nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒08‒12
eighteen papers chosen by
Stan C. Weeber
McNeese State University

  1. Competitive Elections, Incumbency Advantage,and Accountability By Jan Klingelhöfer
  2. Robust Information Aggregation Through Voting By Rune Midjord; Tomás Rodríguez Barraquer; Justin Mattias Valasek
  3. Separation of Powers with Ideological Parties By Álvaro Forteza; Juan S. Pereyra
  4. The method of Enestr\"om and Phragm\'en for parliamentary elections by means of approval voting By Rosa Camps; Xavier Mora; Laia Saumell
  5. Never Forget the First Time: The Persistent Effects of Corruption and the Rise of Populism in Italy By Arnstein Aassve; Gianmarco Daniele; Marco Le Moglie
  6. Identity, Beliefs, and Political Conflict By Nicola Gennaioli; Guido Tabellini
  7. Can gender quotas prevent risky choice shifts? The effect of gender composition on group decisions under risk By Lima de Miranda, Katharina; Detlefsen, Lena; Schmidt, Ulrich
  8. Enumerating Rights: More is Not Always Better By Ball, Sheryl; Dave, Chetan; Dodds, Stefan
  9. The Geography of Dictatorship and Support for Democracy By Maria Angelica Bautista; Felipe Gonzalez; Luis R. Martınez; Pablo Munoz; Mounu Prem
  10. Is mandatory country-by-country reporting effective? Early evidence on the economic responses by multinational firms By De Simone, Lisa; Olbert, Marcel; Spengel, Christoph
  11. Lobbying, Regulatory Enforcement and Corporate Governance: Theory and Evidence from Regulatory Enforcement Actions against US Banks By Panagiota Papadimitri; Ansgar Wohlschlegel
  12. Condorcet efficiency of general weighted scoring rules under IAC: indifference and abstention By Mostapha Diss; Eric Kamwa; Issofa Moyouwou; Hatem Smaoui
  13. Investing in the behavioural dimensions of transnational cooperation: a personal assessment of the Managing Global Governance (MGG) Programme By Fues, Thomas
  14. Samuelson Meets Federalism: Local Production of a National Public Good By Jan K. Brueckner; Steven G. Craig; Kangoh Lee
  15. Composite indicators for computer-aided collective bargaining By Tanguiane, Andranick S.
  16. Personal or partisan incumbency advantage? Evidence from an electoral reform in Italy By Marco Alberto De Benedetto
  17. #FavelaLivesMatter: youth from urban peripheries, political engagement and alternatives to the war on drugs By Movimentos/CESeC,
  18. Innovation Union: Costs and Benefits of Innovation Policy Coordination By Teodora Borota; Fabrice Defever; Giammario Impullitti

  1. By: Jan Klingelhöfer (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)
    Abstract: I present a model of repeated electoral competition between two parties. Parts of the electorate vote retrospectively and consider the amount of rent-seeking by the incumbent party, while the prospective voters follow probabilistic party preferences when casting their votes. I show that it is possible to distinguish the effects of incumbency advantage and electoral punishment on the minimum level of rent-seeking that is consistent with equilibrium. As long as there is electoral punishment for excessive rent-seeking, a larger incumbency advantage increases accountability by decreasing the minimum amount of rent-seeking consistent with equilibrium. The reason is that the larger the incumbency advantage is, the more important is the result of the next election for all future election outcomes. Consequently, the incumbent party is willing to give up more rent-seeking opportunities to improve its electoral prospects.
    Keywords: Incumbency Advantage, Accountability, Competitive Elections, Probabilistic voting, Rent-seeking
    JEL: D72
    Date: 2019–07
  2. By: Rune Midjord; Tomás Rodríguez Barraquer; Justin Mattias Valasek
    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
  3. By: Álvaro Forteza (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Juan S. Pereyra (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: Separation of powers with checks and balances (SP) is usually regarded as a key institution complementing elections in the control of elected officials. However, some analysts and many politicians also warn that excessive checks on the executive in the presence of polarization may lead to political inaction. We present a political agency model with ideological parties where citizens and politicians care about rents (the valence issue) and policy (a positional issue). We show that SP unambiguously raises voters welfare in highly-polarized non-competitive political environments, because it strengthens both discipline and selection without causing political gridlock (voters can grant the executive the legislative majorities needed to enact reforms). SP also raises voters’ welfare if elections are very effective at disciplining first period incumbents. However, SP may reduce it if most rents go undetected and reformis not a first order issue.
