nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒07‒08
twenty-six papers chosen by
Stan C. Weeber, McNeese State University

  1. Overstrained Citizens? The Number of Ballot Propositions and the Quality of the Decision Process in Direct Democracy By Stutzer, Alois; Baltensperger, Michael; Meier, Armando N.
  2. Can common ownership prevent the tragedy of the commons? An experimental investigation By Puzon, Klarizze; Willinger, Marc
  3. Runoff Elections in the Laboratory By Laurent Bouton; Jorge Gallego; Aniol Llorente-Saguer; Rebecca Morton
  4. Slacktivism By Ginzburg, Boris
  5. Measuring electoral competitiveness: A Probability ratio index By Satya R. Chakravarty; Manipushpak Mitra; Suresh Mutuswami; Rupayan Pal
  6. The Winner-Take-All Dilemma By Kazuya Kikuchi; Yukio Koriyama
  8. Robust Information Aggregation Through Voting By Midjord, Rune; Rodríguez Barraquer, Tomás; Valasek, Justin
  9. News We Like to Share : How News Sharing on Social Networks Influences Voting Outcomes By Pogorelskiy. Kirill; Shum, Matthew
  10. Ideology in times of crisis A principal component analysis of votes in the European Parliament, 2004-2019 By Anatole Cheysson; Nicolò Fraccaroli
  11. Analysis of models of the formation of socio-economic structures through the network of information exchange By Levin, Mark (Левин, Марк)
  12. Protectionism under Trump: The China Shock, Intolerance, and the “First White President” By Marcus Noland
  13. What are the best quorum rules? A Laboratory Investigation By Luís Aguiar-Conraria; Pedro C. Magalhães; Christoph A. Vanberg
  14. From finance to fascism: The real effect of Germany's 1931 banking crisis By Doerr, Sebastian; Gissler, Stefan; Peydró, José-Luis; Voth, Hans-Joachim
  15. Characterization of efficient networks in a generalized connections model with endogenous link strength By Olaizola Ortega, María Norma; Valenciano Llovera, Federico
  16. Democratisation in Tanzania: No Elections Without Exemptions By Therkildsen, Ole; Bak, Ane Karoline
  17. The Nucleolus, the Kernel, and the Bargaining Set: An Update By Iñarra García, María Elena; Serrano, Roberto; Shimomura, Ken-Ichi
  18. Flexible Majority Rules for Cryptocurrency Issuance By Hans Gersbach
  19. On some k-scoring rules for committee elections: agreement and Condorcet Principle By Mostapha Diss; Eric Kamwa; Abdelmonaim Tlidi
  20. Competition and the role of group identity By Francesca Cornaglia; Michalis Drouvelis; Paolo Masella
  21. Understanding health management and safety decisions using signal processing and machine learning By Aufegger, Lisa; Bicknell, Colin; Soane, Emma; Ashrafian, Hutan; Darzi, Ara
  22. Expertise and Independence on Governing Boards: Evidence from School Districts By Shi, Ying; Singleton, John D.
  23. Partial decentralisation and inter-governmental electoral competition in local public good provision By Marco Catola
  24. Partnerships with Asymmetric Information: The Benefit of Sharing Equally amongst Unequals By Nana Adrian, Marc Möller
  25. Broken Detailed Balance and Non-Equilibrium Dynamics in Noisy Social Learning Models By Tushar Vaidya; Thiparat Chotibut; Georgios Piliouras
  26. Cooperating in R&D and Advertising By Parisa Pourkarmi; Gamal Atallah

  1. By: Stutzer, Alois (University of Basel); Baltensperger, Michael (BRUEGEL); Meier, Armando N. (University of Basel)
    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 and cantonal propositions. Voters know the most about the content of federal propositions when they are exclusively presented and less with a high number of concurrent cantonal propositions on the ballot. Across other outcomes we find no consistent indications that – for the observed variation in the exposure to popular votes – a high number of propositions impedes the quality of decision making in Swiss federal direct democracy. In the medium to longer term, more federal propositions on the ballot rather relate to higher perceived political influence and satisfaction with democracy.
