nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒02‒26
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. The Price of a Vote: Evidence from France, 1993-2014 By Bekkouche, Yasmine; Cagé, Julia
  2. Electoral spillovers in an intertwined world: Brexit effects on the 2016 Spanish vote By Agelos Delis; Konstantinos Matakos; Dimitrios Xefteris
  3. Policy Choices in Assembly versus Representative Democracy : Evidence from Swiss Communes By Patricia Funk; Stephan Litschig
  4. Homophily and the Persistence of Disagreement By Isabel Melguizo
  5. Political Activism as a Determinant of Clientelistic Transfers: Evidence from an Indian Public Works Program By Chau, Nancy; Liu, Yanyan; Soundararajan, Vidhya
  6. Multi-Battle n-Player Dynamic Contests By Anbarci, Nejat; Cingiz, Kutay; Ismail, Mehmet
  7. The Reform Dilemma in Polarized Democracies By Gersbach, Hans; Tejada, Oriol
  8. Crashing the Party? Elites, Outsiders, and Elections By Richard van Weelden
  9. Balanced Voting By Gersbach, Hans; Wickramage, Kamali
  10. Highlighting the Relations between Interaction Types in Meetings and Group Performance By Amélie Thery; Michel Verstraeten
  11. The Effect of Initial Inequality on Meritocracy. A Voting Experiment on Tax Redistribution. By Natalia Jiménez Jiménez; Elena Molis; Ángel Solano García
  12. Can Quotas Increase the Supply of Candidates for Higher-Level Positions? Evidence from Local Government in India By O'Connell, Stephen D.
  13. Social media, sentiment and public opinions: Evidence from #Brexit and #USElection By Yuriy Gorodnichenko; Tho Pham; Oleksandr Talavera
  14. Tax Morale, Fiscal Capacity, and Wars By Alessandro Belmonte; Désirée Teobaldelli; Davide Ticchi
  15. Uninvadable social behaviors and preferences in group-structured populations By Alger, Ingela; Lehmann, Laurent; Weibull, Jörgen W.
  16. Exclusion and Reintegration in a Social Dilemma By Solda, Alice; Villeval, Marie Claire
  17. Strategic Default in Financial Networks By Nizar Allouch; Maya Jalloul

  1. By: Bekkouche, Yasmine; Cagé, Julia
    Abstract: What is the price of a vote? This paper investigates this consequential controversy by analyzing a new comprehensive dataset of all French municipal and legislative elections over the 1993-2014 period. We begin by documenting the evolution of campaign finance in France, and show that both the amount and sources of campaign contributions vary widely from one candidate to another, in particular depending on their political party. We then turn to the empirical analysis and tackle a number of empirical challenges. First, we rely on recent methodological innovations to handle the special characteristics of multiparty data. Second, to overcome the endogenous nature of campaign spending, we propose a new instrument based on a change in legislation. We find that an increase in spending per voter consistently increases a candidate's vote share both for municipal and legislative elections, and that the effect is heterogeneous depending on the parties and on the sources of campaign funding. According to our estimations, the price of a vote is about 6 euros for the legislative elections, and 32 euros for the municipal ones. Simulations show that small changes in spending patterns and caps can have a large impact on electoral outcomes and seats. Our results suggest that political finance needs to be tightly regulated.
    Keywords: Campaign expenditures; Campaign finance reform; Campaign financing; elections; Multiparty electoral data
    JEL: D72 H72 P48
    Date: 2018–01
  2. By: Agelos Delis; Konstantinos Matakos; Dimitrios Xefteris
    Abstract: The Brexit vote took place three days before the June 26, 2016, Spain’s parliamentary elections, in which anti-systemic parties performed worse compared to the previous elections (December 2015) despite the optimistic predictions of the pre-election polls and the surge in the support for anti-systemic parties that was taking place elsewhere (Hobolt and de Vries 2016). We split the Spanish votes in local ones (casted after Brexit) and postal ones (casted before Brexit) and –by employing a differences-in-differences model a la Montalvo (2011)—we provide causal evidence suggesting that the electoral performance of the anti-systemic parties deteriorated due to the uncertainty and fear of destabilization caused to the Spanish electorate by the Brexit vote.
