nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒05‒07
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Mortgage Market Credit Conditions and U.S. Presidential Elections By Alexis Antoniades; Charles W. Calomiris
  2. Bargaining and Social Dialogue at the Public Sector (BARSOP) Country Study: Slovakia By Marta Kahancová
  3. The Logic of Collective Action Revisited By Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser
  4. Designing International Environmental Agreements under Participation Uncertainty By Mao, Liang
  5. Communication in a threshold public goods game with ambiguity: Anomalies and regularities By Matteo M. Marini; Aurora García-Gallego; Luca Corazzini
  6. Loyalty Shares with Tenure Voting - a Coasian bargain? Evidence from the Loi Florange Experiment By Marco Becht; Yuliya Kamisarenka; Anete Pajuste
  7. Decentralization, spending efficiency and pro-poor outcomes in Morocco By Maria Elkhdari; Babacar Sarr
  8. Static Stability in Games Part II: Asymmetric Games By Igal Milchtaich
  9. The Role of Electoral Incentives for Policy Innovation: Evidence from the U.S. Welfare Reform By Andreas Bernecker; Pierre C. Boyer; Christina Gathmann
  10. Procedural Fairness, the Economy, and Support for Political Authorities By Luís Aguiar-Conraria; Pedro C. Magalhães
  11. The European Union democratic deficit: substantive representation in the European Parliament at the input stage By Sorace, Miriam
  12. Contesting an International Trade Agreement By Matthew T. Cole; James Lake; Benjamin Zissimos
  13. Gender Biases: Evidence from a Natural Experiment in French Local Elections By Jean-Benoît Eymeoud; Paul Vertier
  14. Tax-Exempt Lobbying: Corporate Philanthropy as a Tool for Political Influence By Marianne Bertrand; Matilde Bombardini; Raymond Fisman; Francesco Trebbi
  15. Beyond Outcomes: Experimental Evidence on the Value of Agreement By Philippos Louis; Matias Núñez; Dimitrios Xefteris
  16. Tax Federalism and Cooperative Games: Value Approach By Emilio Calvo

  1. By: Alexis Antoniades; Charles W. Calomiris
    Abstract: Voters punish incumbent Presidential candidates for contractions in the local (county-level) supply of mortgage credit during market-wide contractions of credit, but they do not reward them for expansions in mortgage credit supply in boom times. Our primary focus is the Presidential election of 2008, which followed an unprecedented swing from very generous mortgage underwriting standards to a severe contraction of mortgage credit. Voters responded to the credit crunch by shifting their support away from the Republican Presidential candidate in 2008. That shift was particularly pronounced in states that typically vote Republican, and in swing states. The magnitude of the effect is large. If the supply of mortgage credit had not contracted from 2004 to 2008, McCain would have received half the votes needed in nine crucial swing states to reverse the outcome of the election. The effect on voting in these swing states from local contractions in mortgage credit supply was five times as important as the increase in the unemployment rate; if unemployment had not increased from 2004 to 2008, that improvement in local labor markets would only have given McCain only 9% of the votes needed to win the nine crucial swing states. We extend our analysis to the Presidential elections from 1996 to 2012 and find that voters’ reactions are similar for Democratic and Republican incumbent parties, but different during booms and busts of mortgage credit. These asymmetric results indicate that voters react strongly and negatively to credit supply contraction; however, organized political bargaining (the “smoke-filled room channel”) rather than voting was the primary vehicle for rewarding politicians for supporting government subsidies for mortgage risk during booms.
