nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2018‒11‒12
eighteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Overstrained Citizens? By Stutzer, Alois; Baltensperger, Michael; Meier, Armando N.
  2. Pivotal Persuasion By Jimmy Chan; Seher Gupta; Fei Li; Yun Wang
  3. The Excess Method: A Multiwinner Approval Voting Procedure to Allocate Wasted Votes By Steven, Brams; Markus, Brill
  4. Information Aggregation and Turnout in Proportional Representation: A Laboratory Experiment By Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
  5. The Institutional Foundations of Religious Politics: Evidence from Indonesia By Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
  6. The Political Economy of Multilateral Aid Funds By Dreher, Axel; Simon, Jenny; Valasek, Justin
  7. Term Limit Extension and Electoral Participation: Evidence from a Diff-in-Discontinuities Design at the Local Level in Italy By De Benedetto, Marco Alberto; De Paola, Maria
  8. A Theory of Autocratic Transition. Prerequisites to Self-Enforcing Democracy By Apolte, Thomas
  9. Should we give up on global governance? By Jean Pisani-Ferry
  10. A Situational Theory of Pork-Barrel Politics: The Shifting Logic of Discretionary Allocations in India By Sharma, Chanchal Kumar
  11. Financial Crisis, Creditor-Debtor Conflict, and Political Extremism By Gyongyosi, Gyozo; Verner, Emil
  12. Minority Representation in Local Government By Brian Beach; Daniel B. Jones; Tate Twinam; Randall Walsh
  13. The Anxious and the Climbers: Ambivalent Attitudes towards Democracy among South Africa's Middle Class By Schotte, Simone
  14. Optimal Collateralized Contracts By Garance Genicot; Laurent Bouton; Michael Castanheira
  15. Ethnicity and risk sharing network formation: Evidence from rural Viet Nam By Hoang; Laure Pasquier-Doumer; Camille Saint-Macary
  16. Politics in the Facebook Era Evidence from the 2016 US Presidential Elections By Liberini, Federica; Redoano, Michela; Russo, Antonio; Cuevas, Angel; Cuevas, Ruben
  17. Common pool resources: Is there support for conservationists? By Erik Ansink; Hans-Peter Weikard
  18. The Case for Formation of ISP-Content Providers Consortiums by Nash Bargaining for Internet Content Delivery By Debasis Mitra; Abhinav Sridhar

  1. By: Stutzer, Alois (University of Basel); Baltensperger, Michael (University of Basel); Meier, Armando N.
    Abstract: We study how the number of ballot propositions affects the quality of decision making in direct democracy, as reflected in citizens’ knowledge, voting behavior, and attitudes toward democracy. Using three comprehensive data sets from Switzerland with over 3,500 propositions, we exploit variation in the number of federal propositions and plausibly exogenous variation in the number of cantonal propositions. Only with a relatively high number of propositions on the ballot do voters have less knowledge about federal propositions. Otherwise, we find no indication that the number of ballot propositions impedes the quality of decision making in direct democracy. For instance, a higher number of propositions does not lead more voters to support proposals endorsed by pole parties. If anything, having more federal propositions on the ballot relates to higher perceived political influence and satisfaction with democracy.
    Keywords: ballot length, direct democracy, pole-party endorsements, political knowledge, satisfaction with democracy, turnout, voter behavior
    JEL: D03 D72 D78 H00
    Date: 2018–10–04
  2. By: Jimmy Chan (Department of Economics, Chinese University of Hong Kong); Seher Gupta (Department of Economics, New York University); Fei Li (Department of Eco- nomics, University of North Carolina Chapel Hill); Yun Wang (Wang Yanan Institute for Stud- ies in Economics, Xiamen University)
    Abstract: A sender seeks to persuade a group of heterogeneous voters to adopt an action. We analyze the sender’s information-design problem when the collective decision is made through a majority vote and voting for the action is personally costly. We show that the sender can exploit the heterogeneity in voting costs by privately communicating with the voters. Under the optimal information structure, voters with lower costs are more likely to vote for the sender’s preferred action when it is the wrong choice than those with higher costs. The sender’s preferred action is, therefore, adopted with a higher probability when private communication is allowed than when it is not. Nevertheless, the sender’s preferred action cannot be adopted with probability one if no voter, as a dictator, is willing to vote for it without being persuaded.
