nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒05‒27
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Ostracism in alliances of teams and individuals: Voting, exclusion, contribution, and earnings By Stephan Huber; Jochen Model; Silvio Städter
  2. Preemption Contests Between Groups By Barbieri, Stefano; Konrad, Kai A.; Malueg, David A.
  3. An Experimental Study on the Effects of Communication, Credibility, and Clustering in Network Games By Charness, Gary; Feri, Francesco; Meléndez-Jiménez, Miguel A.; Sutter, Matthias
  4. Peer Effects in Legislative Voting By Nikolaj Harmon; Raymond Fisman; Emir Kamenica
  5. Busy Doing Nothing – Why Politicians Implement Ineffcient Policies By Gustafsson, Anders
  6. Hurricanes, Climate Change Policies and Electoral Accountability By Stefano Gagliarducci; M. Daniele Paserman; Eleonora Patacchini
  7. Extreme Lobbyists and Policy Convergence By Hirata, Daisuke; Kamada, Yuichiro
  8. Coopetition in group contest By Hubert J. Kiss; Alfonso Rosa-Garcia; Vita Zhukova
  9. Competition and the role of group identity By Francesca Cornaglia; Michalis Drouvelis; Paolo Masella
  10. Virtual Community Characteristics as Success Factors for Crowdfunding Projects By Teodora Marinova
  11. Managing environmental risks in development banks and development finance institutions – what role for donor shareholders? By Naeeda Crishna Morgado; Özlem Taşkın
  12. Proportional Systems with Free Entry. A Citizen-Candidate Model By Paolo Balduzzi; Sandro Brusco
  13. Identity and Redistribution: Theory and Evidence By Sanjit Dhami; Emma Manifold; Ali al-Nowaihi

  1. By: Stephan Huber (University of Regensburg and UAS Augsburg); Jochen Model (UAS Augsburg); Silvio Städter (UAS Augsburg)
    Abstract: Alliances often provide a collective good among their allies. This article offers laboratory experimental evidence that the possibility to vote for the exclusion of non-cooperating allies, i.e. ostracism, can be a powerful negative referendum to increase allies’ contributions to the collective good. However, it is found that ostracism does not necessarily increase earnings in a public goods game. In particular, it is shown that the ostracism mechanism is used differently by individuals. While ostracism increases contributions irrespective of the game is played with a alliances of individuals or teams as the decision makers, the earnings do not statistically significant increase in alliances of individuals. This result can be explained with different voting patterns. Compared to individuals, teams vote and in turn exclude significantly less in early periods but more in later periods of the game. Thus, negative earnings effects of ostracism, i.e., excluded players can neither contribute to the collective good nor receive from the collective good, are found to be less severe in alliances of teams.
    Keywords: alliances, team decision, public good, collective good, ostracism, exclusion, experiment
    JEL: C91 C92 H41
    Date: 2019–01
  2. By: Barbieri, Stefano; Konrad, Kai A.; Malueg, David A.
    Abstract: We consider a preemption game between groups where the first agent to take a costly action wins the prize on behalf of his group. We describe the equilibrium solution of this problem when players differ in their own costs of action and these costs are private information. The equilibrium is typically characterized by delay. The nature of the equilibrium depends on key parameters such as the number of groups and their size. More competition between groups reduces delay, whereas in larger groups members of a given cost type are more reluctant to act but may yield an earlier resolution of the conflict. We analyze asymmetries across groups, focusing on group size and strength of the externalities within groups.
    Keywords: dynamic conflict; free riding; incomplete information; inter-group conflict; preemption; waiting
    JEL: D74 H41 L13
    Date: 2019–05
  3. By: Charness, Gary (University of California, Santa Barbara); Feri, Francesco (University of Innsbruck); Meléndez-Jiménez, Miguel A. (University of Malaga); Sutter, Matthias (Max Planck Institute for Research on Collective Goods)
    Abstract: The effectiveness of social interaction depends strongly on an ability to coordinate actions efficiently. In large networks, such coordination may be very difficult to achieve and may depend on the communication technology and the network structure. We examine how pre-play communication and clustering within networks affect coordination in a challenging experimental game on eight-person networks. Free-form chat is enormously effective in achieving the nonequilibrium efficient outcome in our game, but restricted communication (where subjects can only indicate their intended action) is almost entirely ineffective. We can rationalize this result with a novel model about the credibility of cheap-talk messages. This credibility is much larger with freeform message communication than with restricted communication. We are the first to model this credibility and show, both theoretically and experimentally, an interaction effect of network structure and communication technologies. We also provide a model of message diffusion, which indeed predicts that diffusion will be more rapid without clustering and is consistent with our data.
