nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒06‒18
fifteen papers chosen by
Stan C. Weeber, McNeese State University

  1. EXECUTIVES IN POLITICS By Ilona Babenko; Viktar Fedaseyeu; Song Zhang
  2. International Environmental Agreements - Stability with Transfers among Countries By Effrosyni Diamantoudi; Eftichios Sartzetakis; Stefania Strantza
  3. Accountability, Political Capture and Selection into Politics: Evidence from Peruvian Municipalities By León, Gianmarco
  4. Group size effects in social evolution By Nöldeke, Georg; Peña, Jorge
  5. Global Crises and Populism: the Role of Eurozone Institutions By Guiso, Luigi; Herrera, Helios; Morelli, Massimo; Sonno, Tommaso
  6. Social accountability and service delivery: Experimental evidence from Uganda By Fiala, Nathan; Premand, Patrick
  7. The Political Impact of Immigration: Evidence from the United States By Anna Maria Mayda; Giovanni Peri; Walter Steingress
  8. A dynamic spatial model of global governance structures By Giorgos Galanis; Ashok Kumar
  9. The Power of Weak Interests in Financial Reforms: Explaining the Creation of a US Consumer Agency By Lisa Kastner
  10. Dynamic Legislative Bargaining with Veto Power: Theory and Experiments By Nunnari, Salvatore
  11. Governance Gone Wild: Epic Misbehavior at Uber Technologies By Larcker, David F.; Tayan, Brian
  12. On the design and implementation of environmental conservation mechanisms : Evidence from field experiments By Kitesa, Rahel
  13. Value of agreement in decision analysis: concept, measures and application By Pape, Tom
  14. Women's Political Participation and Intrahousehold Empowerment: Evidence from the Egyptian Arab Spring By Bargain, Olivier; Boutin, Delphine; Champeaux, Hugues
  15. Group size and conformity in charitable giving: Evidence from a donation-based crowdfunding platform in Japan By Shusaku Sasaki

  1. By: Ilona Babenko; Viktar Fedaseyeu; Song Zhang
    Abstract: Between 1980 and 2014, the share of politicians in federal office who held a corporate executive position prior to being elected increased from 13.5% to 21.2%, while the likelihood that an executive runs for federal elective office doubled over the same period. Firms whose executives win federal elections experience significant positive stock returns around the dates of such elections and around the dates when Congress passes legislation introduced by their former executives. Relative to non-businessman politicians, we show that businessman politicians are not more effective at introducing or passing legislation but are significantly more likely to vote for legislation supported by pro-business interest groups and less likely to vote for legislation supported by labor unions or consumer advocacy groups. Businessman politicians have a 44.4% higher likelihood of winning elections, and executives with a good track record at their firms are more likely to run for political office. Our results indicate that business representatives have increased their direct involvement in the legislative process in the United States and that this involvement may have generated substantial benefits for their firms. American voters appear to value business experience in political candidates, even though, once elected, such candidates are not more effective legislators than other politicians.
    Keywords: businessman politicians, executives, corporate political connections
    JEL: G32 G38 D72 G30
    Date: 2017
  2. By: Effrosyni Diamantoudi (Concordia University); Eftichios Sartzetakis (University of Macedonia); Stefania Strantza (Concordia University)
    Abstract: The paper examines the stability of self-enforcing International Environmental Agreements (IEAs) among heterogeneous countries, allowing for transfers. We employ a two-stage, non-cooperative model of coalition formation. In the first stage each country decides whether or not to join the agreement, while in the second stage countries choose their emissions simultaneously. Coalition members agree also to share the gains from cooperation in the first stage. We use quadratic benefit and environmental damage functions and assume two types of countries differing in their sensitivity to the global pollutant. In examining the impact of transfers on the coalition size, we apply the notion of Potential Internal Stability (PIS). Results show that transfers can increase cooperation among heterogeneous countries. However, the increase in the coalition size, relative to the case without transfers, comes only from countries belonging to the type with the lower environmental damages, which are drawn into the coalition by the transfers offered. Furthermore, the level of cooperation increases with the degree of heterogeneity. However, the reduction in aggregate emissions achieved by the enlarged coalition is very small leading to dismal improvement in welfare, which confirms the "paradox of cooperation".
