nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒05‒14
thirteen papers chosen by
Stan C. Weeber
McNeese State University

  1. The Coleman-Shapley-index: Being decisive within the coalition of the interested By André Casajus; Frank Huettner
  2. Why an EU Referendum? Why in 2016? By Becker, Sascha O.; Fetzer, Thiemo
  3. Loyalty Shares with Tenure Voting - a Coasian bargain? Evidence from the Loi Florange Experiment By Becht, Marco; Kamisarenka, Yuliya; Pajuste, Anete
  4. It's never too late: funding dynamics and self pledges in reward-based crowdfunding By Paolo Crosetto; Tobias Regner
  5. The Road Not Taken: Gender Gaps along Paths to Political Power By Iyer, Lakshmi; Mani, Anandi
  6. The Likelihood of the Consistency of Collective Rankings under Preferences Aggregation with Four Alternatives using Scoring Rules: A General Formula and the Optimal Decision Rule By Eric Kamwa; Vincent Merlin
  7. The Political Economy of European Populism: Labour Market Dualisation and Protest Voting in Germany and Spain By Dustin Voss
  8. Do Fixed-Prize Lotteries Crowd Out Public Good Contributions Driven by Social Preferences? By Peter Katuscak; Tomas Miklanek
  9. With a Little Help from My Friends: Ministerial Alignment and Public Spending Composition in Parliamentary Democracies By Abel Bojar
  10. Opportunism and Third-Party Influence on Long-Term Public Contracts By Gonzalo Ruiz D.
  11. The Persistent Power of Promises By Florian Ederer; Frédéric Schneider
  12. Political Ideology and the Intragenerational Prospect of Upward Mobility By Maite D. Laméris; Harry Garretsen; Richard Jong-A-Pin
  13. Social Accountability and Service Delivery: Experimental Evidence from Uganda By Nathan Fiala; Patrick Premand

  1. By: André Casajus (HHL Leipzig Graduate School of Management); Frank Huettner (ESMT Berlin)
    Abstract: The Coleman Power of the Collectivity to Act (CPCA) is a popular statistic that re flects the ability of a committee to pass a proposal. Applying the Shapley value to this measure, we derive a new power index that indicates each voter's contribution to the CPCA. This index is characterized by four axioms: anonymity, the null voter property, transfer property, and a property that stipulates that sum of the voters' power equals the CPCA. Similar to the Shapley-Shubik index (SSI) and the Penrose-Banzhaf index (PBI), our new index emerges as the expectation of being a pivotal voter. Here, the coalitional formation model underlying the CPCA and the PBI is combined with the ordering approach underlying the SSI. In contrast to the SSI, the voters are not ordered according to their agreement with a potential bill but according to their vested interest in it. Among the most interested voters, the power is then measured in a similar way as with the PBI. Although we advocate the CSI against the PBI to capture a voter's in fluence on whether a proposal passes, the CSI gives new meaning to the PBI. The CSI is the decomposer of the PBI, splitting it into a voter's power as such and a her impact on the power of the other voters by threatening to block any proposal. We apply the index to the EU Council and the UN Security Council.
    Keywords: Decomposition, Shapley value, Shapley-Shubik index, power index, Coleman Power of the Collectivity to Act, Penrose-Banzhaf index, EU Council, UN Security Council
    JEL: C71 D60
    Date: 2018–05–08
  2. By: Becker, Sascha O. (University of Warwick); Fetzer, Thiemo (University of Warwick)
    Abstract: The outcome of the UK’s Brexit Referendum has been blamed on political factors, such as concerns about sovereignty, and economic factors such as migration, and trade integration. Analyses of the cross-sectional referendum voting pattern cannot explain how anti-EU sentiment built up over time. Since UKIP votes in the 2014 EU Parliament elections are the single most important predictor of the Vote Leave share, understanding the rise of UKIP might help to explain the role of political and economic factors in the build-up of Brexit. This paper presents new stylized facts suggesting that UKIP votes in local, national and European elections picked up dramatically in areas with weak socio-economic fundamentals, but only after 2010, at the expense of the Conservatives, and partly also Labour. The timing suggests that the Government’s austerity measures might have been a crucial trigger that helped to convert economic grievances into UKIP votes, putting increasing pressure on the Conservatives to hold the EU Referendum.