    Keywords: satisfaction with democracy, political knowledge, pole-party endorsements, political efficacy, direct democracy, ballot length, turnout, voter behavior
    JEL: D03 D72 D78 H00
    Date: 2019–06
  2. By: Puzon, Klarizze (Institute of Social and Economic Research, Osaka University); Willinger, Marc (University of Montpellier)
    Abstract: We study experimentally a two-stage common pool resource game. In the first stage, selected members of the group determine the level of protection for the resource. The protected fraction of the resource is equally shared among group members. In the second stage, the unprotected fraction of the resource is competed for. We consider three institutions varying in the extent by which subjects participate in the first stage: vote (all group members participate), dictator (only one member decides), and outsider (no one participates). We also vary the initial level of the resource: scarce or abundant. We establish the following results. First, we find that voting provides more frequent protection and leads to higher protection levels than other institutions. Second, collective rent-seeking is larger when the level of the resource is high, but this tendency is sharply reduced in the presence of democratic institutions. Third, collective rent-seeking is negatively affected by the level of protection, but significantly so only when the highest protection level is implemented. These experimental results are stronger in the case of a resource boom than in the case of a resource bust.
    Keywords: voting; commons; natural resources; property rights; experiments
    JEL: C90 D02 D72 P48
    Date: 2019–06–26
  3. By: Laurent Bouton; Jorge Gallego; Aniol Llorente-Saguer; Rebecca Morton
    Abstract: We study experimentally the properties of the majority runoff system and compare them to the ones of plurality rule, in the setup of a divided majority. Our focus is on Duverger's famous predictions that the plurality rule leads to a higher coordination of votes on a limited number of candidates than the majority runoff rule. Our experiments show that, in contradiction with Duverger's predictions, coordination forces are strong in majority runoff elections. We indeed observe similar levels of coordination under both rules, even when sincere voting is an equilibrium only under majority runoff. Our results suggest that the apparent desire to coordinate, and not vote sincerely, under the majority runoff rule is to some extent not rational. Finally, we find insignificant differences between runoff and plurality systems in terms of both electoral outcomes and welfare. This is so exactly because coordination forces are strong under both rules. But, this does not mean that the two rules are equally socially desirable. Majority runoff rule entails an additional cost: second rounds that take place frequently.
    JEL: C92 D7
    Date: 2019–06
  4. By: Ginzburg, Boris
    Abstract: Many countries have introduced e-government petitioning systems, in which a petition that gathers enough signatures triggers some political outcome. This paper models citizens who choose whether to sign a petition. Citizens are imperfectly informed about the petition's chance of bringing change. The number of citizens approaches infinity, while the cost of signing is positive but low, falling within certain bounds. In the limit, participation is increasing in the required quota of signatures. Social welfare is decreasing in the quota. Information aggregation may fail if individual signals are sufficiently uninformative.
    Keywords: online petitions, collective action, voting, political participation
    JEL: D72 H41
    Date: 2019–05–09
  5. By: Satya R. Chakravarty (Indian Statistical Institute, Kolkata); Manipushpak Mitra (Indian Statistical Institute, Kolkata); Suresh Mutuswami (University of Leicester); Rupayan Pal (Indira Gandhi Institute of Development Research)
    Abstract: We propose an index of electoral competition based on the vote shares of parties competing in the election. This index is the ratio between the probabilities that the two voters drawn at random with (without) replacement have voted for different parties under actual vote shares across the competing parties and under equal vote shares across them. The measure is characterized using two simple axioms, consistency in aggregation and competitive indifference. The former expresses the index as a weighted sum of competitiveness in two party elections. The latter is concerned with redistribution of vote shares across parties.
