nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2019‒12‒02
nineteen papers chosen by
Stan C. Weeber
McNeese State University

  1. The Price of a Vote: Evidence from France, 1993-2014 By Yasmine Bekkouche; Julia Cage
  2. The Defeat of Populism in Greece By MAVROZACHARAKIS, EMMANOUIL
  3. Taxes and Turnout By Bierbrauer, Felix; Tsyvinski, Aleh; Werquin, Nicolas
  4. Divided we stand? Professional consensus and political conflict in academic economics By Beyer, Karl M.; Pühringer, Stephan
  5. The Subversion of Shareholder Democracy and the Rise of Hedge-Fund Activism By Jang-Sup Shin
  6. Political Activists as Free-Riders: Evidence from a Natural Field Experiment By Hager, Anselm; Hensel, Lukas; Hermle, Johannes; Roth, Christopher
  7. Parliamentary sovereignty and democratic accountability: matters of prerogative powers and legal reasoning By O D Delaney, Marianne
  8. Learning to cooperate in the shadow of the law By Roberto Galbiati; Emeric Henry; Nicolas Jacquemet
  9. Confirmation Bias in Social Networks By Marcos Fernandes
  10. Lending a Hand: How Small Black Businesses Supported the Civil Rights Movement By Louis A. Ferleger; Matthew Lavallee
  11. Cooperation and Creed: An Experimental Study of Religious Affiliation in Strategic and Societal Interactions By Kirk, H.
  12. A Distorting Mirror: Major Media Coverage of Americans` Tax Policy Preferences By Daniel Chomsky
  13. Foresight in a Game of Leadership By Perry, Logan; Gavrilets, Sergey
  14. The social power dynamics of post-truth politics: How the Greek youth perceives the “powerful” foreigners and constructs the image of the European partners By Persefoni Zeri; Charalambos Tsekeris; Theodore Tsekeris
  15. Believe it or not: Experimental Evidence on Sunspot Equilibria with Social Networks By Pietro Battiston; Sharon G. Harrison
  16. Innovation and Strategic Network Formation By Krishna Dasaratha
  17. The Economic and Social Roots of Populist Rebellion: Support for Donald Trump in 2016 By Thomas Ferguson; Benjamin Page; Jacob Rothschild; Jie Chen; Arturo Chang
  18. Benin’s stealthy democracide : How Africa's model democracy kills itself bit by bit By Kohnert, Dirk; Preuss, Hans-Joachim
  19. The Policymaking Process to Restart Japanese Nuclear Power Plants By Brian Efird; Saleh Al Muhanna; Imtenan Al-Mubarak; Shahad Turkistani; Faisal Al-Ghamadi

  1. By: Yasmine Bekkouche (Paris School of Economics); Julia Cage (Sciences Po Paris)
    Abstract: What is the price of a vote? This paper investigates this consequential controversy by analyzing a new comprehensive dataset of all French municipal and legislative elections over the 1993-2014 period. We begin by documenting the evolution of campaign finance in France, and show that both the amount and sources of campaign contributions vary widely from one candidate to another, in particular depending on their political party. We then turn to the empirical analysis and tackle a number of empirical challenges. First, we rely on recent methodological innovations to handle the special characteristics of multiparty data. Second, to overcome the endogenous nature of campaign spending, we propose a new instrument based on a change in legislation. We find that an increase in spending per voter consistently increases a candidate`s vote share both for municipal and legislative elections, and that the effect is heterogeneous depending on the parties and on the sources of campaign funding. According to our estimations, the price of a vote is about 6 euros for the legislative elections, and 32 euros for the municipal ones. Simulations show that small changes in spending patterns and caps can have a large impact on electoral outcomes and seats. Our results suggest that political finance needs to be tightly regulated.
    Keywords: Elections, Campaign financing, Campaign expenditures, Campaign finance reform, Multiparty electoral data
    JEL: D72 P48 H7
    Date: 2018–01
    Abstract: The recent elections in Greece reflects an enormous change in the political behavior of the electorate. The citizens have not chosen a simple switch on the power, but contributed with their votes to a strategic defeat of populism and in same time they paved the way for the search of a new type of leadership, which is close to realism in handling with social problems that can't be implemented with calculated financial costs. The vote of 7 th Juli is a vote against the over-promising and under-delivery experienced under Syriza’s rule. The voting for conservative ND is not an ideological choice. It's a choice that runs counter to the logic of falsely or hypocritical negotiating austerity measures opposed to Greece buy his Lenders (memorandum) and the consequent tax-tornado as a result of negotiating failure with the partners in the EEC and the IMF. The positive vote for ND also reflects the contradiction with the misguided manipulations of public opinion regarding the Skopje-Question and finally the strategy of micro concessions and micro- allowances as a means of concluding a “political-social alliance” with an undefined hostile establishment.
