nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒05‒13
seventeen papers chosen by
Stan C. Weeber, McNeese State University

  1. Majority rule or dictatorship? The role of collective-choice rules in resolving social dilemmas with endogenous institutions By Liu, Manwei; van der Heijden, Eline
  2. Voting Expressively By Abhinash Borah
  3. Naïve imitation and partial cooperation in a local public goods model By Herings, P. Jean-Jacques; Peeters, Ronald; Tenev, Anastas; Thuijsman, Frank
  4. Ethnicity and risk sharing network formation: Evidence from rural Viet Nam By Hoang Quynh; Pasquier-Doumer Laure; Saint-Macary Camille
  5. The Politics of CEOs By Cohen, Alma; Hazan, Moshe; Tallarita, Roberto; Weiss, David
  6. Analysis of Approval Voting in Poisson Games By François Durand; Antonin Macé; Matias Nunez
  7. Does Affirmative Action in Politics Hinder Performance? Evidence from India By Sabyasachi Das; Abhiroop Mukhopadhyay; Rajas Saroy
  8. Does the presence of a physically disabled person in the group increase cooperation? An experimental test of the empathyaltruism hypothesis By Arnaud Tognetti; David Doat; Dimitri Dubois; Rustam Romaniuc
  9. From Finance to Fascism: The Real Effect of Germany’s 1931 Banking Crisis By Sebastian Doerr; Stefan Gissler; José-Luis Peydró; Hans-Joachim Voth
  10. Hurricanes, Climate Change Policies and Electoral Accountability By Stefano Gagliarducci; M. Daniele Paserman; Eleonora Patacchini
  11. Group Size and Political Representation Under Alternate Electoral Systems By Sugat Chaturvedi; Sabyasachi Das
  12. An experimental study of partnership formation in social networks By Francis Bloch; Bhaskar Dutta; Stéphane Robin; Min Zhu
  13. Conflict-free and Pareto-optimal Allocations in the One-sided Assignment Game: A Solution Concept Weaker than the Core By David Pérez-Castrillo; Marilda Sotomayor
  14. From consensus to dissensus: the politics of anti-austerity activism in London and its relationship to voluntary organisations By Ishkanian, Armine
  15. Fighting unfair trade, leveling the playing field, enforcing trade rights. The construction of trade protection in the United States and the European Union By Josue Mathieu
  16. Too many cooks in the kitchen?: The division of financing in World Bank projects and project performance By Winters Matthew
  17. The demand for bad policy when voters underappreciate equilibrium effects By Dal Bó, Ernesto; Dal Bó, Pedro; Eyster, Erik

  1. By: Liu, Manwei (Tilburg University, Center For Economic Research); van der Heijden, Eline (Tilburg University, Center For Economic Research)
    Abstract: Collective-choice rules aggregate individual choices into a group choice. This study addresses the role of collective-choice rules in a social dilemma situation in which group members can repeatedly choose a combination of institutions to achieve self-governance. Specifically, we investigate three collectivechoice rules: majority voting, dictatorship and rotating dictatorship. We identify a direct and an indirect channel through which collective-choice rules may affect groups’ behavior and performance in the game. Our main findings are: (1) In terms of the direct effects, there is no evidence of a “democracy premium" (i.e., cooperation level is higher under the institutions chosen via a democratic rule than when the same institutions are chosen via a non-democratic rule). (2) In terms of the indirect effects, institutional choices produced by a fixed dictator are more stable than produced by rotating dictators. (3) Overall, groups with a fixed dictator earn the highest payoffs.
    Keywords: collective decision-making; social dilemma; institutions; majority rule; dictatorship; cooperation
    JEL: C92 D02 D71
    Date: 2019
  2. By: Abhinash Borah (Department of Economics, Ashoka University)
    Abstract: We address a common criticism directed towards models of expressive voting that they are ad hoc in nature. To that end, we propose a foundation for expressive behavior that is based on a novel theory of social preferences under risk. Under our proposal, expressive considerations in behavior arise from the particular way in which risky social prospects are assessed by decision makers who want to interpret their choices as moral. To illustrate the scope of our framework, we use it to address some key questions in the literature on expressive voting: why, for expressive considerations, might voters vote against their self-interest in large elections and why might such elections exhibit a moral bias (Feddersen et al. 2009). Specically, we consider an electoral set-up with two alternatives and explain why, when the size of the electorate is large, voters may want to vote for the alternative they deem morally superior even if this alternative happens to be strictly less preferred, in an all-inclusive sense, than the other.