    Keywords: International Environmental Agreements, Heterogeneous Countries, Transfers
    JEL: Q5 Q54
    Date: 2018–05
  3. By: León, Gianmarco
    Abstract: We estimate the effects of political accountability on the selection of politicians when accountability mechanisms are prone to political capture. Using a comprehensive dataset that records characteristics of candidates for mayor in the last three local elections in Peru, and a close election sharp regression discontinuity design, we compare candidates running for mayor in districts where the incumbent was ousted from office through a recall referendum in the previous electoral term with those who run in districts where the recall referendum failed by a small margin. Candidates in municipalities where the incumbent was recalled are less educated, have less experience in elected offices and in the public sector, and are younger. These findings are consistent with a framework where potential candidates learn about an accountability mechanism which is prone to capture, distorting the main objectives of improving the quality of government, and instead discouraging high quality candidates to run. The negative selection of candidates is partially offset by voters, who elect the best politician out of a lower quality pool of candidates.
    Keywords: accountability; Peru; Selection into Politics
    JEL: D71 D72 O10 O53
    Date: 2018–05
  4. By: Nöldeke, Georg; Peña, Jorge
    Abstract: How the size of social groups affects the evolution of cooperative behaviors is a classic question in evolutionary biology. Here we investigate group size effects in evolutionary games in which individuals choose whether to cooperate or defect. We find that increasing the group size decreases the proportion of cooperators at both stable and unstable rest points of the replicator dynamics. This implies that larger group sizes can have negative effects (by reducing the amount of cooperation at stable polymorphisms) and positive effects (by enlarging the basin of attraction of more cooperative outcomes) on the evolution of cooperation. These two effects can be simultaneously present in games whose evolutionary dynamics features both stable and unstable rest points, such as public goods games with participation thresholds. Our theory recovers and generalizes previous results and is applicable to a broad variety of social interactions that have been studied in the literature.
    Keywords: evolution of cooperation; evolutionary game theory; replicator dynamics; public goods games
    JEL: C73 H41
    Date: 2018–05
  5. By: Guiso, Luigi; Herrera, Helios; Morelli, Massimo; Sonno, Tommaso
    Abstract: Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. We rely on this logic to explain the different support of populist parties among European countries in response to the globalization shock and to the 2008-2011 - financial and sovereign debt crisis. We predict a greater success of populist parties in response to these shocks in Euro zone countries, and our empirical analysis confirms this prediction. This is consistent with voters' frustration for the greater inability of the Euro zone governments to react to dicult-to-manage globalization shocks and financial crises. Our evidence has implications for the speed of construction of political unions. A slow, staged process of political unification can expose the EU to a risk of political backlash if hard to manage shocks hit the economies during the integration process.
    Keywords: Financial Dependence; Frustration; Globalization; populism; Relocation
    JEL: D72 D78 F14 F16
    Date: 2018–05
  6. By: Fiala, Nathan; Premand, Patrick
    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
  7. By: Anna Maria Mayda; Giovanni Peri; Walter Steingress
    Abstract: In this paper we study the impact of immigration to the United States on the vote for the Republican Party by analyzing county-level data on election outcomes between 1990 and 2010. Our main contribution is to separate the effect of high-skilled and low-skilled immigrants, by exploiting the different geography and timing of the inflows of these two groups of immigrants. We find that an increase in the first type of immigrants decreases the share of the Republican vote, while an inflow of the second type increases it. These effects are mainly due to the local impact of immigrants on votes of U.S. citizens and they seem independent of the country of origin of immigrants. We also find that the pro-Republican impact of low-skilled immigrants is stronger in low-skilled and non-urban counties. This is consistent with citizens' political preferences shifting towards the Republican Party in places where low-skilled immigrants are more likely to be perceived as competition in the labor market and for public resources.
    JEL: F22 J61
    Date: 2018–04
  8. By: Giorgos Galanis (Goldsmiths, University of London); Ashok Kumar
    Abstract: This paper presents a novel understanding of the changing governance structures in global supply chains. Motivated by the global garment sector, we develop a geographical political economy dynamic model which reflects the interaction between bargaining power and distribution of value among buyer and producer firms. We find that the interplay between these two forces, in combination with the spatial specificities of global production, are necessary and sufficient to drive governance structures towards an intermediate position regarding their level of explicit coordination and power asymmetry.
