nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒09‒30
eleven papers chosen by
Stan C. Weeber, McNeese State University

  1. Role of honesty and confined interpersonal influence in modelling predilections By Khalid, Asma; Beg, Ismat
  2. Overcoming History through International Organizations - Historical Roots of EU Support and Euroscepticism By Kai Gehring
  3. Vote Buying in the U.S. Congress By Matter, Ulrich; Roberti, Paolo; Slotwinski, Michaela
  4. Political Budget Forecast Cycles By Frank Bohn; Francisco José Veiga
  5. Developing countries' political cycles and the resource curse: Venezuela's case By Márquez-Velázquez, Alejandro
  6. "Trust, Beliefs and Cooperation: Excavating a Foundation of Strong Economics By Jeongbin Kim; Louis Putterman; Xinyi Zhang
  7. Lost in Transition? The Persistence of Dictatorship Mayors By González, F; Muñoz, P; Prem, M
  8. Capital Cities, Conflict, and Misgovernance By Filipe R. Campante; Quoc-Anh Do; Bernardo Guimaraes
  9. A politics of hope: The making of Brazil's post-neoliberal new middle class By Kopper, Moisés
  10. The Central Bank Governor and Interest Rate Setting by Committee By Emile van Ommeren; Giulia Piccillo
  11. The myth of the development team: The relation between developer and architect in real estate development projects By Gunther Maier; Maximilian Schimanko

