nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒09‒17
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Approval voting and Shapley ranking By DEHEZ Pierre,; GINSBURGH Victor,
  2. Coheisive Institutions and Political Violence By Thiemo Fetzer; Stephan Kyburz
  3. The American Nonvoter By Lyn Ragsdale
  4. Exporting corporate governance: Do foreign and local proxy advisors differ? By Vanda Heinen; Christopher Koch; Mario Scharfbillig
  5. Not all Group Members are created Equal: Heterogeneous Abilities in Inter-group Contests By FALLUCCHI Francesco; FATAS Enrique; KÖLLE Felix; WEISEL Ori
  6. The connection between parliamentary and extra-parliamentary opposition in the EU. From ACTA to the financial crisis By Amandine Crespy; Louisa Parks
  7. Committees as Active Audiences: Reputation Concerns and Information By Otto (O.H.) Swank; Bauke (B.) Visser
  8. The Power Resource Theory Revisited: What Explains the Decline in Industrial Conflicts in Sweden? By Enflo, Kerstin; Karlsson, Tobias; Molinder, Jakob
  9. The Big Thumb on the Scale: An Overview of the Proxy Advisory Industry By Copland, James; Larcker, David F.; Tayan, Brian
  10. The impacts of domestic political economic structures on sustainable trade agreements between asymmetric countries By Jisoo Son
  11. Bargaining and Hold-up: The Role of Arbitration By Gabuthy, Yannick; Muthoo, Abhinay
  12. Committees of Experts in the Lab By Sander Renes; Bauke (B.) Visser
  13. The strategic utility of non-violence in violent conflict: the IRA and Hezbollah By Kenneth Houston; Stephen Berry

  1. By: DEHEZ Pierre, (Université catholique de Louvain, CORE, Belgium); GINSBURGH Victor, (Université libre de Bruxelles and CORE)
    Abstract: Approval voting allows voters to list any number of candidates. Their scores are obtained by summing the votes cast in their favor. Fractional voting instead follows the One-person-one-vote principle by endowing voters with a single vote that they may freely distribute among candidates. In this paper, we show that fairness requires the distribution of votes to be uniform. Uniform fractional voting corresponds to Shapley ranking that was introduced to rank wines as the Shapley value of a cooperative game with transferable utility. Here we analyze the properties of these "ranking games" and provide an axiomatic foundation to Shapley ranking. We also analyze Shapley ranking as a social welfare function and compare it to approval ranking.
    Keywords: approval voting, Shapley value
    JEL: D71 C71
    Date: 2018–04–18
  2. By: Thiemo Fetzer; Stephan Kyburz
    Abstract: Can institutionalized transfers of resource rents be a source of civil conflict? Are cohesive institutions better in managing distributive conflicts? We study these questions exploiting exogenous variation in revenue disbursements to local governments together with new data on local democratic institutions in Nigeria. We make three contributions. First, we document the existence of a strong link between rents and conflict far away from the location of the actual resource. Second, we show that distributive conflict is highly organized involving political militias and concentrated in the extent to which local governments are non-cohesive. Third, we show that democratic practice in form having elected local governments significantly weakens the causal link between rents and political violence. We document that elections (vis-a-vis appointments), by producing more cohesive institutions, vastly limit the extent to which distributional conflict between groups breaks out following shocks to the available rents. Throughout, we confirm these findings using individual level survey data.