    Keywords: Political agency, separation of powers, checks and balances
    JEL: D72 E69 P16
    Date: 2019–08
  4. By: Rosa Camps; Xavier Mora; Laia Saumell
    Abstract: We study a method for proportional representation that was proposed at the turn from the nineteenth to the twentieth century by Gustav Enestr\"om and Edvard Phragm\'en. Like Phragm\'en's better-known iterative minimax method, it is assumed that the voters express themselves by means of approval voting. In contrast to the iterative minimax method, however, here one starts by fixing a quota, i.e. the number of votes that give the right to a seat. As a matter of fact, the method of Enestr\"om and Phragm\'en can be seen as an extension of the method of largest remainders from closed lists to open lists, or also as an adaptation of the single transferable vote to approval rather than preferential voting. The properties of this method are studied and compared with those of other methods of the same kind.
    Date: 2019–07
  5. By: Arnstein Aassve; Gianmarco Daniele; Marco Le Moglie
    Abstract: The paper studies the long term impact of corruption on trust towards institutions. Previous studies have demonstrated that exposure to corruption may lower institutional trust in the short run. Whether those short term effects translate into a persistent effect is not known. We study the onset of a corruption shock that took place in Italy between 1992 and 1994. Using recent data from the Trustlab project, coordinated by the OECD, we find that young first time voters exposed to the corruption scandal still today, 25 years later, exert significantly lower institutional trust. A follow up survey reveals that their exposure to corruption also affected their current voting behavior and political preferences. In particular, those young first time voters exposed to the corruption were more likely to vote for populist parties at the 2018 national elections and to have less favourable attitudes towards immigrants and refugees.
    Keywords: Corruption, Institutional trust, Populism, First-time voter, Italy
    JEL: P16 D72 D73
    Date: 2018
  6. By: Nicola Gennaioli; Guido Tabellini
    Abstract: We present a theory of identity politics that builds on two ideas. First, voters identify with the social group whose interests are closest to theirs and that features the strongest policy conflict with outgroups. Second, identification causes voters to slant their beliefs of self and others toward group stereotypes. The theory yields two main implications: i) voters’ beliefs are polarized along the distinctive features of salient groups; ii) economic shocks that render new groups salient bring about large and non standard changes in beliefs and policies across many issues. In particular, exposure to globalization or cultural changes may induce voters to switch identities, dampening their demand for redistribution and exacerbating conflicts in other social dimensions. We show that survey evidence is broadly consistent with these implications.
    JEL: H00 Z10
    Date: 2019
  7. By: Lima de Miranda, Katharina; Detlefsen, Lena; Schmidt, Ulrich
    Abstract: This study contributes to the public debate on gender quotas and the literature on gender and risk taking by analysing how the level of risk taking within a group is influenced by its gender composition. In particular we look at the shift of risk taking between group and individual decisions and analyse to which extent this shift depends on the gender composition. We derive a gender-specific polarization hypothesis which states that compared to individual preferences, male dominated groups will shift towards higher risk taking than female dominated ones. Our experimental tests reveal a systematic impact of gender composition on group shifts which supports our hypothesis and points into the direction that a higher share of females may prevent excessive risk taking.
    Keywords: risky shift,risk taking,group decisions,gender,monetary incentives
    Date: 2019
  8. By: Ball, Sheryl (Virginia Tech University); Dave, Chetan (University of Alberta, Department of Economics); Dodds, Stefan (University of Winnipeg)
    Abstract: Policy debates increasingly employ the language of ‘rights’: how they are assigned and what entitlements individuals in a society are due. In designing present day constitutions for transitional democracies, framers face the issue of whether to formally codify rights or not. We design and implement a novel experiment to test whether social cooperation depends on the assignment of individual rights, by framing the right of subjects to take a particular action either positively or negatively. We find that when rights are framed positively, there exists an ‘entitlement effect’ that reduces social cooperation levels and crowds-out the tendency of individuals to act pro-socially.
    Keywords: Constitutional Design; Coase Theorem; Framing; Preferences; Rights; Battle of the Sexes
    JEL: D71 P48
    Date: 2019–07–30
  9. By: Maria Angelica Bautista (University of Chicago); Felipe Gonzalez (Pontificia Universidad Catolica de Chile); Luis R. Martınez (University of Chicago); Pablo Munoz (University of California - Berkeley); Mounu Prem (Universidad del Rosario)
    Abstract: We show that proximity to military bases during the Pinochet dictatorship in Chile (1973-1990) exposed civilians to more state repression and led to (i) stronger electoral opposition to Pinochet and (ii) a long-lasting strengthening of democratic values. Our empirical strategy exploits the location of military bases during the many decades of democratic rule before the military coup, which we show is unrelated to pre-coup electoral outcomes. We find that residents of counties housing these bases both registered and voted “No†to Pinochet’s continuation in power at higher rates in the crucial 1988 plebiscite that bolstered the democratic transition. These counties also experienced more civilian deaths and forced disappearances during the dictatorship, indicating that increased exposure to repression affected voters' behavior. After democratization, residents of these counties who were exposed to the military coup report greater support for democracy in surveys, but there are no persistent effects on electoral outcomes.