    Keywords: : Political Economy, Austerity, Globalization, Voting, EU JEL Classification: R23, D72, N44, Z13
    Date: 2018
  3. By: Becht, Marco; Kamisarenka, Yuliya; Pajuste, Anete
    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 pre-reform 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: Coase theorem; dual-class shares; Loyalty shares; one-share-one- vote; tenure voting; time-phased voting
    JEL: D23 G32 G34 K22
    Date: 2018–04
  4. By: Paolo Crosetto (INRA - Institut National de la Recherche Agronomique); Tobias Regner (Friedrich-Schiller-Universität Jena)
    Abstract: Crowdfunding recently emerged as an alternative funding channel for entrepreneurs. We use pledge-level data from Startnext, the biggest German platform, to gain insights on funding dynamics and pledgers' motivations. We find that the majority of projects that eventually succeed are not on a successful track at 75% of their funding period. These late successes are boosted by information cascades during the final 25% of the funding duration. We conclude – in contrast with earlier literature – that project success is only partially path-dependent. While early pledges do anticipate project success, a lack of them does not necessarily mean that projects will fail. Interviews and questionnaire responses indicate that projects' communication efforts play a role in making severely under track projects succeed eventually. Moreover, our dataset uniquely allows us to quantify the extent of self funding. Self pledges account for about 10% of all initial pledges and 9% of all pledges that secure funding. Nonetheless, the late surges at severely under track projects are mostly driven by external funders. Furthermore, we find no evidence of subsequent herding triggered by self pledges.
    Keywords: crowdfunding,entrepreneurial finance,donations,pre-selling,innovation,self funding
    Date: 2018–04–01
  5. By: Iyer, Lakshmi (University of Notre Dame); Mani, Anandi (Blavatnik School of Government, Oxford University)
    Abstract: Using an original survey conducted in India’s largest state, we offer systematic evidence on the gender gaps in a rich set of electoral and non-electoral participation metrics. We find that gender gaps in non-electoral forms of participation (such as involvement in public petitions, interactions with public officials and attendance of village meetings) are larger than those in election-related activities, including political candidacy. The gender gaps in political participation persist even after we account for women’s poorer knowledge of political institutions, self-assessment of leadership skills, literacy rates and asset ownership, as well as constraints on their mobility and voice in household decisions. Using an Oaxaca-Blinder decomposition approach, we find that bringing women’s attributes on par with men would bridge less than half the gender gap. This suggests that external factors, such as the role played by voters, parties or societal groups, may constitute important barriers to women’s political participation. The presence of a woman leader in the village increases women’s propensity to meet with government officials, but is not enough to close the gender gap. Our evidence points to the need to consider a wider set of policy tools beyond quotas to encourage women’s civic and political engagement.
    Keywords: political participation, civic engagement, gender gap, India, women leaders, gender quotas JEL Classification:
    Date: 2018
  6. By: Eric Kamwa (LC2S - Laboratoire Caribéen de Sciences Sociales - UAG - Université des Antilles et de la Guyane); Vincent Merlin (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In most of the social choice literature dealing with the computation of the exact probability of voting events under the impartial culture assumption, authors deal with no more than four constraints to describe voting events. With more than four constraints, most of the authors rely on Monte-Carlo simulations. It is usually more tricky to estimate the probability of events described by five constraints. Gehrlein and Fishburn (1980) have tried, but their conclusions are based on conjectures. In this paper, we circumvent this conjecture by having recourse to the technique suggested by Saari and Tataru (1999) in order to compute the limit probability of the consistency of collective rankings when there are four competing alternatives given that the decision rule is a scoring rule. We provide a general formula for the limit probability of the consistency and we determine the optimal decision rules among the scoring rules that provide the best guarantee of consistency. Given the collective ranking on a set A, we have consistency if the collective ranking on B a proper subset of A is not altered after some alternatives are removed from A.
    Date: 2018
  7. By: Dustin Voss
    Abstract: Many advanced economies around the world have recently witnessed a notable rise in populism stirring severe political unrest and social instability. This paper addresses the apparent academic confusion regarding the origins of this phenomenon and combines politico-economic analysis with electoral data to derive a new theory of populist demand. I conceptualise populism as a problem of political alienation stemming from the incapacity of social democratic parties to comprehensively represent the working class in the context of increased labour market dualisation. If the group of underrepresented workers is not sufficiently numerous to be electorally-relevant, right-wing populist protest parties can make use of the representational vacuum by reframing class-distributional issues along cultural conflict lines. If, however, the group of marginalised workers is large enough to mobilise political attention, left-wing populist parties will address socio-economic issues more directly. I thus assume an inverted hyperbolic causal relationship between labour market segmentation and the demand for populism. This hypothesis is tested in a critical case study on the electoral effects of labour market reforms in Germany and Spain.
    Keywords: populism, right-wing parties, dualisation, labour market reform, political representation
    Date: 2018–03
  8. By: Peter Katuscak; Tomas Miklanek
    Abstract: Fundraising for public goods by private contributions is often undermined by free-riding. One prominent mechanism suggested to alleviate problem of free-riding is a fixed-prize lottery with winning probabilities proportional to individual contri- butions (Morgan, 2000; Morgan and Sefton, 2000). Yet, as extensively documented by economic experiments, subjects often contribute even in the absence of incentives of this kind, suggesting that their contributions are driven social preferences. This raises a question of how the lottery incentive interacts with social preferences. We present an experiment in which we de-couple the contribution effect of own prize seeking from the potential crowding out effect due to the perception that the others contribute because of their prize seeking, rather than to benefit the group. Even though the lottery increases contributions relative to the voluntary contribution case, we find that it also crowds out voluntary contributions that are likely driven by social preferences.