    Keywords: expressive voting, morals, social preferences, decisions under risk, voting against self-interest, moral bias of large elections
    Date: 2019–01
  3. By: Herings, P. Jean-Jacques (General Economics 1 (Micro)); Peeters, Ronald (university of otago, dunedin); Tenev, Anastas (General Economics 1 (Micro)); Thuijsman, Frank (DKE Scientific staff)
    Abstract: In a local interaction model agents situated on a circle play bilateral prisoners’ dilemmas with their immediate neighbors and have three possible strategies: cooperate in all interactions (altruistic), defect in all interactions (egoistic), or cooperate with one immediate neighbor with probability 1=2 (partial cooperation). After each period the agents adopt the strategy with the highest average payoff in their observed local neighborhood (naïve imitation). The absorbing states of the process are outlined and analysed. There does not exist an absorbing state in which the partially cooperative strategy coexists with any of the other strategies. The partially cooperative strategy limits the diffusion of altruistic behavior in the population. Even though clustering of altruists is generally beneficial for sustaining altruism, relatively big groups of altruists at the onset actually enable the spread of the partially cooperative strategy.
    Keywords: altruism, public goods, imitation, local interaction
    JEL: C63 C70 C72 C73
    Date: 2019–04–25
  4. By: Hoang Quynh; Pasquier-Doumer Laure; Saint-Macary Camille
    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,Ethnic group,Ethnic inequality,Homophily
    Date: 2018
  5. By: Cohen, Alma; Hazan, Moshe; Tallarita, Roberto; Weiss, David
    Abstract: CEOs of public companies have influence over the political spending of their firms, which has been attracting significant attention since the Supreme Court decision in Citizens United. Furthermore, the policy views expressed by CEOs receive substantial consideration from policymakers and the public. The political preferences of CEOs, we argue, are therefore important for a full understanding of U.S. policymaking and politics. To contribute to this understanding, we provide empirical evidence on the partisan leanings of public-company CEOs. We use Federal Election Commission (FEC) records to put together a comprehensive database of the political contributions made by over 3,500 individuals who served as CEOs of S&P 1500 companies during the period 2000-2017. We find that these political contributions display substantial partisan preferences in support of Republican candidates. We identify how this pattern is related to the company's industry, geographical region, and CEO gender. To highlight the significance of CEO's partisan preferences, we show that public companies led by Republican CEOs tend to be less transparent to investors with respect to their political spending. We conclude by discussing the policy implications of our analysis.
    Keywords: CEOs; corporate political influence; Democrats; Political contributions; Political spending; Republicans
    JEL: G3 G34 G38 K2 K22
    Date: 2019–05
  6. By: François Durand (Nokia Bell Labs [Espoo], LINCS - Laboratory of Information, Network and Communication Sciences - Inria - Institut National de Recherche en Informatique et en Automatique - Institut Mines-Télécom [Paris] - SU - Sorbonne Université); Antonin Macé (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - La plante et son environnement - CNRS - Centre National de la Recherche Scientifique - INA P-G - Institut National Agronomique Paris-Grignon - UP11 - Université Paris-Sud - Paris 11 - INRA - Institut National de la Recherche Agronomique); Matias Nunez (LAMSADE - Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We analyze Approval Voting in Poisson games endowing voters with private values over three candidates. We firsts how that any stable equilibrium is discriminatory: one candidate is commonly regarded as out of contention. We fully characterize stable equilibria and divide them into two classes. In direct equilibria, best responses depend only on ordinal preferences. In indirect equilibria, preference intensities matter. Counter-intuitively, any stable equilibrium violates the ordering conditions, a set of belief restrictions used to derive early results in the literature. We finally use Monte-Carlo simulations to estimate the prevalence of the different sorts of equilibria and their likelihood to elect a Condorcet winner.
