nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒02‒19
fifteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Moral Values and Voting: Trump and Beyond By Benjamin Enke
  2. From the Bargaining Table to the Ballot Box: Political Effects of Right to Work Laws By James Feigenbaum; Alexander Hertel-Fernandez; Vanessa Williamson
  3. Politics, hospital behaviour and health care spending By Cooper, Zack; Kowalski, Amanda; Neff Powell, Eleanor; Wu, Jennifer
  4. The Political Boundaries of Ethnic Divisions By Samuel Bazzi; Matthew Gudgeon
  5. Immigration and Electoral Support for the Far Left and the Far Right By Anthony Edo; Yvonne Giesing; Jonathan Öztunc; Panu Poutvaara
  6. Uninvadable social behaviors and preferences in group-structured populations By Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
  7. Do people contribute more to intra-temporal or inter-temporal public goods? By Gilles Grolleau; Angela Sutan; Radu Vranceanu
  8. Strategic Default in Financial Networks By Nizar Allouch; Maya Jalloul
  9. The Political Economy of European Asylum Policies By Martina Burmann; Marcus Drometer; Romuald Méango
  10. Saving and Dissaving with Hyperbolic Discounting By Dan Cao; Iván Werning
  11. Group behaviour in tacit coordination games with focal points: An experimental investigation By Stefania Sitzia; Jiwei Zheng
  12. Do Voters Dislike Liberalizing Reforms? New Evidence Using Data on Satisfaction with Democracy By Berggren, Niclas; Bjørnskov, Christian
  13. Homeownership, Political Participation, and Social Capital in Post- Communist Countries and Western Europe By Petr Huber; Josef Montag
  14. A Note on Stable Cartels By Mao, Liang
  15. Home Ownership and Political Participation: Longitudinal Evidence Suggests There is No Causal Relationship By John Gibson; Bonggeun Kim

  1. By: Benjamin Enke
    Abstract: This paper studies the supply of and demand for moral values in recent U.S. presidential elections. The hypothesis is that people exhibit heterogeneity in their adherence to “individualizing” relative to “communal” moral values and that politicians' vote shares reflect the interaction of their relative moral appeal and the values of the electorate. To investigate the supply of morality, a text analysis of campaign documents classifies all candidates for the presidency since 2008 along the moral individualism vs. communalism dimension. On the demand-side, the analysis exploits two separate survey datasets to link the structure of voters' moral values to election outcomes, both across individuals within counties and across counties within states or commuting zones. The results document that heterogeneity in moral values is systematically related to voting behavior in ways that are predicted by supply-side text analyses. For example, Donald Trump's rhetoric exhibits the largest communal moral appeal among all recent presidential nominees. This pattern is matched on the demand-side, where communal values are strongly correlated with votes for Trump in the primaries, the difference in votes between Trump and past Republicans in the presidential election, and increases in voter turnout in 2016. Similarly tight connections between supply- and demand-side analyses hold for almost all contenders for the presidency in recent years, hence suggesting that morality is a key determinant of election outcomes more generally. Still, a key difference between 2016 and earlier elections appears to be the salience of moral threat in political language.
    JEL: D03 D72
    Date: 2018–01
  2. By: James Feigenbaum; Alexander Hertel-Fernandez; Vanessa Williamson
    Abstract: Labor unions play a central role in the Democratic party coalition, providing candidates with voters, volunteers, and contributions, as well as lobbying policymakers. Has the sustained decline of organized labor hurt Democrats in elections and shifted public policy? We use the enactment of right-to-work laws—which weaken unions by removing agency shop protections—to estimate the effect of unions on politics from 1980 to 2016. Comparing counties on either side of a state and right-to-work border to causally identify the effects of the state laws, we find that right-to-work laws reduce Democratic Presidential vote shares by 3.5 percentage points. We find similar effects in US Senate, US House, and Gubernatorial races, as well as on state legislative control. Turnout is also 2 to 3 percentage points lower in right-to-work counties after those laws pass. We next explore the mechanisms behind these effects, finding that right-to-work laws dampen organized labor campaign contributions to Democrats and that potential Democratic voters are less likely to be contacted to vote in right-to-work states. The weakening of unions also has large downstream effects both on who runs for office and on state legislative policy. Fewer working class candidates serve in state legislatures and Congress, and state policy moves in a more conservative direction following the passage of right-to-work laws.