    Keywords: Brexit; Spanish elections; electoral spillovers; natural experiment; uncertainty; anti-systemic parties
    Date: 2018–02
  3. By: Patricia Funk (Department of Economics, Universita della Svizzera italiana); Stephan Litschig (National Graduate Institute for Policy Studies, Tokyo, Japan)
    Abstract: This paper investigates whether the form of the legislative institution - assembly versus parliament - affects the level and composition of local public expenditure. We use two research designs in distinct samples of Swiss communes. Our event study analysis focuses on medium-sized and mostly German-speaking communes that switched from assembly to parliament from 1945 to 2010. The regression discontinuity analysis is based on small communes from a French-speaking canton over the period 1986-2005 and exploits a cutoff in local population. Event study estimates suggest that parliament adoption increases total spending by about 6 percent and that this increase is driven mostly by general administration and education spending. In contrast, regression discontinuity estimates are too noisy to be informative. To understand the mechanism at play, we run a survey among assembly participants and document a sizeable under-representation of 20- to 40-year-olds as well as of women in assemblies compared to both the electorate and to voters. Switching from assembly democracy to parliament in our setting therefore seems to increase the representation of two demographics that are known for their relatively strong preferences for education spending.
    Date: 2018–02
  4. By: Isabel Melguizo (Universidad Iberoamericana. Economics Department.)
    Abstract: We study a dynamic model of attitude formation in which individuals average others' attitudes to develop their own. We assume that individuals exhibit homophily in sociodemographic exogenous attributes, that is, the attention they pay to each other is based on whether they possess similar attributes. We also assume that individuals exhibit homophily in attitudes, at the group level. Specifically, attributes that are salient, that is, that exhibit a substantial difference in attitudes between the groups of individuals possessing and lacking them, deserve high attention. Since we allow attention to evolve over time we prove that when there is, initially, a unique most salient attribute, it deserves growing attention overtime in detriment of the remaining ones. As a result, individuals eventually interact only with others similar to them across this attribute and disagreement persists. It materializes in two groups of thinking defined according to this attribute.
    JEL: D83 D85 Z13
    Date: 2017–03–31
  5. By: Chau, Nancy (Cornell University); Liu, Yanyan (IFPRI, International Food Policy Research Institute); Soundararajan, Vidhya (Indian Institute of Management)
    Abstract: Are political activists preferentially targeted by politicians engaging in clientelistic transfers to bolster political support? We provide the first model to highlight two possible rationales for such transfers: to mobilize support from the activists themselves, or to mobilize support from electors these activists have influence over. Using novel household data on ex ante political affiliation and jobs received subsequent to large-scale decentralized workfare program in India, we find that activists are indeed preferentially targeted, and furthermore, such transfers are more pronounced in locations where citizen political involvement is less common, and in remote and less connected areas where activists' role in information transfers is most critical. We argue that the evidence is consistent with the use of transfers to leverage the influence of activists over the decision-making of other electors. Our results are not driven by self selection, reverse causality, and other program transfers, and are robust to alternate definitions of "activism".
    Keywords: political clientelism, political activism, NREGS, India
    JEL: D7 H5
    Date: 2018–01
  6. By: Anbarci, Nejat; Cingiz, Kutay (General Economics 0 (Onderwijs)); Ismail, Mehmet (department of political economy, king's college london)
    Abstract: In presidential primaries, proportional campaign resource allocation to states with respect to their delegate numbers is a desirable concept. To study proportionality, we introduce a novel model for n-player multi-battle dynamic contests. We show that when players maximize their expected number of delegates there is a subgame perfect equilibrium in which players allocate their resources proportionally. However for at least 4 number of states and at least 2 delegates, when players maximize their probability of winning, there is always a distribution of delegates over the states such that population proportionality is not satisfied.
    Keywords: Presidential elections, dynamic contests, presedential primaries, population proportionality, multi-battle contests
    JEL: C73 D72
    Date: 2018–02–08
  7. By: Gersbach, Hans; Tejada, Oriol
    Abstract: We study the feasibility and efficiency of policy reforms in democracies. We develop a simple election model where (i) reforms are costly for voters and politicians and these costs increase with the extent of policy change, and (ii) politicians differ in their ability to carry out reforms efficiently. We identify a so-called Reform Dilemma, which manifests itself in two variants. From a static perspective, low-reform-ability politicians are elected when political parties are polarized, who then impose high costs on citizens for each reform step. This property of elections arises as low reform ability is a substitute for policy commitment. From a dynamic perspective, incumbents may choose socially undesirable policies to align the social need for reform with their own reform ability and are thus re-elected regardless of their reform ability.