    Keywords: networks, clustering, communication, credibility, cheap talk, experiment
    JEL: C71 C91 D03 D85
    Date: 2019–05
  4. By: Nikolaj Harmon (University of Copenhagen); Raymond Fisman (Boston University); Emir Kamenica (University of Chicago)
    Abstract: We exploit seating rules in the European Parliament to identify peer effects in legislative voting. Sitting adjacently leads to a 7 percent reduction in the overall likelihood that two Members of the European Parliament (MEPs) from the same party differ in their vote, but peer effects are markedly stronger among women, among MEP pairs from the same country, and in close votes. Using variation in seating across the two venues of the Parliament (Brussels and Strasbourg), we also show that peer effects are persistent: MEPs who have sat together in the past are less likely to disagree even when they are not seated adjacently.
    Keywords: seating, influence, European Parliament
    JEL: D72 D73 F53 P16
    Date: 2018–08
  5. By: Gustafsson, Anders (The Ratio Institute)
    Abstract: A substantial body of literature suggests that politicians are blocked from implementing efficient reforms that solve substantial problems because of special interest groups or budget constraints. Despite the existing mechanisms that block potentially efficient reforms, real-world data show that a large number of new programs and policies are implemented every year in developed countries. These policies are often selective and considered to be fairly inefficient by ex post evaluation, and they tend to be small in size and scope. With this background, this paper studies the reasons why a rational politician would implement an inefficient public policy that is intended to obfuscate the difficulties in achieving reforms. The paper uses a simple competence signaling model that suggests that if an effective reform is impossible, engaging in strategic obfuscation through an inefficient program increases the probability of winning a re-election compared to doing nothing at all. This is because an inefficient reform does not lead voters to believe that the politician is incompetent, which a lack of action risks doing. Intentional inefficiency aiming to obfuscate the difficulty of efficient reforms can therefore complement the previous theories’ explanations of political failure.
    Keywords: Special Interest Groups; Reforms; Inefficiency; Strategic Obfuscation
    JEL: D72 H11 L82 P16
    Date: 2019–05–13
  6. By: Stefano Gagliarducci (CEIS & DEF University of Rome "Tor Vergata", EIEF and IZA); M. Daniele Paserman (Boston University, NBER, 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.
    Keywords: U.S. Congress, Hurricanes, Legislative Activity.
    JEL: D70 D72 H50 Q54
    Date: 2019–05–17
  7. By: Hirata, Daisuke; Kamada, Yuichiro
    Abstract: We consider a two-candidate election model with campaign contributions. In the first stage of the game, each of two candidates chooses a policy position. In the second stage, each of n lobbyists chooses the amount of contribution to each candidate. The winning probability of each candidate depends on the total amount of contributions that she raised from the lobbyists. In any equilibrium of our model, only extreme lobbyists contribute at any subgame, and the policies converge on the unique equilibrium path. Our results suggest that extreme lobbyists and their contributions do not necessarily cause policies to diverge.
    Keywords: Interest groups, campaign contributions, Hotelling model
    JEL: C72 D72 D78
    Date: 2019–05
  8. By: Hubert J. Kiss (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and Department of Economics, Eötvös Loránd University); Alfonso Rosa-Garcia (Department of Business, Universidad Católica San Antonio de Murcia); Vita Zhukova (Department of Business, Universidad Católica San Antonio de Murcia)
    Abstract: There are situations in which competitors ally to pursue a common objective. This simultaneous presence of cooperation and competition is called coopetition and we study it theoretically and experimentally in a group contest setup. More concretely, we analyze a group contest with a new sharing rule, that we call inverse proportional. This rule embodies the idea that the more a member of a group contributes to win the contest, the less this member is able to capture the potential posterior prize, introducing thus a competitive element into group decision-making. We compare the effects of this rule with a standard, the egalitarian sharing rule. While in the egalitarian case theoretically the optimal individual contribution is positive, with the inverse proportional rule zero contribution represents the individual (and also the social) optimum. We find that participants in our experiment contribute more with the egalitarian than with the inverse proportional rule. We also document over-expenditure with the inverse proportional sharing rule, suggesting that group contest generates inefficient behavior even when individuals are extremely penalized for their contributions. We also explore the drivers of decision in the group contest, and find that contribution in a public goods game is positively associated with contribution in the group contest and that competitiveness explains part of the behavior with the inverse proportional rule but not with the egalitarian sharing. Neither social value orientation, risk attitudes, nor personal traits appear as significant predictors of behavior.