    JEL: D7 J5
    Date: 2018–01
  3. By: Cooper, Zack; Kowalski, Amanda; Neff Powell, Eleanor; Wu, Jennifer
    Abstract: This paper examines the link between legislative politics, hospital behaviour, and health care spending. When trying to pass sweeping legislation, congressional leaders can attract votes by adding targeted provisions that steer money toward the districts of reluctant legislators. This targeted spending provides tangible local benefits that legislators can highlight when fundraising or running for re-election. We study a provision - Section 508 – that was added to the 2003 Medicare Modernization Act (MMA). Section 508 created a pathway for hospitals to apply to get their Medicare payment rates increased. We find that hospitals represented by members of the House of Representatives who voted ‘Yea’ on the MMA were significantly more likely to receive a 508 waiver than hospitals represented by members who voted ‘Nay.’ Following the payment increase generated by the 508 program, recipient hospitals treated more patients, increased payroll, hired nurses, added new technology, raised CEO pay, and ultimately increased their spending by over $100 million annually. Section 508 recipient hospitals formed the Section 508 Hospital Coalition, which spent millions of dollars lobbying Congress to extend the program. After the vote on the MMA and before the vote to reauthorize the 508 program, members of Congress with a 508 hospital in their district received a 22% increase in total campaign contributions and a 65% increase in contributions from individuals working in the health care industry in the members’ home states. Our work demonstrates a pathway through which the link between politics and Medicare policy can dramatically affect US health spending.
    Keywords: health care; US; hospital; politics
    JEL: D72 H51 I10 P16
  4. By: Samuel Bazzi (Boston University, CEPR, BREAD); Matthew Gudgeon (Boston University)
    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: 2017–12
  5. By: Anthony Edo; Yvonne Giesing; Jonathan Öztunc; Panu Poutvaara
    Abstract: Immigration has become one of the most divisive political issues in the United States, the United Kingdom, France and several other Western countries. We estimate the impact of immigration on voting for far-left and far-right parties in France, using panel data on presidential elections from 1988 to 2012. To derive causal estimates, we instrument more recent immigration flows by past settlement patterns in 1968. We find that immigration increases support for far-right candidates and has no robust effect on far-left voting. The increased support for far-right candidates is driven by low-skilled immigrants from non-Western countries.
    Keywords: Voting, immigration, political economy
    JEL: D72 F22 J15 P16
    Date: 2017
  6. By: Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
    Abstract: Humans have evolved in populations structured in groups that extended beyond the nuclear family. Individuals interacted with each other within these groups and there was limited migration and sometimes conáicts between these groups. Suppose that during this evolution, individuals transmitted their behaviors or preferences to their (genetic or cultural) o§spring, and that material outcomes resulting from the interaction determined which parents were more successful than others in producing (genetic or cultural) o§spring. Should one then expect pure material self-interest to prevail? Some degree of altruism, spite, inequity aversion or morality? By building on established models in population biology we analyze the role that di§erent aspects of population structureó such as group size, migration rates, probability of group conáicts, cultural loyalty towards parentsó play in shaping behaviors and preferences which, once established, cannot be displaced by any other preference. In particular, we establish that uninvadable preferences under limited migration between groups will consist of a materially self-interested, a moral, and an other-regarding component, and we show how the strength of each component depends on population structure.