    Keywords: conflict, ethnicity, natural resources, political economy, commodity prices
    JEL: Q33 O13 N52 R11 L71
    Date: 2018
  3. By: Lyn Ragsdale (Rice University)
    Abstract: This paper examines the motivations of individuals who do not vote in American elections from 1968 through 2012. Existing research portrays American nonvoters as a large monolith of people who lack psychological involvement in politics, do not have adequate personal resources to participate, have insufficient social networks to be engaged, or are not sufficiently mobilized by candidates and campaigns. Instead, our paper maintains that uncertainty in the national campaign context ?the economic, mass communication, legal, and international environments--drives individual citizens? decisions about whether to vote. When there is high uncertainty in the national campaign context, people are more likely to vote. When there is low uncertainty in the national campaign context, citizens are less likely to vote. The paper further develops a theoretical distinction between the external uncertainty found in the national campaign context and the internal uncertainty citizens feel about which candidate will adequately address the external uncertainty. In considering this internal uncertainty, four types of nonvoters emerge as they respond differently to the lack of clarity. First, the politically ignorant non-voters do not follow the campaign or the candidates so avoid internal uncertainty about them. Second, the indifferent follow the campaign and the candidates, but see no differences between the candidates, leaving internal uncertainty about them. Third, the dissatisfied know a good deal about the campaign context and the candidates but see one or more candidates negatively. They too do not vote because internal uncertainty about the candidates remains unresolved. Finally, the personal hardship nonvoters pay attention to the campaign and the candidates but do not vote because of personal hardship associated with unemployment. The paper first considers broad differences between voters and nonvoters in their knowledge of politics and attitudes toward elections. It then estimates a model of nonvoting across the time period. Finally, it considers in greater detail the four different types of nonvoters, who they are, and what motivates them not to participate. The study finds that at the presidential level, there are considerable numbers of dissatisfied nonvoters who do not vote because they have negative views of one or both candidates. At the midterm level, nonvoters are more likely to be politically indifferent, not having clear-cut views of one or both candidates.
    Keywords: nonvoter, United States, negative campaigns
    Date: 2018–06
  4. By: Vanda Heinen (Johannes Gutenberg-University); Christopher Koch (Johannes Gutenberg-University); Mario Scharfbillig (Johannes Gutenberg-University)
    Abstract: European regulators are concerned that US-based proxy advisors might export US corporate governance by not considering sufficiently the unique aspects of the local setting. In contrast, local proxy advisors are expected to have a deeper understanding of the local setting. Using the German setting, we examine the pattern and the impact of shareholder voting recommendations by foreign (ISS, Glass Lewis) and local (IVOX) proxy advisors. First, we find that the voting recommendations diverge more between foreign and local proxy advisors than among foreign proxy advisors. Second, we document that against-recommendations by the local proxy advisor have an incremental impact on voting outcomes even after controlling for the voting recommendations by foreign proxy advisors. Third, we observe that the impact of the voting recommendations on voting outcomes increases with a higher proportion of institutional investors. Dividing the proportion into foreign and local institutional investors reveals that against-recommendations by foreign proxy advisors influence the voting decisions of both groups similarly. Overall, our study provides novel evidence that the informational contents of voting recommendations by foreign and local proxy advisors differ, implying that foreign proxy advisors may not fully integrate unique aspects of the local setting in their voting recommendations.
    Date: 2018–08–28
  5. By: FALLUCCHI Francesco; FATAS Enrique; KÖLLE Felix; WEISEL Ori
    Abstract: Competition between groups is ubiquitous in social and economic life, and groups are typically not created equal. Here we experimentally investigate the implications of this general observation on the unfolding of symmetric and asymmetric competition between groups that are either homogeneous or heterogeneous in the ability of their members to contribute to the success of the group. Our main finding is that, in contrast with a number of theoretical predictions, efforts in contests involving heterogeneous groups are higher than in contests involving only homogeneous groups, leading to reduced earnings (to contest participants) and increased inequality. This effect is particularly pronounced in asymmetric contests, where both homogeneous and heterogeneous groups increase their efforts. We find that asymmetry between groups changes the way group members condition their efforts on those of their peers. Implications for contest designers are discussed.
    Keywords: Contests; groups; abilities; heterogeneity; experiments
    JEL: C72 C92 D72 H40
    Date: 2018–09
  6. By: Amandine Crespy; Louisa Parks
    Abstract: With no formal division between majority and opposition in the parliamentary arena, the European Union (EU) calls for an approach to political opposition which considers the role of civil society. This article explores the case of opposition to the Anti-Counterfeiting Trade Agreement (ACTA) within and without the European Parliament (EP) through a political opportunity approach, using the case to reflect on conditions for effective opposition in the EU. The ACTA campaign saw opposed actors within the EP and digital rights groups work together to build coalitions against the agreement. Protests then opened the way for these groups to broker a change of position among other actors, allowing a majority rejection. The ACTA case suggests the need for advocacy by organised groups both within and without the Parliament to construct majorities. Comparisons to similarly successful campaigns bolster this view, as do examples of less effective opposition.