    Keywords: Bayesian Persuasion, Information Design, Private Persuasion, Strategic Voting
    JEL: D72 D83
    Date: 2018–11–03
  3. By: Steven, Brams; Markus, Brill
    Abstract: In using approval voting to elect multiple winners to a committee or council, it is desirable that excess votes—approvals beyond those that a candidate needs to win a seat—not be wasted. The excess method does this by sequentially allocating excess votes to a voter’s as-yet-unelected approved candidates, based on the Jefferson method of apportionment. It is monotonic—approving of a candidate never hurts and may help him or her get elected—computationally easy, and less manipulable than related methods. In parliamentary systems with party lists, the excess method is equivalent to the Jefferson method and thus ensures the approximate proportional representation of political parties. As a method for achieving proportional representation (PR) on a committee or council, we compare it to other PR methods proposed by Hare, Andrae, and Droop for preferential voting systems, and by Phragmén for approval voting. Because voters can vote for multiple candidates or parties, the excess method is likely to abet coalitions that cross ideological and party lines and to foster greater consensus in voting bodies.
    Keywords: Approval voting; multiple winners; apportionment method; proportional representation; wasted votes
    JEL: C72 D71 D72
    Date: 2018–10–27
  4. By: Herrera, Helios; Llorente-Saguer, Aniol; McMurray, Joseph C.
    Abstract: This paper documents a laboratory experiment that analyses voter participation in common interest proportional representation (PR) elections, comparing this with majority rule. Consistent with theoretical predictions, poorly informed voters in either system abstain from voting, thereby shifting weight to those who are better informed. A dilution problem makes mistakes especially costly under PR, so abstention is higher in PR in contrast with private interest environments, and welfare is lower. Deviations from Nash equilibrium predictions can be accommodated by a logit version of quantal response equilibrium (QRE), which allows for voter mistakes.
    Keywords: information aggregation; laboratory experiment; Majority Rule; Proportional representation; Turnout
    JEL: C92 D70
    Date: 2018–10
  5. By: Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
    Abstract: Why do religious politics thrive in some societies but not others? This paper explores the institutional foundations of this process in Indonesia, the world’s largest Muslim democracy. We show that a major Islamic institution, the waqf, fostered the entrenchment of political Islam at a critical historical juncture. In the early 1960s, rural elites transferred large amounts of land into waqf—a type of inalienable charitable trust—to avoid expropriation by the government as part of a major land reform effort. Although the land reform was later undone, the waqf properties remained. We show that greater intensity of the planned reform led to more prevalent waqf land and Islamic institutions endowed as such, including religious schools, which are strongholds of the Islamist movement. We identify lasting effects of the reform on electoral support for Islamist parties, preferences for religious candidates, and the adoption of Islamic legal regulations (sharia). Overall, the land reform contributed to the resilience and eventual rise of political Islam by helping to spread religious institutions, thereby solidifying the alliance between local elites and Islamist groups. These findings shed new light on how religious institutions may shape politics in modern democracies.
    JEL: D72 D74 P16 P26 Z12
    Date: 2018–10
  6. By: Dreher, Axel; Simon, Jenny; Valasek, Justin
    Abstract: When allocating foreign aid, donor countries face a problem of incentivizing recipient countries to invest in state capacity. Here, we show that donors can incentivize recipient countries by committing to collective decision-making: If aid allocation decisions are made ex post via bargaining between donors, then the negotiated outcome will be skewed towards aggregate efficiency, which induces the recipients to compete over ex ante investments. Our model links the fund's composition of membership and its decision rules to participation, investment and allocation decisions. We also find that majority rule induces stronger competition between recipients, resulting in higher investments in state capacity. The qualitative predictions of our model are broadly consistent with empirical findings on multilateral aid. In particular, the model rationalizes our novel empirical finding that, relative to organizations that use a consensus rule, organizations that use majority are more responsive to changes in recipient-country quality.
    Keywords: aid allocation; Aid effectiveness; Decision Rules; International Organizations
    JEL: F35 H87 O19
    Date: 2018–11
  7. By: De Benedetto, Marco Alberto (Birkbeck, University of London); De Paola, Maria (University of Calabria)
    Abstract: We study the effect of term limits on voter turnout in local Italian elections. Since 2014 the Italian law allows mayors in municipalities with a population size lower than 3,000 inhabitants to re-run for a third term, whereas mayors in cities with a number of residents above the cutoff still face a two-term limit. The introduction of the reform permits us to implement a difference-in-discontinuities design exploiting the before/after with the discontinuous policy change. We find that voters negatively react to the introduction of the reform and in particular electoral participation decreases by about 5 percentage points in municipalities eligible to the treatment compared to municipalities in the control group. This negative effect is essentially driven by a decrease in the political competition. We also find that relaxing term limits does not improve the quality of politicians running for election.