    Keywords: electoral competition, probability ratio index, electoral concentration, political heterogeneity
    JEL: D72 P16
    Date: 2019–05
  6. By: Kazuya Kikuchi; Yukio Koriyama
    Abstract: This paper considers collective decision-making when individuals are partitioned into groups (e.g., states or parties) endowed with voting weights. We study a game in which each group chooses an internal rule that specifies the allocation of its weight to the alternatives as a function of its members’ preferences. We show that under quite general conditions, the game is a Prisoner’s Dilemma: while the winner-take-all rule is a dominant strategy, the equilibrium is Pareto dominated. We also show asymptotic Pareto dominance of the proportional rule. Our numerical computation for the US Electoral College verifies the sensibility of the asymptotic results.
    Date: 2019–06
  7. By: Dmitriy Veselov (National Research University Higher School of Economics)
    Abstract: When property rights are poorly secured, crony relations i.e. the tight connection between the owners of major firms and the government are the primary informal mechanism securing the property. However, this institutional framework creates high entry barriers on markets. We propose a theory that explains why in a democracy the majority of voters may prefer this type of institutions. This paper develops a simple voting model with heterogeneous agents, which differ in their skills and wealth endowment. We show that if the policy space is two-dimensional, the wealthy elite and low-skilled workers may form a majority coalition, supporting the regime with high-entry barriers. In this case, the wealthy elite agrees on a higher level of redistribution, preferred by the least skilled agents. We compare the possibility of this outcome for different voting rules, and prove that the electoral support of crony capitalism is more likely for countries with a low level of human capital and high income and skill inequality. The model is also able to explain different effects of democratization process on the institutional structure of the society.
    Keywords: barriers to entry, electoral rules, income inequality, skills inequality, crony capitalism
    JEL: D30 D71 D72 O10 P16
    Date: 2019
  8. By: Midjord, Rune; Rodríguez Barraquer, Tomás; Valasek, Justin (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: Numerous theoretical studies have shown that information aggregation through voting is fragile. We consider a model of information aggregation with vote-contingent payoffs and generically characterize voting behavior in large committees. We use this characterization to identify the set of vote-contingent payoffs that lead to a unique outcome that robustly aggregates information. Generally, it is not sufficient to simply reward agents for matching their vote to the true state of the world. Instead, robust and unique information aggregation can be achieved with vote-contingent payoffs whose size varies depending on which option the committee chooses, and whether the committee decision is correct
    Keywords: Information aggregation; Voting; Vote-contingent payoffs.
    JEL: D71 D72
    Date: 2019–06–10
  9. By: Pogorelskiy. Kirill (University of Warwick); Shum, Matthew (Caltech)
    Abstract: More voters than ever get political news from their friends on social media platforms. Is this bad for democracy? Using context-neutral laboratory experiments, we find that biased (mis)information shared on social networks affects the quality of collective decisions relatively more than does segregation by political preferences on social media. Two features of subject behavior underlie this finding: 1) they share news signals selectively, revealing signals favorable to their candidates more often than unfavorable signals; 2) they naıvely take signals at face value and account for neither the selection in the shared signals nor the differential informativeness of news signals across different sources.
    Keywords: news sharing ; social networks ; voting ; media bias ; fake news ; polarization ; filter bubble ; lab experiments
    JEL: C72 C91 C92 D72 D83 D85
    Date: 2019
  10. By: Anatole Cheysson (European University Institute); Nicolò Fraccaroli (University of Rome "Tor Vergata")
    Abstract: This paper aims to identify the main dividing lines that determine the voting behaviour of Members of the European Parliament (MEPs) and their evolution throughout the crisis. Introducing a new database that collects and classifies the full population of plenary votes from 2004 to 2019, this work uses principal component analysis to identify the latent patterns on which MEPs ally and divide. Focussing on economic votes, it finds that, while pre-crisis votes were mainly determined by differences across the left-vs-right spectrum and, only secondly, by differences in support for European integration, the crisis inverted this trend, making support for Europe the most relevant dividing line in the European Parliament. In support of this evidence, the paper introduces a new vote-scraping technique to investigate the ideological nature of these dimensions. Vote scraping reveals that the left-right cleavage is mainly ideological but with limited impact on budgetary resources, whereas the European dimension mostly reflects a conflict over the budget, with higher legislative impact and seemingly low ideological content.
