nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒06‒10
nine papers chosen by
Stan C. Weeber, McNeese State University

  1. Combining the third vote with traditional elections By Tanguiane, Andranick S.
  2. Heuristics in Multi-Winner Approval Voting By Jaelle Scheuerman; Jason L. Harman; Nicholas Mattei; K. Brent Venable
  3. Resource Transfers to Local Governments: Political Manipulation and Household Responses in West Bengal By Pranab Bardhan; Sandip Mitra; Dilip Mookherjee; Anusha Nath
  4. Experimental Evidence on Cooperation, Political Affiliation, and Group Size By Helénsdotter, Ronja
  5. Primaries, Strategic Voters and Heterogenous Valences By Shino Takayama; Yuki Tamura; Terence Yeo
  6. Intertemporal Evidence on the Strategy of Populism By Gloria Gennaro; Giampaolo Lecce; Massimo Morelli
  7. Fake Experts By Patrick Lahr; Justus Winkelmann
  8. Social Distance and Parochial Altruism: An Experimental Study By Béatrice Boulu-Reshef; Jonah Schulhofer-Wohl
  9. Essays in corporate finance, political economy, and competition By Neretina, Ekaterina

  1. By: Tanguiane, Andranick S.
    Abstract: The German two-vote election system implements two historical conceptions of political representation coined at the end of the 18th century during the American and French Revolutions. The descriptive conception - the parliament portrays the society in miniature - is implemented in the first vote with which local candidates are delegated to the federal parliament. The agent conception - the parliament consists of people's trustees who are not necessarily their countrymen - is implemented in the second vote for a party. The recent conception of representation, policy representation - how well the party system and government represent policy preferences of the electorate, is supported by no election instrument, and the Third Vote election method just aims at filling in this gap. Under the "Third Vote", the voters cast no votes but are asked about their preferences on policy issues as declared in the party manifestos (like in VAAs - voting advice applications, e.g. German Wahl-O-Mat: Abolish Euro -Yes/No; Leave NATO? - Yes/No, etc.). Then the policy profile of the electorate with the balance of public opinion on every issue is determined. The degree to which the parties match with it is expressed by the parties' representativeness indices of popularity (the average percentage of electors represented on all the issues) and universality (the percentage of cases when a majority is represented), and the parliament seats are distributed among the parties in proportion to their indices. The voters are no longer swayed by politicians' charisma and communication skills but are directed to subject matters behind personal images and ideological symbols. The focus on choice properties (political and economic implications of elections, or of single decisions like Bexit or involvement in a new war) is supposed to make vote less emotional and superficial but more rational and responsible, aiming finally at a "more democratic" representative democracy. The Third Vote has been approbated and improved during the 2016, 2017 and 2018 elections to the Student Parliament (StuPa) of the Karlsruhe Institute of Technology (KIT). In the 2016 experiment, the policy questions for the electoral ballots have been taken from the StuPa-OMat - the KIT adaptation of the Wahl-O-Mat to the StuPa elections. However, the questions proposed by the election committee can be favorable for one party and unfavorable for another, making elections manipulable. To avoid impartiality in the 2017 experiment, the competing parties have formulated the questions themselves on their own responsibility - as an element of the electoral campaign, then all the parties have answered all the questions, and finally an optimization model has selected 25 ones to maximally contrast between the party positions. A more sophisticated optimization model in the 2018 experiment has shown even better results. This paper has three subjects. The first one is the Third Vote's equalization effect: an unusually small ratio of the resulting parliament faction sizes, which is surmounted by the Third Vote Plus - a minor modification of the Third Vote. The second subject is combining the Third Vote and Third Vote Plus methods with traditional elections. The third subject is comparative evaluation of three optimization models to select questions. Due to these advances, the Third Vote can be considered an election-ready prototype of a voting method either for use alone or for integration into existing election systems.
    Keywords: policy representation,representative democracy,direct democracy,elections,coalitions,theory of voting
    JEL: D71
    Date: 2019
  2. By: Jaelle Scheuerman; Jason L. Harman; Nicholas Mattei; K. Brent Venable
    Abstract: In many real world situations, collective decisions are made using voting. Moreover, scenarios such as committee or board elections require voting rules that return multiple winners. In multi-winner approval voting (AV), an agent may vote for as many candidates as they wish. Winners are chosen by tallying up the votes and choosing the top-$k$ candidates receiving the most votes. An agent may manipulate the vote to achieve a better outcome by voting in a way that does not reflect their true preferences. In complex and uncertain situations, agents may use heuristics to strategize, instead of incurring the additional effort required to compute the manipulation which most favors them.In this paper, we examine voting behavior in multi-winner approval voting scenarios with complete information. We show that people generally manipulate their vote to obtain a better outcome, but often do not identify the optimal manipulation. Instead, voters tend to prioritize the candidates with the highest utilities. Using simulations, we demonstrate the effectiveness of these heuristics in situations where agents only have access to partial information.
    Date: 2019–05
  3. By: Pranab Bardhan (University of California, Berkeley); Sandip Mitra (Indian Statistical Institute); Dilip Mookherjee (Boston University); Anusha Nath (Federal Reserve Bank of Minneapolis)
    Abstract: We study how political support of household heads respond to receipt of different private and public good benefits delivered by local governments, and whether upper level governments respond strategically by manipulating program budgets to lower level government in West Bengal, India. We exploit redistricting of electoral boundaries by a non-partisan Election Commission, a plausibly exogenous shock to political competition. Consistent with a model of politically motivated allocation, private recurring benefit programs contracted (resp. expanded) in villages redistricted to more competitive constituencies when bottom and upper tier governments were controlled by opposing (resp. same) parties. The resulting changes in household benefit flows help predict household political support, which in turn rationalize the inter-village targeting patterns. The results illustrate the tendency for political parties to manipulate transfers across constituencies in the absence of formula-based grants to local governments, and more generally for political incentives to focus on delivery of short-term private benefits rather than one-time benefits or public goods consistent with theories of political clientelism.