    Keywords: Chile,dictatorship, repression, democratization, human rights
    JEL: D72 N46
    Date: 2019–08
  10. By: De Simone, Lisa; Olbert, Marcel; Spengel, Christoph
    Abstract: Over the past decade, policymakers, non-profit organizations, and the media have demanded greater transparency by multinational firms regarding their global operations and tax payments. These demands are motivated by the assumption that multinational firms engage in aggressive planning strategies to minimize their global tax bill, for instance through operations in tax havens and profit shifting to low-tax jurisdictions. Accordingly, tax transparency is high on the political agenda. The political action resulted in the OECD proposal to require multinational firms to disclose their global operations and tax payments on a country-by-country basis to tax authorities. Since 2016, such country-by-country reporting (CbCR) is mandatory for firms operating in the European Union. While the EU policymakers adopted CbCR primarily in response to perceived harmful tax practices of multinational corporations, the effects of such increased disclosure on corporate decisions is an open but economically and politically relevant question as firms might not only alter their tax strategies but also change their real global footprint in terms of investment in assets or employees.
    Date: 2019
  11. By: Panagiota Papadimitri (Portsmouth Business School); Ansgar Wohlschlegel (Portsmouth Business School)
    Abstract: We explore protection against enforcement as a motive for lobbying and present evidence for bank holding companies with good corporate governance but a poorly performing portfolio of subsidiaries to be more likely to lobby. A simple theoretical model of lobbying as a means for banks to communicate otherwise private information on their quality rationalizes regulators' responsiveness to lobbying, even though lobbying banks inadvertently expose themselves as violators of the regulation. Using a composite governance indicator as a proxy for a bank's quality, we take the hypotheses from the model to a panel dataset of 173 large bank holding companies and their subsidiaries. In line with the theoretical hypotheses, we find that subsidiaries of lobbying, high-governance parent companies are less likely to receive a regulatory enforcement action, but the reverse is true for poor-governance parent companies. Furthermore, banks whose parent companies have lobbied perform better (worse) after five years if the bank holding has a high (low) governance indicator. On a policy note, our paper highlights a potential benefit of the lobbying system and makes the case for carefully designed incentives and commitment powers of bank regulators in order to make the most of this benefit.
    Keywords: Lobbying, enforcement, bank regulation, corporate governance
    JEL: D72 G28 G34 K42
    Date: 2019–07–31
  12. 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); Issofa Moyouwou (MASS - Université de Yaoundé I [Yaoundé]); Hatem Smaoui (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)
    Abstract: In an election, individuals may sometimes abstain or report preferences that include ties among candidates. How abstention or ties within individual preferences impact the performances of voting rules is a natural question addressed in the literature. We reconsider this question with respect to one of the main characteristics of a voting rule: its Condorcet efficiency; that is the conditional probability that the rule selects a Condorcet winner assuming that one exists. We explore the impact of both ties and abstention on the Condorcet efficiency of the whole class of weighted scoring rules in three-candidate elections under the Impartial Anonymous Culture assumption. It appears in general that the possibility of indifference or abstention increases or decreases the Condorcet efficiency of weighted scoring rules depending of the rule in consideration or the probability distribution on the set of observable voting situations.
    Date: 2019–07–28
  13. By: Fues, Thomas
    Abstract: This text sums up the author’s personal experiences and insights as former staff member responsible for the Managing Global Governance (MGG) Programme, funded by the Federal Ministry for Economic Cooperation and Development / Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (BMZ) and implemented by the German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE). The overarching goal of the MGG Programme is to enhance transnational knowledge cooperation for global sustainable development, based on a behavioural theory of change. As the extensive collaboration under the MGG umbrella demonstrates, partner countries share with the German side a preference for the global common good, despite the predominance of domestic concerns for poverty reduction and growth on their side. Over the years, MGG has generated a broad canvas of joint activities in knowledge creation, policy dialogue and training by engaging with a diverse set of actors from governments, think tanks, academia and, to a lesser extent, civil society and business. Two independent evaluations commissioned by DIE, as well as numerous statements by partners and alumni, provide ample evidence that the MGG Programme has fulfilled the defined goals. With an increased number of activities and integration of new sectors, it seems advisable to consolidate MGG by introducing formal arrangements for membership and governance through a memorandum of understanding to be signed by interested institutions.