    Keywords: Ideology,European Parliament,Crisis
    JEL: P16 C38
    Date: 2019–06–28
  11. By: Levin, Mark (Левин, Марк) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Since the 2000s network communication has reached a huge audience, easily winning competition from such “traditional” media as television, radio and newspapers. Network communication tools become a platform for uniting people: first around addictions and hobbies, and eventually other interests, including political ones. The Arab Spring showed that the possibility of instant messaging to a large audience could become a serious political factor, and Facebook groups created to extinguish fires in Russia in the 2010s stimulate volunteering. Numerous meetings in the spring of 2017, the rapid processes of uniting people in Moscow from the beginning of May 2017, all these are signs of the beginning of the spontaneous formation of socio-economic structures in Russia. The object of the study is the individual behavior of agents within the network structure.
    Keywords: socio-economic structures, institutions, socio-economic policy, networks, networking, economic analysis
    Date: 2019–06
  12. By: Marcus Noland (Peterson Institute for International Economics)
    Abstract: In 2016, the United States elected an avowedly protectionist president. This paper uses US county-level electoral data to examine this outcome. The hypothesis that support for protectionism was purely a response to globalization is rejected. Exposure to trade competition encouraged a shift to the Republican candidate, but this effect is mediated by race, diversity, education, and age. If the turn toward protectionism is due to economic dislocation, then public policy interventions could mitigate the impact and support the reestablishment of a political consensus for open trade. If, however, the drivers are identity or cultural values, then the scope for constructive policy intervention is unclear.
    Keywords: China shock, Donald Trump, globalization, protectionism, sociotropic voting
    JEL: D72 F13 Z13
    Date: 2019–06
  13. By: Luís Aguiar-Conraria (Department of Economics / NIPE, University of Minho); Pedro C. Magalhães (Institute of Social Sciences, University of Lisbon); Christoph A. Vanberg (Alfred-Weber-Institut, University of Heidelberg)
    Abstract: Many political systems with direct democracy mechanisms have adopted rules preventing decisions from being made by simple majority rule. The device most commonly added to majority rule in national is a quorum requirement. The two most common are the participation and the approval quora. Such rules are a response to three major concerns: the legitimacy of the referendum outcome, its representativeness (the concern with the outcome representing the will of the whole electorate), and protection of minorities regarding issues that should demand a broad consensus. Guided by a pivotal voter model, we conduct a laboratory experiment to investigate the performance of different quora in reaching such goals. We introduce two main innovations in relation to previous work on the topic. First, part of the electorate goes to the polls out of a sense of civic duty. Second, we test the performance of a different quorum, the rejection quorum, recently proposed in the literature. We conclude that, depending on the preferred criterion, either the approval or the rejection quorum is to be preferred.
    Keywords: Election Design; Participation Quorum; Approval Quorum; Laboratory Experiment
    JEL: C91 D72 D02
    Date: 2019
  14. By: Doerr, Sebastian; Gissler, Stefan; Peydró, José-Luis; Voth, Hans-Joachim
    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.
    JEL: E44 G01 G21 N20 P16
    Date: 2019
  15. By: Olaizola Ortega, María Norma; Valenciano Llovera, Federico
    Abstract: We consider a natural generalization of Jackson and Wolinsky s (1996) connections model where the quality or strength of a link depends on the amount invested in it and is determined by a non-decreasing function of that amount. The information that the nodes receive through the network is the revenue from investments in links. We prove that in this most general version of the connections model, the only possibly nonempty efficient networks, in the sense of maximizing the aggregate proffit, are still the all-encompassing star and the complete network, with the sole and rare exception of a highly particular case where there is a draw between the all-encompassing star, the complete network and a whole range of a particular type of nested split graph structures intermediate between them.