    Keywords: costs of reform; democracy; elections; political polarization.
    JEL: D72 D82
    Date: 2018–02
  8. By: Richard van Weelden
    Abstract: We study an elections model in which political parties are internally divided betweenan “elite†and a “base†whose preferences are imperfectly aligned. Elites are better informedabout the quality of potential nominees, and their endorsements can identify andpromote high quality candidates. However, elites may also choose to restrict their endorsementsto candidates who adopt their preferred policies. We introduce a threat ofentry from outsider candidates, who have the prominence and resources to bypass partyelites. We consider when voters will turn to an outsider candidate, and identify the conditionsunder which an outsider challenge will come in the primary as opposed to as athird-party candidacy. We further explore when this threat disciplines elite endorsementsand the conditions under which outsider challenges are most likely to succeed.
    Date: 2017–01
  9. By: Gersbach, Hans; Wickramage, Kamali
    Abstract: We introduce 'Balanced Voting', a voting scheme tailored to fundamental societal decisions. It works as follows: Citizens may abstain from voting on a fundamental direction in a first stage. This guarantees the voting right in a second voting stage on the variants of the fundamental direction chosen in the first. All losers from the first stage also obtain voting rights in the second stage, while winners do not. We develop a model with two fundamental directions and variants of these directions. Information about the preferences is private. We identify circumstances under which Balanced Voting performs well with regard to utilitarian welfare and Pareto dominance. We discuss the robustness of the results, procedural rules to implement the voting scheme, and extensions. Moreover, we provide several examples, such as the US presidential election, for which the scheme could be applied.
    Keywords: Balanced Voting; fundamental decision; minority protection; tyranny of majority
    JEL: D7
    Date: 2018–02
  10. By: Amélie Thery; Michel Verstraeten
    Abstract: Are some types of interactions beneficial or harmful to team performance? Should conflict among members be promoted or avoided in teams to achieve better results? Many questions arise when trying to understand how group dynamics impact its performance. The present study intends to highlight the kinds of verbal interactions which influence the performance of a team during a meeting. A two-phase (design and building) videotaped decision-making experiment was organised with 41 teams. All interactions were then coded with the INSIDE TEAMS3D (IT3D) coding system. Three dimensions of interactions were considered: their functional meaning, the convergence among interactions (including content or process conflict) and their interpersonal emotional meaning (including indications of relational conflict). Performance was measured for each group as an assignment result. It was positively associated with the total number of interactions shared. The results support that some functional meaning categories are positively associated with performance: thus, groups which shared more interactions aiming at offering an opinion or a suggestion on the content, get on average better outcomes. Socialization categories (making jokes, fostering the conversation) were also positively correlated with performance. The study of interactions convergence within groups also provides significant results, showing that disagreements on the content have positive relations with team performance. Negative interpersonal emotional meaning is also showing positive relations with performance, which are discussed in the paper. On top of these considerations on interaction types, the research reveals that the groups with balanced contributions between members during the exercise got higher performance than those facing great heterogeneity. More generally, this paper provides methodological insights about a way to study group dynamics and gather data on interactions and performance.
    Keywords: group dynamics; interactions; performance; contributions balance; team meetings
    JEL: D23 D79 D83
    Date: 2018–02–21
  11. By: Natalia Jiménez Jiménez (Departamento de Economía, Métodos Cuantitativos e Historia Económica, University Pablo de Olavide.); Elena Molis (Department of Economic Theory and Economic History, University of Granada.); Ángel Solano García (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: According to Alesina and Angeletos (2005), societies are less redistributive but more efficient when the median voter believes that effort and talent are much more important than luck to determine income. We test these results through a lab experiment in which participants vote over the tax rate and their pre-tax income is determined according to their performance in a real effort task with leisure time. Subjects receive either a high or a low wage and this condition is either obtained through their talent in a tournament or randomly assigned. We compare subjects' decisions in these two different scenarios considering different levels of wage inequality. In our framework, this initial income inequality turns out to be crucial to support the theoretical hypothesis of Alesina and Angeletos (2005). Overall, we find that, only if the wage inequality is high, subjects choose a lower level of income redistribution and they provide a higher effort level in the scenario in which high-wage subjects are selected based on their talent through a tournament (than when it is randomly). Thus, we confirm almost all theoretical results in Alesina and Angeletos (2005) when the wage inequality is high enough. The big exception is for efficiency (measured as the sum of total payoffs), since theoretical results only hold for the scenario in which wage inequality is low.