    Keywords: Global value chains, global production networks, uneven development, disequilibrium dynamics, monopsony power
    JEL: D02 D43 E32 R10
    Date: 2018–03
  9. By: Lisa Kastner (Centre d'études européennes et de politique comparée)
    Abstract: Dodd-Frank, the US financial reform law passed in response to the 2008 financial crisis, established the Consumer Financial Protection Bureau (CFPB), a new federal regulator with the sole responsibility of protecting consumers from unfair, deceptive, or abusive practices. This decision marked the end of a highly politicized reform debate in the US Congress, involving lobbying from business associations and civil society groups, in which proponents of the new bureau would normally have been considered to be much weaker than its opponents. Paradoxically, an emerging civil society coalition successfully lobbied decisionmakers and countered industry attempts to prevent industry capture. What explains the fact that rather weak and peripheral actors prevailed over more resourceful and dominant actors? The goal of this study is to examine and challenge questions of regulatory capture by concentrated industry interests in the reform debates in response to the credit crisis which originated in the US in 2007. The analysis suggests that for weak actors to prevail in policy conflicts over established, resource-rich opponents, they must undertake broad coalitionbuilding among themselves and with influential elite allies outside and inside of Congress who share the same policy goals.
    Keywords: Financial crisis; Financial regulation; Consumer protection; Interest groups; Lobbying
    Date: 2016–07
  10. By: Nunnari, Salvatore
    Abstract: In many domains, committees bargain over a sequence of policies and a policy remains in effect until a new agreement is reached. In this paper, I argue that, in order to assess the consequences of veto power, it is important to take into account this dynamic aspect. I analyze an infinitely repeated divide-the-dollar game with an endogenous status quo policy. I show that, irrespective of legislators' patience and the initial division of the dollar, policy eventually gets arbitrarily close to full appropriation by the veto player; that convergence to this outcome is slower, and the power to veto less valuable, in more patient committees; and that the veto player supports reforms that decrease his allocation. These results stand in sharp contrast to the properties of models where committees bargain over a single policy. The main predictions of the theory find support in controlled laboratory experiments.
    Keywords: Dynamic Legislative Bargaining; Endogenous Status Quo; Laboratory experiments; Markov perfect equilibrium; Veto Power
    JEL: C72 C73 C78 C92 D71 D72 D78
    Date: 2018–05
  11. By: Larcker, David F. (Stanford University); Tayan, Brian (Stanford University)
    Abstract: In this Closer Look, we examine the roles that leadership and culture play in contributing to chronic misbehavior and the manner in which it takes root in an organization. We use the example of Uber Technologies. Between 2012 and 2017, Uber Technologies faced a series of governance challenges including regulatory battles, relations with drivers, intellectual property theft, cybersecurity breaches, allegations of sexual harassment, and boardroom battles. We discuss these in detail and ask: 1. Did Uber's early risk-seeking behavior cause larger problems down the road? 2. How important is CEO personality and behavior in influencing the collective behavior of an organization? 3. How difficult is it to change culture, once it is established? 4. To what extent is culture created top down and to what extent bottom up? 5. Does Uber need a substantial turnover of management and key non-management employees to successfully complete a cultural shift? Note: The Stanford Closer Look series is a collection of short case studies through which we explore topics, issues, and controversies in corporate governance and executive leadership. In each study, we take a targeted look at a specific issue that is relevant to the current debate on governance and explain why it is so important. Larcker and Tayan are co-authors of the books Corporate Governance Matters and A Real Look at Real World Corporate Governance.