    Keywords: Approval voting,Poisson games,Stable equilibria,Monte-Carlo simulations
    Date: 2019–03
  7. By: Sabyasachi Das (Department of Economics, Ashoka University); Abhiroop Mukhopadhyay (Department of Economics, Ashoka University); Rajas Saroy (Department of Economics, Ashoka University)
    Abstract: We examine how performance of elected representatives, as measured by delivery of public goods, is affected by affirmative action in elections, i.e., imposing quota in elections for one population group. We show both theoretically and empirically, using randomized electoral quotas for a caste group (OBCs) in India, that when group identities are salient and group sizes are asymmetric, affirmative action may in fact increase electoral competition and consequently, improve leader's performance. The result challenges the notion that equity promotion must necessarily come at the cost of "efficiency." It further justifies the electoral quota policy in India of targeting the jurisdictions where the group is numerous.
    Keywords: Electoral competition, Reservation, Public goods, Gram Panchayat
    Date: 2018–08
  8. By: Arnaud Tognetti (Karolinska Institutet [Stockholm], Institute for Advanced Study Toulouse); David Doat (ANTHROPO-LAB - Laboratoire d'Anthropologie Expérimentale - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille); Dimitri Dubois (CEE-M - Centre d'Economie de l'Environnement - Montpellier - FRE2010 - INRA - Institut National de la Recherche Agronomique - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier); Rustam Romaniuc (ANTHROPO-LAB - Laboratoire d'Anthropologie Expérimentale - ICL - Institut Catholique de Lille - UCL - Université catholique de Lille, LEM - Lille économie management - LEM - UMR 9221 - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The empathy-altruism hypothesis postulates that the awareness of others' need, pain, or distress increases empathetic feelings, which in turn triggers cooperative behaviour. Although some evidence supports this hypothesis, previous studies were prone to the ‘experimenter demand effects' raising concerns about the interpretation of the results. To avoid this issue, we designed a laboratory experiment where we examined whether the presence of individuals with a genuine physical disability would increase group cooperation in a public goods game. By manipulating the group composition during a social dilemma, we created a more ecologically valid environment closer to real-life interactions. Our results showed that the presence of physically disabled individuals did not affect group cooperation. Specifically, their presence did not affect the contributions of their physically abled partners. The lack of a surge in cooperative behaviour questions the interpretation of previous studies and suggests that they may be explained by an experimenter demand effect. Alternatively, our results may also suggest that in the context of a social dilemma with real stakes, people with physical disabilities are not perceived as being in need or do not induce enough empathy to overweight the cost of cooperation and trigger cooperative behaviours.
    Keywords: cooperation,empathy-altruism hypothesis,public goods game,physically disabled individuals
    Date: 2019
  9. By: Sebastian Doerr; Stefan Gissler; José-Luis Peydró; Hans-Joachim Voth
    Abstract: Do financial crises radicalize voters? We analyze a canonical case – Germany during the Great Depression. After a severe banking crisis in 1931, caused by foreign shocks and political inaction, radical voting increased sharply in the following year. Democracy collapsed six months later. We collect new data on pre-crisis bank-firm connections and show that banking distress led to markedly more radical voting, both through economic and non-economic channels. Firms linked to two large banks that failed experienced a bank-driven fall in lending, which caused reductions in their wage bill and a fall in city-level incomes. This in turn increased Nazi Party support between 1930 and 1932/33, especially in cities with a history of anti-Semitism. While both failing banks had a large negative economic impact, only exposure to the bank led by a Jewish chairman strongly predicts Nazi voting. Local exposure to the banking crisis simultaneously led to a decline in Jewish-gentile marriages and is associated with more deportations and attacks on synagogues after 1933.