    JEL: D72 E51 G01 G21 L51 N22 N42 P16
    Date: 2018–03
  2. By: Marta Kahancová
    Abstract: This report examines the evolution and role of industrial relations in the public sector in Slovakia since 2000 and studies three sub-sectors of the public sector: primary education, hospitals and a part of local government, childcare facilities. The report uses document and data analysis, semi-structured interviews with policy makers at national level and social partners’ representatives (at national, sector and local levels), interview transcripts, analyses and findings of authors’ earlier projects, which also focused on industrial relations in public sector. Unlike in other countries, the crisis in Slovakia did not yield significant employment cuts, however, austerity measures concentrated on wage freezes across various domains of the public sector. The crisis indirectly affected industrial relations and working conditions in Slovakia, including the public sector, which has witnessed heightened mobilization via the new actors that engaged in new strategies and became active via protests, petitions and demonstrations. This means that the strategies for gaining influence shifted from established bargaining channels to the public space. Despite that, multi-employer and single-employer collective bargaining structures remained stable. Increasing regulation of working conditions via legislative solutions became the other trend. This paper argues that a focus on legislative solutions together with the tendency of unions to seek political support by political parties in the government undermines the role of collective bargaining. Across all studied subsectors, social partners actively voiced their criticisms on reform proposals as well as proposed legislative changes, which in most cases concerned wage regulations. Nevertheless, a direct relationship between reform efforts and changes in the quality of provided public services is difficult to establish. Supported by the European Commission, Industrial Relations and Social Dialogue program (VS/2016/0107)
    Date: 2018–04–26
  3. By: Joachim Weimann; Jeannette Brosig-Koch; Timo Heinrich; Heike Hennig-Schmidt; Claudia Keser
    Abstract: Since Mancur Olson’s “Logic of collective action” it is common conviction in social sciences that in large groups the prospects of a successful organization of collective actions are rather bad. Following Olson’s logic, the impact of an individual’s costly contribution becomes smaller if the group gets larger and, consequently, the incentive to cooperate decreases with group size. Conducting a series of laboratory experiments with large groups of up to 100 subjects, we demonstrate that Olson’s logic does not generally account for observed behavior. Large groups in which the impact of an individual contribution is almost negligible are still able to provide a public good in the same way as small groups in which the impact of an individual contribution is much higher. Nevertheless, we find that small variations of the MPCR in large groups have a strong effect on contributions. We develop a hypothesis concerning the interplay of MPCR and group size, which is based on the assumption that the salience of the advantages of mutual cooperation plays a decisive role. This hypothesis is successfully tested in a second series of experiments. Our result raises hopes that the chance to organize collective action of large groups is much higher than expected so far.
    Keywords: public goods, large groups
    JEL: C90
    Date: 2018
  4. By: Mao, Liang
    Abstract: We analyze the design of international environmental agreement (IEA) by a three-stage coalition formation game. In stage one, a designer chooses an IEA rule which, depending on the coalition of signatories formed in stage two, specifies the action that each signatory should take in stage three. A certain degree of participation uncertainty exists in that each country intending to sign the IEA for its best interest has a probability to end up a non-signatory. An IEA rule is said to be optimal if it maximizes the expected payoff of each signatory. We provide an algorithm to determine an optimal rule, and show its advantage over some rules used in the literature.
    Keywords: International environmental agreement; coalition formation; participation uncertainty, stable coalition
    JEL: C72 H41 Q54
    Date: 2017–05–15
  5. By: Matteo M. Marini (Dept of Economics, Università degli Studi dell'Insubria, Varese-Italy, LEE and Dept of Economics, Universitat Jaume I, Castellón-Spain); Aurora García-Gallego (LEE & Department of Economics, Universitat Jaume I, Castellón, Spain); Luca Corazzini (Department of Economics, University of Venice ‘Cà Foscari’, Venice, Italy)
    Abstract: This paper offers evidence on the impact of communication on public good provision within the context of ambiguous public good values and noisy information. We run a laboratory experiment with two treatments, where the control variable is pre-play communication in the form of unrestricted text chat. A binary threshold public goods game with four-person groups, threshold of three and partner matching is at the core of the design. We introduce a novel provision mechanism which, in case the threshold is reached, consists in a binary lottery producing either a stated high value or a stated low value for the whole group with unknown probability. Before the contribution decision, private signals for the actual value of the public good are provided. The results at the group level emphasize that, in accordance with related literature, communication significantly increases public good provision by reducing inefficiency that comes from wasteful under-contribution. Nevertheless, despite the presence of a valid coordination device, the players in the chat treatment seem to neglect the free-rider issue and often end up over-contributing, in contrast with previous scientific findings. After chat analysis, we discover that the agreements on all members contributing are often successful, arguably thanks to pronounced group identity generated by the partner matching. Moreover, we propose the common fate hypothesis as further explanation of the massive over-contribution. Since the players show greater concern for ambiguity than for the free-rider problem, we speculate about a possible crowding out effect of the former on the latter.
    Keywords: communication, ambiguity, private signal, threshold public goods game
    JEL: C92 D81 D82 D83 H41
    Date: 2018
  6. By: Marco Becht; Yuliya Kamisarenka; Anete Pajuste
    Abstract: French listed companies can issue shares that confer two votes per share after a holding period of at least two years (loyalty shares with tenure voting rights). In 2014 the default rule changed from one-share-one-vote to loyalty shares. The Coase theorem predicts that ceteris paribus shareholders rewrite the corporate charter to preserve the pre-reform structure. The theorem also predicts that the proportion of loyalty shares in initial public offerings is unchanged. The paper shows that most one-share-one-vote companies reverted to the prereform contract. The exception were firms with a stake held by the French state. In initial public offerings, the new default rule had an impact; the proportion of loyalty share statutes increased from about forty to fifty percent after the passage of the law. Companies that kept the same statutes have a significantly higher market to book ratio than companies forced into a different regime. The evidence is broadly consistent with the predictions of the Coase theorem, but only in the absence of conflicted parties with veto power.