    Keywords: network, formation, connecions, model, nested, split, graph, efficiency
    JEL: A14 C7 D85
    Date: 2019–05–09
  16. By: Therkildsen, Ole; Bak, Ane Karoline
    Abstract: A demand-supply framework has been developed and applied to Tanzania to explore the link between democratisation, economic liberalisation and the use of tax exemptions to fund political parties’ electoral campaigns. In Tanzania, the demand for this type of money has increased since one-party rule was abolished in 1992. This led to reduced state subsidies to parties, while growing inter- and intra-party competition for political power through the ballot box increased the campaign costs of the last three elections. Political liberalisation also raised the cost of keeping together increasingly fragmented political elites. The increased supply of political funding for the ruling party is driven by mutual interest between the funding demands of political elites, the interests of companies and emerging capitalists for tax exemptions and other rents to succeed in business. This demand-supply framework helps to explain an increased use of tax exemptions for private companies and individuals around election years in Tanzania. The framework is also relevant to the analysis of political financing through tax exemptions elsewhere on the African continent.
    Keywords: Economic Development, Finance, Governance,
    Date: 2019
  17. By: Iñarra García, María Elena; Serrano, Roberto; Shimomura, Ken-Ichi
    Abstract: One of David Schmeidler’s many important contributions in his distinguished career was the introduction of the nucleolus, one of the central single-valued solution concepts in cooperative game theory. This paper is an updated survey on the nucleolus and its two related supersolutions, i.e., the kernel and the bargaining set. As a first approach to these concepts, we refer the reader to the great survey by Maschler (1992); see also the relevant chapters in Peleg and Sudholter (2003). Building on the notes of four lectures on the nucleolus and the kernel delivered by one of the authors at the Hebrew University of Jerusalem in 1999, we have updated Maschler’s survey by adding more recent contributions to the literature. Following a similar structure, we have also added a new section that covers the bargaining set. The nucleolus has a number of desirable properties, including nonemptiness, uniqueness, core selection, and consistency. The first way to understand it is based on an egalitarian principle among coalitions. However, by going over the axioms that characterize it, what comes across as important is its connection with coalitional stability, as formalized in the notion of the core. Indeed, if one likes a single-valued version of core stability that always yields a prediction, one should consider the nucleolus as a recommendation. The kernel, which contains the nucleolus, is based on the idea of “bilateral equilibrium” for every pair of players. And the bargaining set, which contains the kernel, checks for the credibility of objections coming from coalitions. In this paper, section 2 presents preliminaries, section 3 is devoted to the nucleolus, section 4 to the kernel, and section 5 to the bargaining set.
    Keywords: nucleolus, kernel, bargaining, set
    JEL: C71 C72
    Date: 2019–06
  18. By: Hans Gersbach (ETH Zurich, Switzerland)
    Abstract: We suggest that flexible majority rules for currency issuance decisions foster the stability of a cryptocurrency. With flexible majority rules, the voteshare needed to approve a particular currency issuance growth is increasing with this growth rate. By choosing suitable parameters for these flexible majority rules, we show that optimal growth rates can be achieved in simple settings. Moreover, with flexible majority rules, changes in the composition of growth-friendly and growth-adverse agents only have a comparatively moderate impact on growth rates, and extreme growth rates are avoided. Finally, we show that optimal money growth rates are realized if agents entering financial contracts anticipate ensuing inflation rates determined by these flexible majority rules.