    Date: 2017–12
  12. By: Kitesa, Rahel (Tilburg University, School of Economics and Management)
    Abstract: This doctoral dissertation consists of three chapters on the design and implementation of environmental conservation mechanisms using economic experiments. The first chapter examines how variations in information and context affect the outcomes of valuation using field experiment. The chapter shows the evidence that people’s contributions increase significantly and substantially if attention is drawn to their own responsibility in the deforestation and desertification process, suggesting, the ‘responsibility effect’ is important in the valuation-an extension of the previous examination on the role of behavior in valuation. The second chapter revisits Payment for Ecosystem Services (PES) and the determination of the optimal price by comparing the performance of Uniform Price Auctions (UPA) and Take-it-or-leave (TILI) mechanism. Using both laboratory and field experiments it is found that given the same level of price, the sign-up rate to a PES project differs between the two mechanisms. More subjects are willing to sign-up in TILI than was predicted in UPA. The findings also suggest that this disparity can be explained by the hypothesis of more deliberate decision making in UPA than TILI. The third chapter examines how trust and trustworthiness evolve in the community (engaged in public good provision) to predict the sustainability of common good conservation. The chapter deals with trust and trustworthiness, as important social norms, between the cooperators and non- cooperator in common good provision. The findings of the chapter support the hypothesis that higher trust is placed on the cooperators than non-cooperators with payoff consequences-contrary to standard economic prediction. The cooperator type receives more money, but sends and returns less to non-cooperators which allow the cooperator type to receive a consistently higher payoff- which was predicted by the Ostrom’s theory of collective actions.
    Date: 2018
  13. By: Pape, Tom
    Abstract: In multi-criteria decision analysis workshops, participants often appraise the options individually before discussing the scoring as a group. The individual appraisals lead to score ranges within which the group then seeks the necessary agreement to identify their preferred option. Preference programming enables some options to be identified as dominated even before the group agrees on a precise scoring for them. Workshop participants usually face time pressure to make a decision. Decision support can be provided by flagging options for which further agreement on their scores seems particularly valuable. By valuable, we mean the opportunity to identify other options as dominated (using preference programming) without having their precise scores agreed beforehand. The present paper quantifies this Value of Agreement and extends the concept to portfolio decision analysis and criterion weights. The new concept is validated through a case study in recruitment.
    Keywords: Multi-criteria decision analysis; Incomplete information; Group decision support system; Preference programming; Portfolio decision analysis; Human resources
    JEL: J1
    Date: 2017–04–01
  14. By: Bargain, Olivier (University of Bordeaux); Boutin, Delphine (CERDI, University of Auvergne); Champeaux, Hugues (CERDI, University of Auvergne)
    Abstract: Egyptian women have played an unprecedented role in the Arab Spring democratic movement, possibly changing women's perception about their own rights and role. We question whether these events have translated into better outcomes within Egyptian households. We conjecture that potential changes must have been heterogeneous and depended on the local intensity of protests and women's participation over 2011-13. We exploit the geographical heterogeneity along these two margins to conduct a double difference analysis using data surrounding the period. We find a significant improvement in women's final say regarding decisions on health, socialization and household expenditure, as well as a decline in the acceptation of domestic violence and girls' circumcision, in the regions most affected by the protests. This effect is not due to particular regional patterns or pre-existing trends in empowerment. It is also robust to alternative treatment definitions and confirmed by triple difference estimations. We confront our main interpretation to alternative mechanisms that could have explained this effect.
    Keywords: Arab Spring, revolutions, gender, empowerment, Egypt
    JEL: J12 J16 D74 I14
    Date: 2018–05
  15. By: Shusaku Sasaki
    Abstract: A charitable donor typically imitates the majority contribution of other donors. This study examines the relationships between majority size and this so-called donor’s conformity behavior, by empirically investigating the impacts of multiple earlier donations on the donation of a subsequent donor to JapanGiving, a donation-based crowdfunding platform in Japan. This analysis is possible because the platform’s webpage displays the previous donation amounts in chronological order, thus allowing us to examine the modal amount of more recent donations. By using data on 9,989 actual donations, our dynamic panel analyses suggest that when the two most recent donations are identical, a subsequent donor is likely to match the last donation. In other words, when the last donor imitates the donation of the penultimate donor, the subsequent donor is also likely to imitate this amount. Additionally, the likelihood increases when the number of most recent continuous modal donations increases. These results support the notion that a donor’s conformity behavior is more likely to occur when a greater proportion of the other donors give a similar amount. Furthermore, the effects of continuous modal donations are strongly observed for low monetary ranges. We discuss that individuals would obtain an excuse for less cooperation due to others’ behaviors or initiating further cooperation among a large number of less cooperative others would become harder. Our findings connect economic studies of charity and social psychology studies of conformity and could help improve the effectiveness of fundraising by charities.
    Date: 2017–05

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