    Keywords: Loyalty shares, tenure voting, time-phased voting, dual-class shares, one-shareone- vote, Coase theorem
    Date: 2018–04
  7. By: Maria Elkhdari (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Babacar Sarr (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique, International Monetary Fund (IMF))
    Abstract: This paper studies how decentralization affects poverty, vulnerability, and inequality in Morocco, in the context of ongoing regionalization reforms. We use different non-parametric approaches to assess spending efficiency of Moroccan municipalities and regions over the period 2005-2009. The results indicate that the efficiency of spending in improving pro-poor outcomes is dependent on the fiscal autonomy of subnational governments. While the impact of transfer dependency is not statistically significant, more granular data show that formula-based (unconditional) transfers significantly improve spending efficiency when the opposite is true for ad-hoc (conditional) transfers. Furthermore, we investigate the impact of political decentralization and find that local spending is less efficient in regions where municipal governments have a greater responsibility for spending compared to the regional government. This finding also holds in more fragmented regions with a high number of municipalities. Finally, we test whether there is an electoral budget cycle in Morocco and find that spending efficiency decreases the year of local elections, but increases with the level of education of elected officials.
    Keywords: Decentralization, Morocco, Poverty, Vulnerability, Inequality, Public spending efficiency, Data Envelopment Analysis, Partial Frontier Analysis.
    Date: 2018–04–24
  8. By: Igal Milchtaich (Bar-Ilan University)
    Abstract: Static stability in strategic games differs from dynamic stability in only considering the players’ incentives to change their strategies. It does not rely on any assumptions about the players’ reactions to these incentives and it is thus not linked with any particular dynamics. This paper introduces a general notion of (local) static stability of strategy profiles that is applicable to any N-player strategic game. It examines a number of important classes of games, with strategy spaces or payoff functions that have special structures, where this general notion takes a simple, concrete form. The paper explores the relations between these special cases of static stability and different versions of dynamic stability, and connects static stability in general, asymmetric games with the related, but essentially weaker, notion of static stability of strategies in symmetric games.
    Date: 2017–08
  9. By: Andreas Bernecker; Pierre C. Boyer; Christina Gathmann
    Abstract: We investigate whether the decision to experiment with novel policies is influenced by electoral incentives. Our empirical setting is the U.S. welfare reform in 1996, which marked the most dramatic shift in social policy since the New Deal. We find that electoral incentives matter: governors with strong electoral support are less likely to experiment with policies than governors with little electoral support. Yet, governors who cannot be reelected experiment more than governors striving for reelection. The importance of electoral incentives is robust to controlling for governor ideology, voter preferences for redistribution, the influence of the legislature, or for learning among states. A comparison of the role of governor ideology and electoral incentives reveals that both contribute about equally to policy experimentation.
    Keywords: policy innovation, electoral incentives, welfare reform, spillovers
    JEL: D72 D78 H75
    Date: 2018
  10. By: Luís Aguiar-Conraria (Department of Economics/NIPE, University of Minho); Pedro C. Magalhães (Institute of Social Sciences, University of Lisbon)
    Abstract: A vast literature in social and organizational psychology suggests that support for authorities is driven both by the outcomes they deliver and by the extent to which they employ fair decision-making processes. Furthermore, that literature describes a processoutcome interaction, through which the effects of outcome favorability are reduced as process fairness increases. However, very few studies have been conducted to determine whether such interaction is also present in the explanation of support for political authorities. Here, we start by analyzing whether individual perceptions of the political system’s procedural fairness moderate the well-known relationship between perceived economic performance and government approval. Then, we explore the implications of such process-outcome interaction to the phenomenon of “economic voting,” testing whether impartiality in governance moderates the effect of objective economic performance on incumbent support. In both cases, we show that the interaction between processes and outcomes indeed extends beyond the organizational contexts where it has been previously observed, with important implications for the study of political support.
    Keywords: procedural fairness; process-outcome interaction; political support; executive approval; economic voting
    Date: 2018
  11. By: Sorace, Miriam
    Abstract: The analysis compares voters' preferences in economic policy to political parties' economic written parliamentary questions during the 2009–2014 term of the European Parliament. The corpus of over 55,000 written questions was ideologically scaled via crowdsourcing. The analysis shows that parties are unresponsive to second-order and to disengaged voters. The results also suggest that there is no upper class bias in European Parliament political representation. The data highlight a strong tendency of EP7 political parties to cluster around the position of the average European voter, at the expense of their average supporter. The democratic deficit is therefore at most a pluralism deficit in the European Parliament, since substantive representation in the European Parliament is successful as far as the majoritarian norm is concerned.