    Keywords: public good game; crowding out; social preferences; lottery;
    JEL: C91 D91 D03
    Date: 2018–04
  9. By: Abel Bojar
    Abstract: The determinants of public spending composition have been studied from three broad perspectives in the scholarly literature: functional economic pressures, institutional constraints and party-political determinants. This paper engages with the third perspective by placing intra-governmental dynamics in the center of the analysis. Building on the portfolio allocation approach in the coalition formation literature and the common pool perspective in public budgeting, I argue that spending ministers with party-political backing from the Finance Minister or the Prime Minister are in a privileged positon to obtain extra funding for their policy jurisdictions compared to their colleagues without such support or without any partisan affiliation (non-partisan ministers). I test these propositions via a system of equations on six spending categories using seemingly unrelated regressions on a panel of 32 parliamentary democracies over two decades and offer largely supportive empirical evidence. With the exception of education, I provide evidence that budget shares accruing to key spending departments reflect this party-political logic of spending outcomes. In addition to the econometric results, I also illustrate the impact of ministerial alignment by short qualitative accounts from selected country cases.
    Keywords: Public spending, budget composition, cabinet, ministers, coalition
    Date: 2018–04
  10. By: Gonzalo Ruiz D. (Departamento de Economía de la Pontificia Universidad Católica del Perú)
    Abstract: The present paper refers to the influence of interest groups and stakeholders on government and concessionaire contractual behavior in long-term public contracts. In particular, we show how government political commitments with interest groups represent a ‘reputational investment’, which reduces the incentives to enforce the contract and increases the willingness to accept renegotiation proposals. This situation, particularly in the case of “high profile” or “politically sensitive” projects, when observed by the private concessionaire, can be exploited to capture additional quasi-rents from the exchange relationship. Using a simple model and a case study of the South Interoceanic Road Project in Peru, we show how interactions of the government with influential stakeholders, in the context of weak institutions, can create favorable conditions for private opportunistic behavior. JEL Classification-JEL: D72 , L14 , L33 , L51
    Keywords: Concession, Opportunism, Stakeholder
    Date: 2018
  11. By: Florian Ederer (Cowles Foundation, Yale University); Frédéric Schneider (Yale School of Management)
    Abstract: This paper investigates how the passage of time affects trust, trustworthiness, and cooperation. We use a hybrid lab and online experiment to provide the first evidence for the persistent power of communication. Even when 3 weeks pass between messages and actual choices, communication raises cooperation, trust, and trustworthiness by about 50 percent. Lags between the beginning of the interaction and the time to respond do not substantially alter trust or trustworthiness. Our results further suggest that the findings of the large experimental literature on trust that focuses on laboratory scenarios in which subjects are forced to choose their actions immediately after communicating, may translate to more ecologically valid settings in which individuals choose actions outside the lab and long after they initially made promises.
    Keywords: Trust, Promises, Persistence, Trustworthiness, Delay, Experiment
    JEL: A13 C91 D03 C72 D64 K12
    Date: 2018–04
  12. By: Maite D. Laméris; Harry Garretsen; Richard Jong-A-Pin
    Abstract: We examine the effect of prospects of upward mobility (POUM) on the support for redistribution in an intragenerational context. In this context, existing literature so far fails to consider the potential indirect channel via political ideology through which mobility expectations affect redistributive preferences. We address this by including an interaction between income mobility and political ideology, such that the POUM-effect is allowed to vary with political beliefs. We find a robust POUM-effect that is conditional on political preferences. Only for right-wing individuals expected upward income mobility negatively affects support for redistribution. Left-wing individuals on the other hand prefer redistribution, regardless of expected upward income movements.
    Keywords: the POUM-effect, political ideology, income mobility, redistribution, preferences
    JEL: D30 D72 J69
    Date: 2018
  13. By: Nathan Fiala (University of Connecticut); Patrick Premand (World Bank)
    Abstract: Corruption and mismanagement of public resources can affect the quality of government services and undermine growth. Can citizens in poor communities be empowered to demand better-quality public investments? We look at whether providing social accountability training and information on project performance can lead to improvements in local development projects. The program we study is unique in its size and integration in a national program. We find that offering communities a combination of training and information on project quality leads to significant improvements in household welfare. However, providing either social accountability training or project quality information by itself has no welfare effect. These results are concentrated in areas that are reported by local officials as more corrupt or mismanaged, suggesting local agents have significant information about where corruption and mismanagement is worse. We show evidence that the impacts come in part from community members increasing their monitoring of local projects, making more complaints to local and central officials and increasing cooperation. We also find modest improvements in people’s trust in the central government. The results suggest that government-led, large-scale social accountability programs can strengthen communities’ ability to address corruption and mismanagement as well as improve services.
    Keywords: Social accountability; community training; scorecards; corruption; service delivery
    JEL: D7 H4 O1
    Date: 2018–04

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