    Keywords: Strategic interactions; Preference evolution; Evolution by natural selection; Cultural transmission; Pro-sociality; Altruism; Morality; Spite
    JEL: A12 A13 B52 C73 D01 D63 D64 D91
    Date: 2018–02
  7. By: Gilles Grolleau (LAMETA - Laboratoire Montpelliérain d'Économie Théorique et Appliquée - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques - INRA Montpellier - Institut national de la recherche agronomique [Montpellier] - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier, Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - GESC Dijon - Groupe Ecole Supérieure de Commerce Dijon - Bourgogne); Angela Sutan (Laboratoire d'Expérimentation en Sciences Sociales et Analyse des Comportements (LESSAC) - GESC Dijon - Groupe Ecole Supérieure de Commerce Dijon - Bourgogne); Radu Vranceanu (Business School - UAB - The University of Alabama at Birmingham [ Birmingham], UMR 8184 Théorie Economique Modélisation et Applications (THEMA) - CNRS - Centre National de la Recherche Scientifique, Université de Cergy Pontoise)
    Abstract: We introduce a dynamic public goods game, where an individual's investment in the public good at a given round provides benefits to other individuals in the next round, and the individual himself benefits from investments in the public good made by his current group members in the previous round. Subjects turn out to be more generous in this inter-temporal context, than in a standard public goods experiment where contributions and transfers are exchanged at the same period. Furthermore, when known, benefits from the past investment are positively related to the individual's current investment in the public good.
    Keywords: dynamic public goods,inter-temporal transfers,voluntary contribution mechanism,contribution vs. investment,public goods,dynamic game,laboratory experimentation,profit,altruism,bien public,rentabilité des investissements,contribution volontaire,jeu dynamique,expérimentation en laboratoire,bénéfice,altruisme
    Date: 2016
  8. By: Nizar Allouch; Maya Jalloul
    Abstract: This paper investigates a model of strategic interactions in financial networks, where the decision by one agent on whether or not to default impacts the incentives of other agents to escape default. Agents’ payoffs are determined by the clearing mechanism introduced in the seminal contribution of Eisenberg and Noe (2001). We first show the existence of a Nash equilibrium of this default game. Next, we develop an algorithm to find all Nash equilibria that relies on the financial network structure. Finally, we explore some policy implications to achieve efficient coordination.
    Keywords: systemic risk; default; financial networks; coordination games; central clearing counterparty; financial regulation
    JEL: C72 D53 D85 G21 G28 G33
    Date: 2017–12
  9. By: Martina Burmann; Marcus Drometer; Romuald Méango
    Abstract: Despite the recognition that asylum policies are partly determined by political economy factors in the destination country, there is little empirical evidence on the precise linkages between those political factors and asylum policies. We shed light on this issue by examining the impact of elections and parties on first-time asylum applications. Our evidence is based on a large bilateral panel data set comprising 12 European destination countries and their 51 most relevant origin countries during the time period 2002 to 2014. Our findings suggest that the number of asylum applicants under left- and right-wing parties converges before elections and differs thereafter. This result is robust to several different specifications and suggests that both left- and rightwing cabinets choose moderate policies before the election and less moderate policies after the election.
    Keywords: Electoral cycles, migration policies
    JEL: H11 D72 F22
    Date: 2017
  10. By: Dan Cao; Iván Werning
    Abstract: Is the standard hyperbolic-discounting model capable of robust qualitative predictions for savings behavior? Despite results suggesting a negative answer, we provide a positive one. We give conditions under which all Markov equilibria display either saving at all wealth levels or dissaving at all wealth levels. Moreover, saving versus dissaving is determined by a simple condition comparing the interest rate to a threshold made up of impatience parameters only. Our robustness results illustrate a well-behaved side of the model and imply that qualitative behavior is determinate, dissipating indeterminacy concerns to the contrary (Krusell and Smith, 2003). We prove by construction that equilibria always exist and that multiplicity is present in some cases, highlighting that our robust predictions are not due to uniqueness. Similar results may be obtainable in related dynamic games, such as political economy models of public spending.
    JEL: D03 D7 E21
    Date: 2018–01
  11. By: Stefania Sitzia (University of East Anglia); Jiwei Zheng (Universtiy of East Anglia)
    Abstract: This paper reports an experimental investigation of Schelling's theory of focal points that compares group and individual behaviour. We find that when players' interests are perfectly aligned, groups choose more often the label salient option and achieve higher coordination success than individuals. However, in games with conflict of interest, groups do not always perform better than individuals, especially when the degree of conflict is substantial. We also find that groups outperform individuals in games in which identifying the solution to the coordination problem requires some level of cognitive sophistication (i.e. trade-off games). Finally, players that successfully identify the solution to these games achieve also greater coordination rates in games with a low degree of conflict than other players. This result raises questions of whether finding the focal point is more a matter of logic rather than imagination as instead Schelling argued.