    Keywords: European Parliament; Anti-Counterfeiting Trade Agreement; Parliamentary opposition; Extra-parliamentary opposition; Political opportunity; Civil society
    Date: 2017–04–05
  7. By: Otto (O.H.) Swank (Erasmus University Rotterdam); Bauke (B.) Visser (Erasmus University Rotterdam)
    Abstract: We study committees that acquire information, deliberate and vote. A member cares about state-dependent decision payoffs and about his reputation for expertise. The state remains unobserved, even after the decision has been taken. In such inconclusive environments, in equilibrium, a member's internal (peer) reputation is based on deliberation patterns, while members' external (market) reputation is based on the observed group decision. Either form of reputation concerns create strategic complementarity among members' effort levels. Internal reputations create stronger incentives to become informed than external reputations, and their strength grows in committee size; external reputations create no incentives in large committees. If prior information favors a state, internal -- not external – reputations may hinder deliberation. In equilibrium, reputation concerns lead to additional information acquisition without affecting the expected reputations. Nevertheless, moderate rates of reputation concerns relax members' participation constraints, by counteracting the often predicted underprovision of information in committees.
    Keywords: committee decision making; reputation concerns; information acquisition; peers; markets
    JEL: D71 D83
    Date: 2018–09–02
  8. By: Enflo, Kerstin; Karlsson, Tobias; Molinder, Jakob
    Abstract: This paper revisits the Power Resource Theory by testing one of its more influential claims: the relation between the strength of the labor movement and the reduction of industrial conflicts. Using panel data techniques to analyze more than 2,000 strikes in 103 Swedish towns we test whether a shift in the balance of power towards Social Democratic rule was associated with fewer strikes. The focus is on the formative years between the first general election in 1919 and the famous Saltsjöbaden Agreement in 1938, the period when Sweden went from a country of fierce labor conflicts to a state of industrial peace. The spatial dimension provides new possibilities to test the theory. We find that Social Democratic power reduced strike activity, but only in towns where union presence was strong. Powerful unions in themselves did not reduce local strike activity. On the contrary, we find that the rise of the Social Democratic Party in municipal governments offset about 45 percent of the estimated effect of growing union presence on industrial conflicts. We do not see any significant tangible concessions in terms of increased social spending by local governments after a left-wing victory as predicted by Power Resource Theory. Instead the mechanism leading to fewer strikes appears to be related to corporatist explanations.
    Keywords: industrial conflicts; Local Labor Markets; Power Resource Theory; strikes
    JEL: H53 J51 N34 N44
    Date: 2018–08
  9. By: Copland, James (Manhattan Institute); Larcker, David F. (Stanford University); Tayan, Brian (Stanford University)
    Abstract: Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and generally lead to better outcomes for companies and their shareholders. This Closer Look provides a comprehensive review of the proxy advisory industry and the influence of these firms on voting behavior, corporate choices, and outcomes, and it outlines potential reforms for the industry. We ask: How accurate are the voting recommendations of proxy advisory firms? How influential are they over voting practices and corporate choices? Should steps be taken to reduce their influence or improve the reliability of their recommendations? Would greater transparency, back-testing, and regulation improve the market for their services?