    Keywords: Digital currency, central bank, voting, majority rule, flexible majority rules
    JEL: D72 E31 E42 E52 E58
    Date: 2019–06
  19. By: Mostapha Diss (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Eric Kamwa (LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles); Abdelmonaim Tlidi (ENSA Marrakech - École nationale des sciences appliquées de Marrakech)
    Abstract: Given a collection of individual preferences on a set of candidates and a desired number of winners, a multi-winner voting rule outputs groups of winners, which we call committees. In this paper, we consider five multi-winner voting rules widely studied in the literature of social choice theory: the k-Plurality rule, the k-Borda rule, the k-Negative Plurality rule, the Bloc rule, and the Chamberlin-Courant rule. The objective of this paper is to provide a comparison of these multi-winner voting rules according to many principles by taking into account a probabilistic approach using the well-known Impartial Anonymous Culture (IAC) assumption. We first evaluate the probability that each pair of the considered voting rules selects the same unique committee in order to identify which multi-winner rules are the most likely to agree for a given number of candidates and a fixed target size of the committee. In this matter, our results show that the Chamberlin-Courant rule and the k-Plurality rule on one side, and the k-Borda rule and the Bloc rule on the other side, are the pairs of rules that most agree in comparison to other pairs. Furthermore, we evaluate the probability of every multi-winner voting rule selecting the Condorcet committee à la Gehrlein when it exists. The Condorcet committee à la Gehrlein is a fixed-size committee such that every member defeats every non-member in pairwise comparisons. In addition, we compare the considered multi-winner voting rules according to their ability (susceptibility) to select a committee containing the Condorcet winner (loser) when one exists. Here, our results tell us that in general, the k-Borda rule has the highest performance amongst all the considered voting rules. Finally, we highlight that this paper is one of the very rare contributions in the literature giving exact results under the Impartial Anonymous Culture (IAC) condition for the case of four candidates.
    Keywords: Scoring rules,Chamberlin-Courant,Borda,Condorcet,Voting,Committee
    Date: 2019–06–04
  20. By: Francesca Cornaglia; Michalis Drouvelis; Paolo Masella
    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
  21. By: Aufegger, Lisa; Bicknell, Colin; Soane, Emma; Ashrafian, Hutan; Darzi, Ara
    Abstract: Background: Small group research in healthcare is important because it deals with interaction and decision-making processes that can help to identify and improve safer patient treatment and care. However, the number of studies is limited due to time- and resource-intensive data processing. The aim of this study was to examine the feasibility of using signal processing and machine learning techniques to understand teamwork and behaviour related to healthcare management and patient safety, and to contribute to literature and research of teamwork in healthcare. Methods: Clinical and non-clinical healthcare professionals organised into 28 teams took part in a video- and audio-recorded role-play exercise that represented a fictional healthcare system, and included the opportunity to discuss and improve healthcare management and patient safety. Group interactions were analysed using the recurrence quantification analysis (RQA; Knight et al., 2016), a signal processing method that examines stability, determinism, and complexity of group interactions. Data were benchmarked against self-reported quality of team participation and social support. Transcripts of group conversations were explored using the topic modelling approach (Blei et al., 2003), a machine learning method that helps to identify emerging themes within large corpora of qualitative data. Results: Groups exhibited stable group interactions that were positively correlated with perceived social support, and negatively correlated with predictive behaviour. Data processing of the qualitative data revealed conversations focused on: (1) the management of patient incidents; (2) the responsibilities among team members; (3) the importance of a good internal team environment; and (4) the hospital culture. Conclusions: This study has shed new light on small group research using signal processing and machine learning methods. Future studies are encouraged to use these methods in the healthcare context, and to conduct further research on how the nature of group interaction and communication processes contribute to the quality of team and task decision-making.
    JEL: J50
    Date: 2019–06–13
  22. By: Shi, Ying (Stanford University); Singleton, John D. (University of Rochester)
    Abstract: In this paper, we study the roles of expertise and independence on governing boards in the context of education. In particular, we examine the causal influence of professional educators elected to local school boards on education production. Educators may bring valuable human capital to school district leadership, thereby improving student learning. Alternatively, the independence of educators may be distorted by interest groups. The key empirical challenge is that school board composition is endogenously determined through the electoral process. To overcome this, we develop and implement a novel research design that exploits California's randomized assignment of the order that candidates appear on election ballots. The insight of our empirical strategy is that ballot order effects generate quasi-random variation in the elected school board's composition. This approach is made possible by a unique dataset that combines election information about California school board candidates with district-level data on education inputs and outcomes. The results reveal that educators on the school board causally increase teacher salaries and reduce district enrollment in charter schools relative to other board members. We do not find accompanying effects on student test scores. We interpret these findings as consistent with educators on school boards shifting bargaining in favor of teachers' unions.
