underlying relationship between their nominal voting weights and their expected payoffs in weighted voting games; and (2) the transfer of acquired learning from one committee choice problem to a similar but different problem. In the experiment, subjects choose to join one of two committees (weighted voting games) and obtain a payoff stochastically determined by a voting theory. We found that: (i) subjects learned to choose the committee that generates a higher expected payoff even without feedback about the payoffs they received; and (ii) there was statistically significant evidence of ``meaningful learning'' (transfer of learning) only for the treatment with no payoff-related feedback. This finding calls for re-thinking existing models of learning to incorporate some type of introspection.
    Keywords: experiment,voting game,learning,two-armed bandit problem
    Date: 2017–02–02
  6. By: Hans Peter Grüner; Thomas Tröger
    Abstract: How should a society choose between two social alternatives if participation in the decision process is voluntary and costly and monetary transfers are not feasible? Considering symmetric voters with private valuations, we show that it is utilitarian-optimal to use a linear voting rule: votes get alternativedependent weights, and a default obtains if the weighted sum of votes stays below some threshold. Standard quorum rules are not optimal. We develop a perturbation method to characterize equilibria in the case of small participation costs and show that leaving participation voluntary increases welfare for linear rules that are optimal under compulsory participation.
    Keywords: Network effects, two-sided markets, platform competition, competitive bottleneck, multihoming
    JEL: D43 L13 L86
    Date: 2018–01
  7. By: Felix Bierbrauer; Aleh Tsyvinski; Nicolas D. Werquin
    Abstract: We develop a model of political competition with endogenous turnout and endogenous platforms. Parties face a trade-off between maximizing their base and getting their supporters out to vote. We study the implications of this framework for non-linear income taxation. In equilibrium, both parties propose the same tax policy. This equilibrium policy is a weighted combination of two terms, one reflecting the parties’ payoff from mobilizing their own supporters, one reflecting the payoff from demobilizing the supporters of the other party. The key determinant of the equilibrium policy is the distribution of the voters’ party attachments rather than their propensity to swing vote. Our analysis also provides a novel explanation for why even left-leaning parties may not propose high taxes on the rich.
    JEL: D72 D82 H21
    Date: 2017–12
  8. By: Nunn, Nathan; Qian, Nancy; Wen, Jaya
    Abstract: We present findings that document one way in which a society's culture can affect political outcomes. Examining an annual panel of democratic countries over six decades, we show that severe economic downturns are more likely to cause political turnover in countries that have lower levels of generalized trust. The relationship is only found among democracies and for regular leader turnover, which suggests that the underlying mechanism works through leader accountability and the electoral process. Moreover, we find that the effects of trust on turnover are greatest during years with regularly-scheduled elections, and within democracies with a parliamentary system, a fully free media, and greater stability. The estimates suggest that generalized trust affects political institutions by influencing the extent to which citizens attribute economic downturns to the mistakes of politicians.
    Keywords: Political Turnover; Recession; Trust
    JEL: D72 P16 P17 P51
    Date: 2018–01
  9. By: NESTEROV, Yurii, (CORE, Université catholique de Louvain)
    Abstract: In this paper, we suggest a new technique for soft clustering of multidimensional data. It is based on a new convex voting model, where each voter chooses a party with certain probability depending on the divergence between his/her preferences and the position of the party. The parties can react on the results of polls by changing their positions. We prove that under some natural assumptions this system has a unique fixed point, providing a unique solution for soft clustering. The solution of our model can be found either by imitation of the sequential elections, or by direct minimization of a convex potential function. In both cases, the methods converge linearly to the solution. We provide our methods with worst-case complexity bounds. To the best of our knowledge, these are the first polynomial-time complexity results in this field.
    Keywords: soft clustering, fuzzy clustering, C-means, polynomial-time complexity bounds, electoral models
    Date: 2018–01–16
  10. By: Nuria Boot (KU Leuven, DIW Berlin); Timo Klein (Amsterdam School of Economics, University of Amsterdam); Maarten Pieter Schinkel (Amsterdam School of Economics and ACLE, University of Amsterdam)
    Abstract: The fixing of the Libor and Euribor benchmark rates has proven vulnerable to manipulation. Individual rate-setters may have incentives to fraudulently distort their submissions. For the contributing banks to collectively agree on the direction in which to rig the rate, however, their interests need to be sufficiently aligned. In this paper we develop cartel theory to show how an interbank lending rates cartel can be sustained by preemptive portfolio changes. Exchange of information facilitates front running that allows members to reduce conflicts in their trading books. Designated banks then engage in eligible transactions rigging to justify their submissions. As the cartel is not able to always find stable cooperative submissions against occasional extreme exposure values, there is episodic recourse to non-cooperative quoting. Periods of heightened volatility in the rates may be indicative of cartelization. Recent reforms to broaden the class of transactions eligible for submission may reduce the level of manipulation, but can lead to more frequent collusive quoting.
    Keywords: Libor; Euribor; IRD; banking; cartel; insider trading
    JEL: E43 G14 G21 K21 L41
    Date: 2017–12–27
  11. By: Yiran Chen; Hanming Fang
    Abstract: About two thirds of the political committees registered with the Federal Election Commission do not self identify their party affiliations. In this paper we propose and implement a novel Bayesian approach to infer about the ideological affiliations of political committees based on the network of the financial contributions among them. In Monte Carlo simulations, we demonstrate that our estimation algorithm achieves very high accuracy in recovering their latent ideological affiliations when the pairwise difference in ideology groups' connection patterns satisfy a condition known as the Chernoff-Hellinger divergence criterion. We illustrate our approach using the campaign finance record in 2003-2004 election cycle. Using the posterior mode to categorize the ideological affiliations of the political committees, our estimates match the self reported ideology for 94.36% of those committees who self-reported to be Democratic and 89.49% of those committees who self reported to be Republican.
    JEL: D72 D85 P16
    Date: 2017–12
  12. By: Heine, Florian (Tilburg University, School of Economics and Management)
    Abstract: In this dissertation I examine group contests for both endogenous and exogenous public goods. Three studies jointly illustrate that participants accede to a pernicious one-upping in order to outdo the competing party. This tendency to over-contribute in (group) contest games complements earlier studies. Taking extant contributions in that field into account I investigate the role of fundamental institutions, which have been characterised as vehicles to promote cooperation towards a more efficient strategy in cooperative games. The results of my studies, however, paint a grim picture of the role of these simple institutions – such as rewarding and punishment, free form text communication or wealth redistribution – in group contest games. Unequivocally, players use them to push groupmates to intensify the between-group contest and add insult to injury.
    Date: 2017

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