    Keywords: groups, coordination, label cues, cognition
    JEL: C72 C78 C91 C92
    Date: 2018–01–30
  12. By: Berggren, Niclas (Research Institute of Industrial Economics (IFN)); Bjørnskov, Christian (Research Institute of Industrial Economics (IFN))
    Abstract: Since the early 1980s a wave of liberalizing reforms has swept over the world. While the stated motivation for these reforms has usually been to increase economic efficiency, some critics have instead inferred ulterior motives and a desire to enrich certain (already rich) people at the expense of others. This critique, coupled with the claim that many of the reforms have been undertaken during different crises so as to bypass potential opponents, suggests that people will dislike the reforms and even be less satisfied with democracy as such. We test this hypothesis empirically, using panel data from 30 European countries in the period 1993–2015. The dependent variable is the average satisfaction with democracy, while the reform measures are constructed as distinct changes in four policy areas: government size, the rule of law, openness and regulation. Our results indicate that while reforms of government size are not robustly related to satisfaction with democracy, reforms of the other three kinds are – and in a way that runs counter to the anti-liberalization claims. Reforms that reduce economic freedom are generally related to satisfaction with democracy in a negative way, while reforms that increase economic freedom are positively associated with satisfaction with democracy. Voters also react more negatively to left-wing governments introducing reforms that de-liberalize. It thus seems as if the hypothesis of a general negative reaction towards liberalizing reforms taking the form of reduced satisfaction with democracy does not stand up to empirical scrutiny, at least not in our European sample.
    Keywords: Government satisfaction; Reforms; Crisis; Public choice; Voting; Institutions
    JEL: D02 D72 H11 P11 Z18
    Date: 2018–02–01
  13. By: Petr Huber (Austrian Institute for Economic Research (WIFO) and Faculty of Business and Economics, Mendel University in Brno.); Josef Montag (International School of Economics, Kazakh-British Technical University and Department of Economics, Mendel University in Brno)
    Abstract: We study whether the positive effects of homeownership on political participation and social capital, found in developed market economies, extend to post-communist countries. We find that homeownership is strongly related to higher participation in local-level and national elections. In post- communist countries, homeownership is also related to higher social trust. However, the positive association between homeownership and volunteering found in developed market economies does not extend to post-communist countries. Together, our results corroborate that homeownership is associated with positive social benefits. However, these effects are highly heterogeneous and context- dependent.
    Keywords: Homeownership, social capital, political participation, post-communist countries
    JEL: D62 D72 P14 P26
    Date: 2018–02
  14. By: Mao, Liang
    Abstract: In non-cooperative open membership cartel formation games, it is usually assumed that cartel members will maximize their joint payoffs. Through an example, this note shows that this assumption is problematic, because it imposes some unnecessary restrictions on cartel members' actions. We recommend that the cartel agreement should be endogenously determined in future studies.
    Keywords: cartel formation, stable cartel, self-enforcing agreement
    JEL: C79 H41
    Date: 2017–11–14
  15. By: John Gibson (University of Waikato); Bonggeun Kim (Seoul National University)
    Abstract: The effect of home ownership on political participation is examined using longitudinal data from New Zealand. We study political party membership, and if and how individuals voted in six General Elections, using validated data. There is a positive correlation between being a home owner and ever voting, and between political party membership and the local home ownership rate. Individual home ownership and the home ownership rate negatively correlate with voting for left-wing political parties. But once the longitudinal nature of the data are exploited, using fixed effects specifications, these significant correlations disappear. This change in the results suggests that unobserved factors that predispose people to be a home owner also affect their political participation.
    Keywords: home ownership; omitted variables; political participation; voting
    Date: 2018–02–10

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