    Keywords: Agenda 2030,Wissenskooperation
    Date: 2018
  14. By: Jan K. Brueckner; Steven G. Craig; Kangoh Lee
    Abstract: This paper studies an overlooked phenomenon in the provision of public goods: local produc-tion of a national public good, such as the manufacture of fighter planes (which contribute to national defense) in many different jurisdictions across the country. Because local production of the national good raises local incomes, each jurisdiction seeks to raise its share of the good’s production. A subset of jurisdictions then forms a minimum winning coalition, which offers equal production shares to its members and smaller (possibly zero shares) to non-members, while choosing the provision level of the national good. The outcome is inefficient, with produc-tion inefficiently concentrated and the public good also overprovided (because income benefits reducing the good’s perceived marginal cost). Empirical results confirm the prediction that the location of production is important in determining Congressional support for federal program spending.
    JEL: H10 H11
    Date: 2019
  15. By: Tanguiane, Andranick S.
    Abstract: A negotiation model for flexicurity-relevant collective bargaining is developed. It is based on the Dutch computer archive of about 5,400 collective agreements called in the Dutch literature collective labor agreement (CLA). First, the opposite interests of negotiating sides are specified - a list of security items from the trade union side and a list of flexibility items from the employers' side. These items are quantified using some indices; then two composite indicators - for security and flexibility - are defined. A perfect parity agreement should have 0-balance, by analogy with credit-debit 0-balance in finances. Since the flexibility and security indices are expressed in different scales ("in different currencies"), the substitution rate ("exchange rate") is determined by regression analysis of flexicurity-relevant agreements from the past practices, finding how (on the average) flexibility is compensated by security.
    Date: 2019
  16. By: Marco Alberto De Benedetto (University of Messina; Birkbeck, University of London)
    Abstract: We analyze the incumbency advantage using a large data set on Italian municipal elections held from 1993 to 2011. We first apply a non-parametric Sharp Regression Discontinuity Design comparing parties that barely win an election to those that barely lose, exploiting the fact that partisan incumbency status changes discontinuously at the threshold of margin of victory of zero. In order to disentangle the personal incumbency advantage from the partisan effect, we rely on a reform that introduced mayoral term limit, and exploit the exogenous change on the incumbency status of mayors keeping the partisan incumbency status constant. We find that the incumbency advantage is essentially driven by the personal effect. The results are robust to different specifications and estimation strategies with excellent balance in observable characteristics. Also, the effect of interest seems to be larger in magnitude for municipalities located in the South of Italy compared to northern municipalities.
    Keywords: Incumbency Status, Political Participation, Sharp RDD, Term Limit
    JEL: C7 D8 O3 K4
    Date: 2019–05
  17. By: Movimentos/CESeC,
    Abstract: This article aims to share the experience of Movimentos (Movements), a collective of young activists from Brazilian favelas and peripheral neighborhoods whose goal is to discuss alternatives to the current drug policy from the peripheral youth’s standpoint. The population’s role in the formulation, application, and enforcement of public safety and drug policies is rudimentary, and the opportunities available to youngsters who live in Brazilian favelas and the outskirts are even smaller. The purpose of Movimentos is to have youngsters from the outskirts take center stage in the debate over public safety and drug policies, because they are the war on drugs greatest victims. The collective follows a hybrid organizational model that combines collective, horizontal governance with the institutional support of an academic research center. Not only does it seek to broaden youngsters’ agency around public safety and drug policies, but it also devises and experiments with methodologies to enable their active participation.
    Keywords: Favelas; youth; public safety; Latin America
    JEL: N0 L81
    Date: 2019–06
  18. By: Teodora Borota; Fabrice Defever; Giammario Impullitti
    Abstract: In this paper, we document large heterogeneity in innovation policy and performance between old and new EU member states, and present firm-level evidence on the close link between foreign direct investment (FDI) spillovers and eastern European _firms' innovation. Guided by these facts and motivated by the pressing debate on further EU integration, we build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The two regions, the West (the old members) and the East (the new post-2004 members), feature firms competing in innovation for market leadership, are integrated via free trade and costly technology transfer via FDI and have different innovation performance and policy. Calibrating the model to reproduce key features of the EU economy, we compare the outcomes of an East-West R&D subsidy war with a cooperation scenario with unified subsidy across regions, and obtain three main results. First, we find that the dynamic gains spurring from the impact of cooperation on the economy's growth rate are sizable and substantially larger than the static gains obtained internalising the strategic motive for subsidies. Second, our model suggests that the presence of FDI and multinational production alleviates the strategic motive and increases the gains from cooperation. Third, separating FDI and innovation policy generates larger gains from cooperation, a policy complementarity driven by the knowledge spillovers carried by FDI.
    Keywords: Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers
    JEL: O41 O31 O38 F12 F42 F43
    Date: 2019–08

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