    Date: 2018–05
  10. By: Jisoo Son (Sungkyunkwan University)
    Abstract: This paper examines how the domestic political economic structures influence the bargaining power of small economies facing market dominant large trade partner. Through the analysis of the incentive compatibility conditions of small economies and large economies facing different political stances of domestic interest groups, we demonstrate that when the politically influential interest groups of large economies take the political stance supporting free trade regime, small economies? bargaining power can be improved. This result stems from the reduced equilibrium transfer from small economies to keep the trade equilibrium as a stable equilibrium due to the pro-free trade political pressures imposed by the interest groups of large economies. This result provides good theoretical insights on why most small economies are so eager to keep close connection with the interest groups in large economies
    Keywords: Stable trade agreement, Domestic political interest groups, Bargaining power of small economies, equilibrium transfer to satisfy incentive compatibility conditions
    JEL: F51 F53
    Date: 2018–07
  11. By: Gabuthy, Yannick (University of Lorraine, University of Strasbourg, CNRS, BETA, Nancy, France); Muthoo, Abhinay (Department of Economics, University of Warwick)
    Abstract: This paper analyses arbitration as a surrogate for complete contracts. We embed this idea in a simple model of a long-term relationship between a firm and its workforce, in which they can make productive-enhancing, relationship-specific investments, and then negotiate over the division of the resultant surplus. It is shown that the mere presence of the arbitrator (in the background of negotiations) may enhance investment incentives ex-ante by minimising each party's ability to engage in hold-up behaviours ex-post. Furthermore, we highlight notably that the partners should optimally commit to call an arbitrator ensuring a compromise by awarding a reasonable share of the surplus to the worker. Indeed, this type of arbitrator would harmonise the parties' bargaining powers and then weight their investment incentives optimally.
    JEL: D74 J52 K41
    Date: 2018
  12. By: Sander Renes (Erasmus University Rotterdam); Bauke (B.) Visser (Erasmus University Rotterdam)
    Abstract: Theory predicts that committees of experts may take decisions that look good but are bad and that they show a united front to impress evaluators. Although evaluators see through this behavior, committees persist in it only to avoid worse assessments. We investigate this theory in the lab, using treatments with and without reputation concerns and with and without cheap-talk communication with evaluators. We use the chat among committee members to learn about, e.g., their beliefs about the determinants of evaluators' assessments. We find that a committee's desire to come across as well-informed causes it to garble the information on which evaluators can base their assessments. Evaluators see through this behavior, making their assessments less dependent on actual decisions and statements. With or without reputation concerns, for the majority of committees, words speak louder than costly decisions. Evaluators pick this up. Orthogonality tests show that evaluators use observable clues about ability quite efficiently but struggle to infer ability from infrequent statements. The absence of cheap talk as a means to influence assessments hurts decision making and reduces the overall accuracy of assessments. Evidence that united fronts are consciously formed is limited.
    Keywords: committees; reputation concerns; assessments; cheap talk; united front; information garbling
    JEL: C91 D71 D83 D84 L14
    Date: 2018–09–02
  13. By: Kenneth Houston (Webster University Thailand); Stephen Berry (Webster University Thailand)
    Abstract: With undoubtedly the best of intentions in mind, both scholarly analysis and activist advocacy of non-violence emphasizes the potential for non-violent civil disobedience to effect normative political change. This includes the role of non-violence in reducing or even eliminating violent conflict. Non-violence is not without its critics, some more constructive than others. This paper considers the relationship between non-violence and its antithesis, violence itself and seeks to orientate analysis towards a framework that examines how non-violent strategies become vulnerable to manipulation by those actors who have not eliminated physical force from their strategic repertoire. The analysis draws on two empirical examples to draw out the conditions whereby ostensible non-violence tactics has augmented existing violent campaigns. The paper concludes that the discursive framework and moral imperative underpinning non-violence ultimately remains subordinate to coercive power, and the relationship between violent and non-violent resistance is an inextricable rather than a dichotomous one. The study argues that a clearer distinction be made between non-violence as an end in and of itself, and non-violence as a means to an end. The success or failure of non-violent strategies is contingent on variables that influence the political and security calculus of state actors. These include such factors such as established conflict regulation potential, legitimized public values and mechanisms, popular and international exposure and the broader spatio-temporal context. The analysis offers a realistic appraisal of the role of non-violence in violent contexts.
    Keywords: Conflict, Non-violence, Strategy
    JEL: D74
    Date: 2018–06

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