    Keywords: income redistribution, voting, taxation, real-effort task, leisure.
    JEL: C92 D72 H30 J41
  12. By: O'Connell, Stephen D. (Massachusetts Institute of Technology)
    Abstract: A common argument for quota policies is that they can increase the participation of targeted groups in positions that are not directly subjected to quotas or after quotas are no longer in place. I investigate this hypothesis empirically in the context of India, where one third of local political leadership seats are randomly assigned to be held by a woman in each election cycle. Quotas increase the number of female candidates who later contest seats in state and national legislatures, where such policies do not exist. This effect arises from the candidacy of beneficiaries who gained experience in local government due to the quotas and career politicians who continue contesting in longer-exposed areas. Effect magnitudes imply that the policy accounts for a substantial portion of the increase in female candidates for these bodies since the start of the policy. The new candidates have a higher probability of a top finish when they run on major party tickets or contest in areas where the local constituency overlaps closely with that of the contested seat.
    Keywords: quotas, affirmative action, political candidacy, India
    JEL: J15 J45
    Date: 2018–01
  13. By: Yuriy Gorodnichenko; Tho Pham (School of Management, Swansea University); Oleksandr Talavera (School of Management, Swansea University)
    Abstract: This paper studies information diffusion in social media and the role of information dissemination in shaping public opinions. Using Twitter data on the 2016 EU Referendum and the 2016 US Presidential Election, we find that information about these two events is spread quickly on Twitter, most likely within 1-2 hours. There are also interactions among different types of Twitter agents in spreading information with a considerable spillover from bot to human tweeting activities. However, the degree of influence depends on whether bots provide consistent information with humans' priors. This finding lends support to the "echo chambers" effect on Twitter that Twitter users are more likely to expose to information supporting their own views while ignore the opposite information. Further examination shows that sentiment matters in information acquiring and sharing. Overall, our results suggest that the aggressive use of Twitter bots, coupled by the fragmentation of social media and the role of sentiment, increases the polarization of public opinions about the EU Referendum and the US Election.
    Keywords: Brexit, US Election, Information diffusion, Echo chambers, Political Bots, Twitter
    JEL: D70 D72 D86
    Date: 2018–01–25
  14. By: Alessandro Belmonte (IMT School for advanced studies); Désirée Teobaldelli (University of Urbino); Davide Ticchi (Marche Polytechnic University)
    Abstract: This paper studies how mobilization for war motivates citizens to contribute to their own community and therefore help forming tax morale in a constituency. We derive a theoretical model to investigate government's decision to expand tax revenues from alternative sources, namely changing the country's culture of tax compliance or expanding fiscal capacity. Despite the two are initially substitute, we show how in equilibrium dynamic complementarity arises. Our mechanism exploits exogenous variation in the cost of tax morale formation, induced by an expected war (either internal or external) that makes easier for the government to mobilize the constituency. We motivate our theory through a novel cross-country analysis that uses information on war frequency, tax morale, and fiscal capacity. We additionally discuss some historical cases consistent with our mechanism.
    Keywords: tax morale, state capacity, external threat, civil wars, dynamic complementarity, culture and institutions
    JEL: P16 H11 H26 H41
    Date: 2018–02
  15. 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
  16. By: Solda, Alice (GATE, University of Lyon); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Using a negatively framed public good game, we study the cooperative behavior of individuals who reintegrate their group after being excluded by their peers. We manipulate the length of exclusion and whether this length is imposed exogenously or results from a vote. We show that people are willing to exclude the least cooperators although it is not an equilibrium strategy. Exclusion has a positive impact on cooperation when it is followed by a quick rather than a slow reintegration and that the length of exclusion is chosen by the group. In this environment, a quicker reintegration also limits retaliation. Post-exclusion cooperation and forgiveness depend not only on the length of exclusion but also on the perceived intentions of others when they punish.
    Keywords: ostracism, exclusion, reintegration, social dilemma, cooperation, experiment
    JEL: C92 H41 D23
    Date: 2017–12
  17. By: Nizar Allouch (University of Kent); Maya Jalloul (Queen Mary University of London)
    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: 2018–02–06

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