    Keywords: diff-in-discontinuities, voter turnout, political competition
    JEL: C21 D72 H70 J78
    Date: 2018–09
  8. By: Apolte, Thomas
    Abstract: This paper aims at contributing to a better understanding of the conditions of self-enforcing democracy by analyzing the recent wave of autocratic transitions. Based on a game-theoretic framework, we work out the conditions under which governments may induce the diverse public authorities to coordinate on extra-constitutional activities, eventually transforming the politico-institutional setting into one of autocratic rule. We find three empirically testable characteristics that promote this coordination process, namely: populism and public support, corruption, and a lack in the separation of powers. By contrast, low degrees of corruption and strongly separated powers can be viewed as prerequisites to self-enforcing democracy.
    Keywords: self-enforcing democracy,political regimes,autocratic transition
    JEL: D02 D72 D74 P48
    Date: 2018
  9. By: Jean Pisani-Ferry
    Abstract: This paper, which partially draws on the author's Tommaso Padoa-Schioppa inaugural lecture at the EUI, is an updated and augmented version of a contribution to the Hertie School’s Governance Report 2018, published under the title ‘Is global governance passé?’. The high point of global governance was reached in the mid-1990s around the creation of the World Trade Organisation. It was hoped that globalisation would be buttressed by a system of global rules and a network of specialised global institutions. Two decades later these hopes have been dashed by a series of global governance setbacks, the rise of economic nationalism and the dramatic change of attitude of the United States administration. From trade to the environment, a retreat from multilateralism is observable. The 2008 elevation of the G20 to leaders’ level was an exception to this trend. But the G20 is no more than a political steering body. The reasons for this retreat partially arise from political developments in individual countries. But such factors hide a series specific roadblocks to global governance - the growing number and diversity of countries involved; the mounting rivalry between the US and China; doubts about globalisation and the distribution of the associated benefits; the obsolescence of global rules and institutions; imbalances within the global governance regime; and increased complexity. What, then, should be the way forward? The demand for global governance has not diminished, but support for binding multilateral arrangements has. There is a need for alternative governance technologies that better accommodate the diversity of players, provide for more flexibility and rely less on compulsion. From competition to financial regulation, such arrangements have been developed in a series of fields already. They are often hailed as providing a solution to the governance conundrum. But their effectiveness should be assessed critically. Can they overcome the free-rider curse and enforcement problems? Usual game theory suggests not. Not all games are similar, however, and some collective action problems can be tackled without recourse to coercion. Against this background, multilateralists hesitate over the choice of a strategy. One option would be to seek to preserve the existing order to the greatest extent possible. Its downside is that it does not address the underlying problems. An alternative option is to try to redesign international arrangements, putting the emphasis on flexibility and voluntary participation. Its downside is that it risks overlooking the intrinsic problems of international or global collective action. A potentially more promising approach would be to define the minimum conditions that the multilateral framework must fulfil to provide a strong-enough basis for flexible, variable-geometry and possibly informal arrangements. In the end, we should neither cultivate the nostalgia of yesterday’s order nor invest our hopes in ineffective international cooperation. The narrow path ahead is to establish a sufficient, critical multilateral base for flexible arrangements and to equip policymakers with a precise toolkit for determining, on a field-by-field basis, the minimum requirements for effective collective action.
    Date: 2018–10
  10. By: Sharma, Chanchal Kumar
    Abstract: Despite the extensive literature on distributive politics, we still lack a theory of how political and fiscal institutions interact to shape the pork-barrelling ability of national leaders in a federal parliamentary democracy. Focusing on party system attributes and governmental incentives attached to different types of discretionary grants, this article examines the extent to which a shift in the priorities and interests of the prime minister's party - effected by the change from a dominant-party system to a multiparty-coalition system - is responsible for the change in the dynamics of distributive policies. I use a rich panel dataset on Indian states to propose a situational theory of distributive politics which states that incentives for exclusive targeting of affiliated states in dominant-party systems drive national ruling parties towards particularism, while the shrinking opportunity to indulge in such a policy in multiparty-coalition systems creates a universalisation effect. Additionally, the disaggregated analysis of discretionary grants brings to the fore the fact that the shift from particularism to universalism occurs for schematic grants, which provide an opportunity for credit-claiming. The ad hoc grants, which are like side payments, remain subject to particularism.