    JEL: H40 H75 H76 O10 P48
    Date: 2018–12
  4. By: Helénsdotter, Ronja (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The main objective of this paper is to strengthen the knowledge about the relationship be-tween cooperation and political affiliation. For this purpose, I carry out an incentivized N-person prisoner’s dilemma experiment. I find that left-wing voters cooperate more than right-wing voters in 3-person prisoner’s dilemmas. However, this difference in cooperation tapers off with group size due to a heterogeneous response to larger decision groups. While leftists cooperate less as the group size increases, I find no significant group size effect for rightists. These findings can partly be explained by differences in beliefs about the cooperativeness of others, but a substantial part remains unexplained.
    Keywords: Cooperation; Social dilemma; Political ideology; Group size; Experiment
    JEL: C71 C90 D70 D84
    Date: 2019–05
  5. By: Shino Takayama (School of Economics, The University of Queensland); Yuki Tamura (Department of Economics, University of Rochester); Terence Yeo (School of Economics, The University of Queensland)
    Abstract: We propose a two-party model of policy promises and valence for office-seeking candidates under a two-stage electoral process with strategic voters. There are two equilibrium regimes depending on whether a good quality candidate of one party can win elections at both stages with certainty. We then provide the conditions for the existence of each equilibrium regime. We further analyze the case where only one party holds a primary, and conduct comparative statics analyses including how the change of public opinion affects equilibrium outcomes. Using a modified model including the decision of each candidate on entering the primary, we also show that if a low quality candidate places less importance on policy outcomes, and the good quality candidate in the opponent party has sufficiently low valence relative to the good quality candidate in her own party, she does not enter. This is because her entry will potentially damage the probability of her party winning the general election.
    Keywords: primary election, median voter, uncertainty, valence
    Date: 2019–05–24
  6. By: Gloria Gennaro; Giampaolo Lecce; Massimo Morelli
    Abstract: Do candidates use populism to maximize the impact of political campaigns? Is the supply of populism strategic? We apply automated text analysis to all available 2016 US Presidential campaign speeches and 2018 midterm campaign programs using a continuous index of populism. This novel dataset shows that the use of populist rhetoric is responsive to the level of expected demand for populism in the local audience. In particular, we provide evidence that current U.S. President Donald Trump uses more populist rhetoric in swing states and in locations where economic insecurity is prevalent. These findings were confirmed when the analysis was extended to recent legislative campaigns wherein candidates tended towards populism when campaigning in stiffly competitive districts where constituents are experiencing high levels of economic insecurity. We also show that pandering is more common for candidates who can credibly sustain anti-elite positions, such as those with shorter political careers. Finally, our results suggest that a populist strategy is rewarded by voters since higher levels of populism are associated with higher shares of the vote, precisely in competitive districts where voters are experiencing economic insecurity. Keywords: Populism, Electoral Campaign, American Politics, Text Analysis
    Date: 2019
  7. By: Patrick Lahr; Justus Winkelmann
    Abstract: We consider a multi-sender cheap talk model, where the receiver faces uncertainty over whether senders have aligned or state-independent preferences. This uncertainty generates a trade-off between giving sufficient weight to the most informed aligned senders and minimizing the influence of the unaligned. We show that preference uncertainty diminishes the benefits from specialization, i.e., senders receiving signals with more dispersed accuracy. When preference uncertainty becomes large, it negates them entirely, causing qualified majority voting to become the optimal form of communication. Our results demonstrate how political polarization endangers the ability of society to reap the benefits of specialization in knowledge.
    Keywords: Cheap Talk, Information Aggregation, Voting
    JEL: D83 D71
    Date: 2019–05
  8. By: Béatrice Boulu-Reshef (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Jonah Schulhofer-Wohl (University of Virginia, The Department of Politics)
    Abstract: Parochial altruism-individual sacrifice to benefit the in-group and harm an out-group-undermines inter-group cooperation and is implicated in a plethora of politically-significant behaviors. We report new experimental findings about the impact of variation in social distance within the in-group together with variation in social distance between the in-and out-groups on parochial altruism. Building from a minimal group paradigm setup , we find that differential social distance has a systematic effect on individual choice in a setting of potential inter-group conflict. In particular, parochial altruism is stimulated when individuals' distance to both their in-and out-group is high. A long-standing finding about behavior in contexts of inter-group conflict is that low social distance facilitates collective action. Our results suggest that the effects of high social distance may create a potential additional pathway to group-based individual action. Research on inter-group conflict and collective action can be advanced by investigating such effects.
    Date: 2019–05–21
  9. By: Neretina, Ekaterina (Tilburg University, School of Economics and Management)
    Abstract: This thesis consists of three chapters and it highlights the implications of limited competition in Financial Economics. The first chapter shows negative externalities from corporate lobbying on the market value of competitor companies that do lobby themselves. It also demonstrates that the competitors do not lobby when they lack voting power to support lawmakers in the elections, or when they fail to coordinate in trade associations. Two other chapters focus on implications of limited competition in intermediation industries. The second chapter shows that segmentation in the corporate bond market results in limited choice of underwriters to the issuers, providing underwriters with high bargaining power and oligopolistic rents. The third chapter shows that dominant plaintiff law firms that charge premium fees for their services do not improve the settlement outcomes for their clients, but merely use their ability to select large and profitable lawsuits.
    Date: 2019

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