    Keywords: financial crises, banking, Great Depression, democracy, Anti-Semitism
    JEL: E44 G01 G21 N20 P16
    Date: 2019–05
  10. By: Stefano Gagliarducci (Tor Vergata University, EIEF and IZA); M. Daniele Paserman (Boston University, EIEF, CEPR and IZA); Eleonora Patacchini (Cornell University, EIEF, CEPR and IZA)
    Abstract: This paper studies how politicians and voters respond to new information on the threats of climate change. Using data on the universe of federal disaster declarations between 1989 and 2014, we document that congress members from districts hit by a hurricane are more likely to support bills promoting more environmental regulation and control in the year after the disaster. The response to hurricanes does not seem to be driven by logrolling behavior or lobbysts’ pressure. The change in legislative agenda is persistent over time, and it is associated with an electoral penalty in the following elections. The response is mainly promoted by representatives in safe districts, those with more experience, and those with strong pro-environment records. Our evidence thus reveals that natural disasters may trigger a permanent change in politicians’ beliefs, but only those with a sufficient electoral strength or with strong ideologies are willing to engage in promoting policies with short-run costs and long-run benefits.
    Date: 2019
  11. By: Sugat Chaturvedi (Department of Economics, Ashoka University); Sabyasachi Das (Department of Economics, Ashoka University)
    Abstract: We examine the effect of group size of minorities on their representation in national government under majoritarian (MR) and proportional (PR) electoral systems. We first establish a robust empirical regularity using an ethnicity-country level panel data comprising 438 ethno-country minority groups across 102 democracies spanning the period 1946-2013. We show that a minority group's population share has no relation with its absolute representation in the national executive under PR but has an inverted-U shaped relation under MR. The pattern is stable over time and robust to alternate specifications. The developmental outcomes for a group proxied using stable nightlight emissions in a group's settlement area follow the same pattern. We reproduce the main results by two separate identification strategies-(i) instrumenting colony's voting system by that of the primary colonial ruler and, (ii) comparing the same ethnicity across countries within a continent. We argue that existing theoretical framework with a two group set up is not able to explain this pattern. Our proposed model incorporates the spatial distribution of multiple minority groups in a probabilistic voting model and justifies these patterns as equilibrium behavior. The data further validate a critical assumption of the model and its additional comparative static results. Our work highlights that electoral systems can have important effects on power in equality across minorities, and consequently, their well-being.
    Keywords: Electoral systems, minorities, political representation, settlement patterns
    Date: 2018–08
  12. By: Francis Bloch (Department of Economics, Ashoka University); Bhaskar Dutta (Department of Economics, Ashoka University); Stéphane Robin (Department of Economics, Ashoka University); Min Zhu (Department of Economics, Ashoka University)
    Abstract: This paper reports on laboratory experiments on the formation of partnerships in social networks. Agents randomly request favors and turn to their neighbors to form a partnership where they commit to provide the favor when requested. The formation of a partnership is modeled as a sequential game, which admits a unique subgame perfect equilibrium resulting in the formation of the maximum number of partnerships. Experimental results show that a large fraction of the subjects (75%) play according to their subgame perfect equilibrium strategy and reveals that the efficient maximum matching is formed over 78% of the times. When subjects deviate from their best responses, they accept to form partnerships too early. The incentive to accept when it is optimal to reject is positively correlated with subjects' risk aversion, and players employ simple heuristics-like the presence of a captive partner-to decide whether they should accept or reject the formation of a partnership.
    Keywords: social networks, partnerships, matchings in networks, non-stationary networks, laboratory experiments
    Date: 2018–08
  13. By: David Pérez-Castrillo; Marilda Sotomayor
    Abstract: In the one-sided assignment game any two agents can form a partnership and decide how to share the surplus created. Thus, in this market, an outcome involves a matching and a vector of payoffs. Contrary to the two-sided assignment game, stable outcomes often fail to exist in the one-sided assignment game. We introduce the idea of conflict-free outcomes: they are individually rational outcomes where no matched agent can form a blocking pair with any other agent, neither matched nor unmatched. We propose the set of Pareto-optimal (PO) conflict-free outcomes, which is the set of the maximal elements of the set of conflict-free outcomes, as a natural solution concept for this game. We prove several properties of conflict-free outcomes and PO conflict-free outcomes. In particular, we show that each element in the set of PO conflict-free payoffs provides the maximum surplus out of the set of conflict-free payoffs, the set is always non-empty and it coincides with the core when the core is non-empty. We further support the set of PO conflict-free outcomes as a natural solution concept by suggesting an idealized partnership formation process that leads to these outcomes. In this process, partnerships are formed sequentially under the premise of optimal behavior and two agents only reach an agreement if both believe that more favorable terms will not be obtained in any future negotiations.