    Keywords: crowdsourcing; democratic deficits; European Parliament; European Union; political representation
    JEL: J1
    Date: 2018–03–01
  12. By: Matthew T. Cole; James Lake; Benjamin Zissimos
    Abstract: We develop a new theoretical framework of trade agreement (TA) formation, called a ‘parallel contest’, that emphasizes the political fight over TA ratification within countries. TA ratification is inherently uncertain in each country, where anti- and pro-trade interest groups contest each other to influence their own governments’ ratification decision. Unlike prior literature, the protection embodied in negotiated TA tariffs reflects a balance between the liberalizing force of lobbying and inherently protectionist government preferences. Moreover, new international political externalities emerge that are not internalized by governments that just internalize terms of trade externalities.
    Keywords: contests, international integration, trade agreement
    JEL: F02
    Date: 2018
  13. By: Jean-Benoît Eymeoud; Paul Vertier (Département d'économie)
    Abstract: Women are under-represented in politics. In this paper, we test one of the potential explanations for this situation: gender-bias from voters. We use a natural experiment during French local elections in 2015: for the first time in this country, candidates had to run by pairs, which had to be gender-balanced. We argue that this reform confused some voters, who mighthave assumedthat the firstname on theballot representedthe "main" candidate. Since the order of the candidates on the ballot was determined by alphabetical order, the order of appearance of male and female candidates is as-good-as-random, and this setting allows us to isolate gender biases from selection effects. Our main result is that there exists a negative gender bias affecting right-wing candidates, who receive about 1.5 points lower shares of vote when the female candidate appears first on the ballot. The missing votes prevented some pairs of candidates from being elected. Using the fact that the candidates can (but do not have to) report additional information about themselves on the ballot, we show that this discrimination is likely to be statistical, since the most affected women are those running in pairs which do not report any information.
    Keywords: Political Economy; Gender Discrimination; Voting Behavior
    Date: 2018–04
  14. By: Marianne Bertrand; Matilde Bombardini; Raymond Fisman; Francesco Trebbi
    Abstract: We explore the role of charitable giving as a means of political influence, a channel that has been heretofore unexplored in the political economy literature. For philanthropic foundations associated with Fortune 500 and S&P500 corporations, we show that grants given to charitable organizations located in a congressional district increase when its representative obtains seats on committees that are of policy relevance to the firm associated with the foundation. This pattern parallels that of publicly disclosed Political Action Committee (PAC) spending. As further evidence on firms’ political motivations for charitable giving, we show that a member of Congress’s departure leads to a short-term decline in charitable giving to his district, and we again observe similar patterns in PAC spending. Charities directly linked to politicians through personal financial disclosure forms filed in accordance to Ethics in Government Act requirements exhibit similar patterns of political dependence. Our analysis suggests that firms deploy their charitable foundations as a form of tax-exempt influence seeking. Based on a straightforward model of political influence, our estimates imply that 7.1 percent of total U.S. corporate charitable giving is politically motivated, an amount that is economically significant: it is 280 percent larger than annual PAC contributions and about 40 percent of total federal lobbying expenditures. Given the lack of formal electoral or regulatory disclosure requirements, charitable giving may be a form of political influence that goes mostly undetected by voters and shareholders, and which is directly subsidized by taxpayers.
    JEL: G28 P16 P48
    Date: 2018–03
  15. By: Philippos Louis; Matias Núñez; Dimitrios Xefteris
    Abstract: Does an individual assign a higher value to a group decision she has explicitly agreed with? Or does she only care about the intrinsic features of the outcome? Since it is difficult to address this question in natural settings, we employ a laboratory experiment where, after the group collectively decides on an issue, each individual may propose a revision to the group decision. We find that outcomes generated by congruent mechanisms i.e. procedures that incentivize subjects to agree with the winning alternative- are revised to a far lesser extent compared to outcomes generated by outcome-wise identical mechanisms that encourage disagreement.
    Keywords: implementation; mechanism design; consensus; agreement; congruence; experiment; endorsements
    JEL: D71 D72
    Date: 2018–05
  16. By: Emilio Calvo (Universidad de Valencia. ERI-CES)
    Abstract: We model the problem of how to distribute the public spending between the different regions of a country once all taxes are collected as a cooperative game in coalitional form. A tax game is built, specifying how much tax is collected in every region and coalition of regions in the country under secession. In this paper we propose two tax rules: the balanced tax rule, and the redistributive balanced tax rule. Both rules have the property of being stable for every tax problem, as they belong to the core of the tax game. The Spanish case is considered as example. We compare their redistributive behavior with the present Spanish financial system, with the population egalitarian, and with the optimistic secession tax rules.
    Keywords: fiscal federalism; fiscal stability; secessionism; coalitional
    JEL: H72 H77 C71
    Date: 2018–04

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