    Keywords: distributive politics,pork-barrel politics,particularism,universalism,oneparty majority government,multiparty coalition government,India
    JEL: D72 D78 H70 H72 H73 H77
    Date: 2017
  11. By: Gyongyosi, Gyozo; Verner, Emil
    Abstract: This paper studies the effect of the 2008 financial crisis on the vote share of the populist far right. We use the foreign currency borrowing of households in Hungary as a natural experiment. During the crisis the unexpected and large depreciation of the domestic currency increased the debt burden of households borrowing in foreign currencies but not of households borrowing in the local currency. We use zip code level variation in the prevalence of foreign currency borrowing of households, and show that the exposure to the depreciation significantly affected political preferences. A 10 percent unanticipated rise in indebtedness increased the vote share of the far right by 2.2 percentage points. This effect explains one third of the increase of their popularity by the 2010 election. Foreign currency debtors' naїveté, persistent extremist attitudes, local labor market shocks, and immigration do not account for this increase. We present evidence that the conflict between creditors and debtors about the resolution of the crisis is an important mechanism in the electoral success of the far right. The far right sided with debtors against creditors by advocating policies to help households with foreign currency loans.
    Date: 2018
  12. By: Brian Beach; Daniel B. Jones; Tate Twinam; Randall Walsh
    Abstract: Does minority representation in a legislative body differentially impact outcomes for minorities? To examine this question, we assemble a novel dataset identifying the ethnicity of over 3,500 California city council candidates and study close elections between white and nonwhite candidates. We find that narrowly elected nonwhite candidates generate differential gains in housing prices in majority nonwhite neighborhoods. This result, which is not explained by correlations between candidate race and political affiliation or neighborhood racial composition and income, suggests that increased representation may help reduce racial disparities. Consistent with a causal interpretation, results strengthen with increased city-level segregation and council-member pivotality. Observed changes in business patterns and policing underpin our results.
    JEL: D72 H7 J15 R3
    Date: 2018–10
  13. By: Schotte, Simone
    Abstract: Beyond the hopes placed in Africa's emergent middle class as an engine of economic growth, some analysts see this group as a bastion of political stability and enduring democratisation across the continent. This paper's approach differs from that of most studies, which treat the middle class as a homogeneous group, through two key contributions. First, using cluster analysis, I propose a novel way of conceptualising social class that broadly draws on the Weberian idea of shared life chances. I apply this method to South Africa and identify five social classes characterised by their members' living standards, overall life satisfaction, and self-perceived upward mobility. Second, the empirical analysis reveals significant discrepancies in attitudes towards democracy between the downwardly and upwardly mobile strata of the middle class, which I term the "anxious" and the "climbers", respectively. On the one hand, the "climbers" show the highest generic support for democracy as a form of government, whereas the "anxious" middle class displays feelings of resignation. On the other hand, I find indicative evidence of a status-quo bias among the "climbers". Rather than assuming a more demanding or critical stance in politics, they allow their political priorities to be at least partly shaped by an interest in securing and expanding attained living standards; being upwardly mobile is even associated with a higher tolerance for government attempts to constrain freedom of information, opinion, or expression.
    Keywords: South Africa,middle class,democratic consolidation,political attitudes
    Date: 2017
  14. By: Garance Genicot (Department of Economics, Georgetown University); Laurent Bouton (Department of Economics, Georgetown University); Michael Castanheira (Ecares, ULB, Belgium)
    Abstract: This paper studies the political determinants of inequality in government interventions under the majoritarian and proportional representation systems. Using a model of electoral competition with targetable government intervention and heterogeneous localities, we uncover a novel relative electoral sensitivity effect in majoritarian systems. This effect, which depends on the geographic distribution of voters, can incentivize parties to allocate resources more equally under majoritarian systems than proportional representation systems. This contrasts with the conventional wisdom that government interventions are more unequal in majoritarian systems.