    Keywords: school boards, education, ballot order effects, education production, expertise, independence
    JEL: I20 H75 J24
    Date: 2019–06
  23. By: Marco Catola
    Abstract: Over the last few years, the literature on partial decentralisation has largely grown, pointing out that one of its effects is a reduction in accountability because voters are imperfectly informed about each government contribution. However, the possibility for politicians to directly manipulate this asymmetry in information has not been addressed yet. This paper provides a simple model in which two levels of government are involved in the provision of a local public good with the local government that can decide to spend its budget either on the provision of the public good or in spending that influences the information of the voters in its favour. A central result is that the conflict of interest that arises among the levels of government reduces the spending in the public good at both levels, while it generates a wasteful spending to pander to voters.
    Keywords: partial decenstralisation; party alignment; accountability; intergovernmental transfers
    JEL: D72 H72 H77
    Date: 2019–06–01
  24. By: Nana Adrian, Marc Möller
    Abstract: This paper provides a rationale for equal sharing in heterogeneous partnerships. We introduce project choice and information sharing to a standard team production setting. A team with two agents can choose whether they want to work on a status quo project or on an alternative project. If the (expected) quality of the projects is given and common knowledge, it is optimal for team surplus to give a higher share to the more productive agent in order to optimally motivate. If agents have private information, we have to give the higher share of profits to the less productive agent if we want agents to share this information, which would allow for better adaptation. Equal revenuesharing strikes a balance between the two objectives of adaptation and motivation and can be efficient even in the presence of considerable productivity differences across partners
    Keywords: Team adaptation, effort motivation, information disclosure
    JEL: D2 D8 L2
    Date: 2019–05
  25. By: Tushar Vaidya; Thiparat Chotibut; Georgios Piliouras
    Abstract: We propose new Degroot-type social learning models with feedback in a continuous time, to investigate the effect of a noisy information source on consensus formation in a social network. Unlike the standard Degroot framework, noisy information models destroy consensus formation. On the other hand, the noisy opinion dynamics converge to the equilibrium distribution that encapsulates correlations among agents' opinions. Interestingly, such an equilibrium distribution is also a non-equilibrium steady state (NESS) with a non-zero probabilistic current loop. Thus, noisy information source leads to a NESS at long times that encodes persistent correlated opinion dynamics of learning agents.
    Date: 2019–06
  26. By: Parisa Pourkarmi (Department of Economics, Carleton University, Ottawa, ON); Gamal Atallah (Department of Economics, University of Ottawa, Ottawa, ON)
    Abstract: This paper studies the impact of cooperative R&D and advertising on innovation and welfare in a duopolistic industry. The model incorporates two symmetric firms producing differentiated products. Firms invest in R&D and advertising in the presence of R&D spillovers and advertising spillovers. Advertising spillovers may be positive or negative. Four cooperative structures are studied: no cooperation, R&D cooperation, advertising cooperation, R&D and advertising cooperation. R&D spillovers and advertising spillovers always increase innovation and welfare if products are highly differentiated and/or spillovers are sufficiently high. The ranking of cooperation settings in terms of R&D, profits and welfare depends on product differentiation, R&D spillovers and advertising externalities. Firms always prefer cooperation on both dimensions, which is socially beneficial only when advertising and R&D spillovers are sufficiently high.
    Keywords: R&D, Advertising, Cooperation, Spillovers, Product differentiation, Innovation, Marketing.
    JEL: D43 L13 O32
    Date: 2019

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