  1. By: Khalid, Asma; Beg, Ismat
    Abstract: Classical models of decision-making do not incorporate for the role of influence and honesty that affects the process. This paper develops on the theory of influence in social network analysis. We study the role of influence and honesty of individual experts on collective outcomes. It is assumed that experts have the tendency to improve their initial predilection for an alternative, over the rest, if they interact with one another. It is suggested that this revised predilection may not be proposed with complete honesty by the expert. Degree of honesty is computed from the preference relation provided by the experts. This measure is dependent on average fuzziness in the relation and its disparity from an additive reciprocal relation. Moreover, an algorithm is introduced to cater for incompleteness in the adjacency matrix of interpersonal influences. This is done by analysing the information on how the expert has influenced others and how others have influenced the expert.
    Keywords: Honesty; group decision making; social network analysis; confined influence; predilection.
    JEL: C44 C61 D71 D81
    Date: 2018–06–15
  2. By: Kai Gehring
    Abstract: There is little causal evidence about deep-rooted sources of support for shifting power from nation-states to international organizations. Focusing on the European Union, this paper develops the hypothesis that citizens appreciate the role of international organizations in constraining member state’s the more, the more negatively their region was historically affected by the actions of nation-states. For identification, I use the historically homogeneous regions of Alsace and Lorraine in France as a natural experiment. A municipal level geographical regression discontinuity design documents that more negative exposure led to persistently higher EU support in three important referenda and less success of Eurosceptic parties in parliamentary elections. This effect is not driven by linguistic differences, migration, socioeconomic factors or public good provision, but linked to a stronger European identity. This stronger identity is neither explained by perceived economic benefits, nor comes at the expense of a weaker national or regional identity.
    Keywords: European Union, European Union support, Euroscepticism, international organizations, nation-states, repression, conflict, persistence, European identity, group identity
    JEL: D70 F50 H70 N24
    Date: 2019
  3. By: Matter, Ulrich; Roberti, Paolo; Slotwinski, Michaela
    Abstract: We assess the influence of moneyed interests on legislative decisions. Our theory predicts that the vote outcome distribution and donation flows in a legislature feature a discontinuity at the approval threshold of bills if special interest groups are involved in vote buying. Testing the theoretical predictions based on two decades of roll-call voting in the U.S. House, we identify the link between narrowly passed bills and well-timed campaign contributions. Several pieces of evidence substantiate our main finding, suggesting that moneyed interests exert remarkably effective control over the passage of contested bills.
    Keywords: Legislative voting, campaign finance, special interest groups, lobbying, forensic economics
    JEL: D72 D78
    Date: 2019–09
  4. By: Frank Bohn (Radboud University, Institute for Management Research, Department of Economics); Francisco José Veiga (NIPE and Economics Department, University of Minho.)
    Abstract: By forecasting overly optimistic revenues opportunistic governments can increase spending in order to appear more competent prior to elections. Ex post deficits emerge in election years, thereby producing political forecast cycles - as also found for US states in the empirical literature. In our theoretical moral hazard model we obtain three additional results which are tested with panel data for Portuguese municipalities. The extent of manipulations is reduced when (i) the winning margin is expected to widen; (ii) the incumbent is not re-running; and/or (iii) the share of informed voters (proxied by education) goes up.
    Keywords: opportunistic political cycles; political budget cycles; revenue forecasts; deficit; transfers; asymmetric information; political economy.
    JEL: D72 H68 E32
    Date: 2019
  5. By: Márquez-Velázquez, Alejandro
    Abstract: The resource curse literature's main lesson is that developing and natural resource-rich countries should save most of their oil windfalls in foreign currency. Moreover, the political cycle literature's recent contributions predict stronger cycles in these countries. This paper investigates how political cycles might explain low oil windfall savings. Using Venezuela's case, the paper argues that power concentration during periods of oil price explosiveness leads to increased public investment in prestige projects aimed at increasing the incumbent's − or his party's − re-election probabilities. The article backs the argument analyzing the Chavista democratic period of 1999-2016. It also identifies parallels with Venezuela's 1970-1988 period.
    Keywords: oil windfalls,political cycles,resource curse,Venezuela
    Date: 2019
  6. By: Jeongbin Kim; Louis Putterman; Xinyi Zhang
    Abstract: We use a two-phase experimental design to study how systematically manipulated beliefs about trust and trustworthiness can promote or deter cooperation. We use decisions in an initially played trust game to create five environments that differ in the information subjects have about the relative trust/trustworthiness of fellow group members when they make a voluntary contribution decision in our experiment’s second phase. We find that perceived high trusting environments are treated equivalently to ones of perceived high trustworthiness, with both positively affecting subjects’ first-order beliefs about the cooperativeness of group-mates, and in consequence, leading to higher contributions. Our results indicate that people cooperate more and hence produce more together in an environment of high trust/trustworthiness, indicating one channel through which trust helps to grow the economic pie.
    Date: 2019
  7. By: González, F; Muñoz, P; Prem, M
    Abstract: Dictatorships can affect the functioning of new democracies but the mechanisms are poorly understood. We study the Pinochet dictatorship in Chile using new data and provide two findings. First, mayors appointed by Pinochet obtained a nine percentage point vote premium in the first local election in democracy. This premium is explained by an incumbency advantage and by an increase in local spending during the transition. Second, dictatorship mayors increased the vote share of right-wing political parties in democracy. We conclude that the dictatorship won “hearts and minds” before the transition and successfully maintained part of their political power.
    Keywords: politicians, dictatorship, democracy
    JEL: D2 G2 G3 M2
    Date: 2019–09–19
  8. By: Filipe R. Campante (Harvard University); Quoc-Anh Do (Département d'économie); Bernardo Guimaraes (São Paulo School of Economics)
    Abstract: We investigate the links between capital cities, conflict, and the quality of governance, starting from the assumption that incumbent elites are constrained by the threat of insurrection, and that the latter is rendered less effective by distance from the seat of political power. We show evidence that (i) conflict is more likely to emerge (and dislodge incumbents) closer to the capital, and (ii) isolated capitals are associated with misgovernance. The results hold only for relatively nondemocratic countries and for intrastate conflicts over government (as opposed to territory)—exactly the cases where our central assumption should apply.
    JEL: D72 D74 O17 O18 R12
    Date: 2019–07
  9. By: Kopper, Moisés
    Abstract: How does hope emerge as a life-altering possibility against the backdrop of economic precarity, political disregard, and soaring inequality? This paper explores the role of hope as both a political-economic construct and an infrastructural affect in the wake of policy implementation. It draws on a five-year ethnography among community leaders, housing activists, planners, politicians, state officials, and market representatives involved in the implementation of Minha Casa Minha Vida, Brazil's largest social housing program. In recent years, low-income projects have become the battleground for experimental, post-neoliberal forms of democratic governance via inclusive consumption. These public-private housing infrastructures give insight into the relationship between material hope and the making of Latin America's "pink tide" new middle classes: how grassroots communities organize around hierarchies of worthiness to allocate wellbeing-enhancing state benefits, and how the uneven distribution of these benefits sustains the constitution of emerging, albeit temporary, collectives of consumer citizens.
    Keywords: citizenship,infrastructure,material hope,middle class,post-neoliberalism,social housing,bürgerschaftliches Engagement,Infrastruktur,materielle Hoffnung,Mittelschichten,Postneoliberalismus,sozialer Wohnungsbau
    Date: 2019
  10. By: Emile van Ommeren; Giulia Piccillo
    Abstract: This paper examines the role of central bank governors in monetary policy decisions taken by a committee. To carry out this analysis, we constructed a novel dataset of committee voting behaviour for six OECD countries for up to three decades. Using a range of Taylor-rule specifications, we show that a change in governor significantly affects the interest rate setting of the whole committee. We also observe systematic differences in the responsiveness to recent changes in the state of the economy based on the political party appointing the governor, with higher responsiveness under governors that are appointed by a left-wing political authority. In contrast, right wing appointed governors are more likely to consider expected economic developments in the future when deciding on the appropriate interest rate.
    Keywords: monetary policy, Taylor rule, central bank governors
    JEL: E00
    Date: 2019
  11. By: Gunther Maier; Maximilian Schimanko
    Abstract: This paper discusses the relationship between main actors in the development team of real estate projects. In particular we look at the relation between the developer and the architect. This relation, however, can be viewed as a model for other relations as well.The textbook literature on real estate development typically uses the term "development team" for the large number of actors involved in such a project. The development team is described as a team that works together in order to successfully finalize the project. It is our hypothesis that this view is misleading and hides the numerous and fundamental conflicts of interest between these actors. Our paper discusses this situation theoretically. We use the theory of economic agents in order to derive hypotheses about potential conflicts and about actors' strategies to protect themselves against risk and financial losses.In a second step we check these hypotheses via qualitative interviews. We interview architects and developers about their view of this relationahip and about their and their partner's actions.
    Keywords: conflict of interest; conflict resolution; development team; Real Estate Development
    JEL: R3
    Date: 2019–01–01

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