    Keywords: Distributive Politics, Electoral Systems, Public Good, Inequality
    JEL: D72 H00
    Date: 2018–10–24
  15. By: Hoang (PSL, Université Paris-Dauphine, Paris, France, UMR 225 DIAL, Institut de Recherche pour le Développement (IRD), Paris, France); Laure Pasquier-Doumer (IRD, UMR DIAL, PSL, Université Paris-Dauphine); Camille Saint-Macary (IRD, UMR DIAL, PSL, Université Paris-Dauphine)
    Abstract: Ethnic inequality remains a persistent challenge for Viet Nam. This paper aims at better understanding this ethnic gap through exploring the formation of risk sharing networks in rural areas. It first investigates the differences in risk sharing networks between the ethnic minorities and the Kinh majority, in terms of size and similarity attributes of the networks. Second, it relies on the concept of ethnic homophily in link formation to explain the mechanisms leading to those differences. In particular, it disentangles the effect of demographic and local distribution of ethnic groups on risk-sharing network formation from cultural and social distance between ethnic groups, while controlling for the disparities in the geographical environment. Results show that ethnic minorities have smaller and less diversified networks than the majority. This is partly explained by differences in wealth and in the geographical environment. But ethnicity also plays a direct role in risk-sharing network formation through the combination of preferences to form a link with people from the same ethnic group (inbreeding homophily) and the relative size of ethnic groups conditioning the opportunities to form a link (baseline homophily). Inbreeding homophily is found to be stronger among the Kinh majority, leading to the exclusion of ethnic minorities from Kinh networks, which are supposed to be more efficient to cope with covariant risk because they are more diversified in the occupation and location of their members. This evidence suggests that inequalities among ethnic groups in Viet Nam are partly rooted in the cultural and social distances between them.
    Keywords: Risk-sharing network, homophily, ethnic gap, Viet Nam, Vietnam.
    JEL: O12 I31 D85
    Date: 2018
  16. By: Liberini, Federica (ETH Zurich, Department of Economics); Redoano, Michela (University of Warwick, Department of Economics); Russo, Antonio (ETH Zurich,Department of Economics); Cuevas, Angel (University Carlos III, Department of Telematic Engeneering); Cuevas, Ruben (University Carlos III, Department of Telematic Engeneering)
    Abstract: Social media enable politicians to personalize their campaigns and target voters who may be decisive for the outcome of elections. We assess the effects of such political "micro-targeting" by exploiting variation in daily advertising prices on Facebook, collected during the course of the 2016 U.S. presidential campaign. We analyze the variation of prices across political ideologies and propose a measure for the intensity of online political campaigns. Combining this measure with information from the ANES electoral survey, we address two fundamental questions: (i) To what extent did political campaigns use social media to micro-target voters? (ii) How large was the effect, if any, on voters who were heavily exposed to campaigning on social media? We find that online political campaigns targeted on users' gender, geographic location, and political ideology had a signi cant e ect in persuading undecided voters to support Mr Trump, and in persuading Republican supporters to turn out on polling day. Moreover the effect of micro-targeting on Facebook was strongest among users without university or college-level education.
    Date: 2018
  17. By: Erik Ansink (Vrije Universiteit Amsterdam); Hans-Peter Weikard (Wageningen University)
    Abstract: We examine the role of support for coalition stability in common pool resource games such as fisheries games. Some players may not want to join a coalition that jointly manages a resource. Still, because they benefit from spillovers, they may want to support the coalition with a transfer payment in order to set incentives for others to join. We find that the impact of support on equilibria of this game is limited to games with three or five players.
    Keywords: Cartel games; Coalition formation; Common Pool Resources; Support
    JEL: C72 D02 Q20
    Date: 2018–11–05
  18. By: Debasis Mitra; Abhinav Sridhar
    Abstract: The formation of consortiums of a broadband access Internet Service Provider (ISP) and multiple Content Providers (CP) is considered for large-scale content caching. The consortium members share costs from operations and investments in the supporting infrastructure. Correspondingly, the model's cost function includes marginal and fixed costs; the latter has been important in determining industry structure. Also, if Net Neutrality regulations permit, additional network capacity on the ISP's last mile may be contracted by the CPs. The number of subscribers is determined by a combination of users' price elasticity of demand and Quality of Experience. The profit generated by a coalition after pricing and design optimization determines the game's characteristic function. Coalition formation is by a bargaining procedure due to Okada (1996) based on random proposers in a non-cooperative, multi-player game-theoretic framework. A necessary and sufficient condition is obtained for the Grand Coalition to form, which bounds subsidies from large to small contributors. Caching is generally supported even under Net Neutrality regulations. The Grand Coalition's profit matches upper bounds. Numerical results illustrate the analytic results.
    Date: 2018–10

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