    Keywords: matching, assignment game, core, Pareto-optimal outcome, conflict-free outcome
    JEL: C78 D78
    Date: 2019–04
  14. By: Ishkanian, Armine
    Abstract: This article examines how activism against austerity is organized and manifested in London. Given that anti-austerity activists are addressing issues related to social welfare, we examine whether there are alliances between the activists and voluntary organizations (VOs) that are working in that field. Examining the challenges involved in creating and sustaining alliances, we argue that the regulatory context alone is an insufficient explanation as to why activist–VO alliances are difficult to establish and maintain. We contend that more significantly, it is VOs’ and activists’ divergent and at times irreconcilable stances, which we refer to as the consensus and dissensus stances, respectively, which impede activist–VO alliances, beyond episodic interactions, from developing.
    JEL: N0
    Date: 2017–11–03
  15. By: Josue Mathieu
    Abstract: The PhD dissertation studies the construction of trade protection in the United States and the European Union. It focuses in particular on measures of contingent protection, comprising anti-dumping duties, countervailing duties and safeguards. The dissertation adopts a constructivist approach based on narrative analysis: broadening the conventional scope of political economy research on trade, the analysis combines the study of narratives with the concept of ‘discourse coalition’. The period under investigation spans over the period 2010-2014, covering the Obama Administration and the mandate of European Commissioner for trade Karel De Gucht. Adopting a comparative approach of the US and EU trade policy, the dissertation provides a detailed analysis of the US administration’s and the European Commission’s discourses on trade protection, and includes an analysis of a large array of other actors’ alternative, or competing constructions of contingent protection. The dissertation demonstrates that a specific type of unilateral enforcement plays an underestimated role in the construction of contingent protection. It also emphasizes that policy actors consider contingent protection as necessary to convince people that the trading system is fair; the research proposes the concept of ‘discursive embedded liberalism’ to account for this specific construction of trade protection. The research underlines elements of continuity and change, showing that many elements of the current crisis within the international trade regime were already in the making in the period under investigation.
    Keywords: international trade; unfair trade; dumping; subsidies; European Union; US trade policy; trade policy
    Date: 2019–03–19
  16. By: Winters Matthew
    Abstract: The total funding envelope for World Bank projects is often divided among various state and non-state actors, each of which can have competing ideas about or interests in the project. How does the division of financing relate to overall project effectiveness?I argue that too many funding streams in a project can reduce project effectiveness by creating delays, increasing transaction costs, and blurring lines of accountability. I combine original data on the number and concentration of financial collaborators in World Bank projects with the World Bank’s ratings of project performance, looking at within-country variation across projects to explore whether there is evidence of reduced aid effectiveness in projects with more participants.The results suggest that projects with significant co-financing receive somewhat worse project ratings.
    Keywords: Aid effectiveness,Foreign aid,funding,World Bank
    Date: 2019
  17. By: Dal Bó, Ernesto; Dal Bó, Pedro; Eyster, Erik
    Abstract: Most of the political-economy literature blames inefficient policies on institutions or politicians' motives to supply bad policy, but voters may themselves be partially responsible by demanding bad policy. In this paper, we posit that voters may systematically err when assessing potential changes in policy by underappreciating how new policies lead to new equilibrium behavior. This biases voters towards policy changes that create direct benefits - welfare would rise if behavior were held constant - even if those reforms ultimately reduce welfare because people adjust behavior. Conversely, voters are biased against policies that impose direct costs even if they induce larger indirect benefits. Using a lab experiment, we find that a majority of subjects vote against policies that, while inflicting direct costs, would help them to overcome social dilemmas and thereby increase welfare. Subjects also support policies that, while producing direct benefits, create social dilemmas and ultimately hurt welfare. Both mistakes arise because subjects fail to fully anticipate the equilibrium effects of new policies. More precisely, we establish that subjects systematically underappreciate the extent to which policy changes will affect the behavior of other people, and that these mistaken beliefs exert a causal effect on the demand for bad policy.
    Keywords: voting; reform; political failure; endogenous policy; experiment
    JEL: C9 D7
    Date: 2018–04–01

This nep-cdm issue is ©2019 by Stan C. Weeber. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.