    Keywords: competitiveness, egalitarian sharing rule, group contest, inverse proportional sharing rule, public goods game, risk attitudes, social value orientation
    JEL: C72 C92 D70 D72 H41
    Date: 2019–04
  9. By: Francesca Cornaglia (Queen Mary University of London); Michalis Drouvelis (Department of Economics, University of Birmingham); Paolo Masella (Department of Economics, University of Bologna)
    Abstract: The emergence of competition is a defining aspect of human nature and characterizes many important social environments. However, its relationship with how social groups are formed has received little attention. We design an experiment to analyze how individuals’ willingness to compete is affected by group identity. We find that individuals display substantially stronger competitiveness in within group (ingroup) matchings than in between group (outgroup) matchings or in a control setting where no group identity is induced. We also find that the effect of group identity is stronger for subjects who participated more actively in the team-building task.
    Keywords: competition; social distance; group identity; laboratory experiment
    JEL: C92 D03
    Date: 2019–05–07
  10. By: Teodora Marinova (Sofia University “St. Kliment Ohridski”, Faculty of Economics and Business Administration)
    Abstract: In this paper I investigate the factors influencing the likelihood of crowdfunding projects’ success by analyzing data from the crowdfunding platform Kickstarter. The research focus is on the influence of virtual community characteristics. The results show that the probability of project success is positively influenced by a higher number of project supporters but a larger amount of comments on the project, controlled for project definition factors, is found to decrease the likelihood of project success. This is in line with previous findings of a double-edged impact of the size of the virtual innovation community and the amount of peer-to-peer interaction on the likelihood of successful innovation input by the participants.
    Keywords: User innovation, Crowdfunding, Virtual communities, Innovation communities.
    JEL: O31 O32 O33
    Date: 2019–05
  11. By: Naeeda Crishna Morgado; Özlem Taşkın
    Abstract: How and where infrastructure is built – and how environmental and social risks related to infrastructure are managed – will have a direct influence on whether developing countries pursue more sustainable development pathways or not. Development banks and development finance institutions (DFIs) serve as important channels for infrastructure finance, have adopted safeguards systems to minimise and manage the environmental and social risks associated with their projects. This paper provides an overview of these systems and discusses the role of members of the OECD Development Assistance Committee (DAC) in influencing these, in their capacity as shareholders of these institutions. It shows that donor governments influence the policies and activities of development banks, but that the level of engagement varies between bilateral and multilateral development banks and is often determined by internal capacity. The paper argues that donor shareholder governments must continue to play an important role in encouraging development banks to strengthen the implementation of safeguards, which will require continued collaboration within governments, across countries and between development banks and DFIs. Efforts to build the evidence base on the impacts of safeguards in projects will further support this agenda.
    Keywords: development banks, development co-operation, development finance, environment and social safeguards, green investment
    JEL: O13 O19 O44 Q56
    Date: 2019–05–22
  12. By: Paolo Balduzzi; Sandro Brusco
    Abstract: We analyze the equilibrium of a proportional electoral system with free entry in a citizen candidate model. In proportional systems the policy outcomes are typically decided through legislative bargaining and a perspective entrant has to worry about the governing coalitions that will be able to reach 50% of the seats. We show that there are equilibria with medium-sized parties, i.e. no party has absolute majority but the number of parties is relatively small. However, when the number of seats is su±ciently large, all equilibria must have at least 4 parties. We also discuss the impact of variations of the electoral formula, such as the introduction of of thresholds.
    Date: 2019
  13. By: Sanjit Dhami; Emma Manifold; Ali al-Nowaihi
    Abstract: We contribute to a growing literature on redistribution and identity. We propose a theoretical model that embeds social identity concerns, as in Akerlof and Kranton (2000), with inequity averse preferences, as in Fehr and Schmidt (1999). We conduct an artefactual ultimatum game experiment with registered members of British political parties for whom both identity and redistribution are salient. The empirical results are as follows. (1) Proposers and responders demonstrate ingroup-favoritism. (2) Proposers exhibit quantitatively stronger social identity effects relative to responders. (3) As redistributive taxes increase, offers by proposers and the minimum acceptable offers of responders (both as a proportion of income) decline by almost the same amount, suggesting a shared understanding that is characteristic of social norms. (4) Subjects experience more disadvantageous inequity from outgroup members relative to ingroup members.
    Keywords: Social identity, prosocial behaviour, ultimatum game, fiscal redistribution, entitlements
    JEL: D01 D03
    Date: 2019–04

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