    Date: 2019–07–17
  3. By: Bierbrauer, Felix; Tsyvinski, Aleh; Werquin, Nicolas
    Abstract: We develop a model of political competition with endogenous platform choices of parties and endogenous turnout. A main finding is that a party that is leading in the polls has an incentive to cater primarily to the core voters of the opposing party. A party that is lagging behind, by contrast, has an incentive to cater to its own base. We analyze the implications for redistributive taxation and characterize the political weights that competing parties assign to voters with different incomes. Finally, we relate the comparative statics predictions of our model to the asymmetric demobilization strategy in the German elections in the era of Merkel.
    Keywords: Political competition, Income Taxation, Turnout.
    JEL: D72 D82 H21
    Date: 2019–11
  4. By: Beyer, Karl M.; Pühringer, Stephan
    Abstract: In this paper we address the issue of the role of ideology and political preferences of publically engaged economists and contribute to the debate on consensus in economics. To do so, we conduct a social network analysis on the signatories of economist petitions, which we identify as one channel for economists to exert public influence. We base our analysis on 77 public policy petitions and presidential anti-/endorsement letters from 2008-2017 in the United States with more than 6,400 signatories and check the robustness of our results with six sub-networks. Our contribution is twofold: On the one hand we provide an extended empirical basis for the debate on consensus in economics and the role of politics and ideology in economics. On the other hand we provide a viable tool to trace the ideological leaning of (prospective) economist petitions and economists based on the social structure of petition networks.
    Keywords: social network analysis,sociology of economics,consensus,public economists,economist petitions,United States
    JEL: A11 A13 A14 B20 B30 D04 E66 G18 I38 P16
    Date: 2019
  5. By: Jang-Sup Shin (National University of Singapore)
    Abstract: This paper explains how hedge-fund activists are exerting power over corporate resource allocation far in excess of the actual voting power of their shareholdings. The power of these `minority-shareholding corporate raiders` derives from misguided regulatory `reforms` carried out in the 1980s and 1990s in the name of `shareholder democracy`. Sanctioned and overseen by the Department of Labor (DOL) and the Securities and Exchange Commission (SEC), these reforms include the introduction of compulsory voting by institutional investors and proxy-voting rule changes that greatly facilitated hedge-fund activists` aggregation of the proxy votes of institutional investors. In addition, the introduction of the 1996 National Securities Markets Improvement Act (NSMIA) that allowed hedge funds to draw funds from institutional investors effectively with no limit also played an important role in the rise of hedge-fund activism. The paper concludes with policy proposals to rebalance value creation and value extraction by rebuilding the engagement and proxy voting system including (1) making it mandatory for shareholders to submit justifications in shareholder proposals on value creation or capital formation of corporations concerned; (2) removing voting as a fiduciary duty of institutional investors; (3) introducing differentiated voting rights that favor long-term shareholders; and (4) making it mandatory for both shareholders and management to reveal to the public what they discussed in engagement sessions.
    Keywords: Labor Shareholder democracy, Hedge-fund activism, Compulsory voting of institutional investors, Engagement and proxy rules, Proxy advisory firms, New Deal financial regulations, Sustainable value creation and value extraction.
    JEL: G18 G28 K22 L21 M10 N22
    Date: 2018–07
  6. By: Hager, Anselm (University of Konstanz); Hensel, Lukas (University of Oxford); Hermle, Johannes (University of California, Berkeley); Roth, Christopher (University of Warwick)
    Abstract: How does a citizen's decision to participate in political activism depend on the participation of others? We examine this core question of collective action in a nation-wide natural field experiment in collaboration with a major European party during a recent national election. In a seemingly unrelated party survey, we randomly assign canvassers to true information about the canvassing intentions of their peers. Using survey evidence and behavioral data from the party's smartphone canvassing application, we find that treated canvassers significantly reduce both their canvassing intentions and behavior when learning that their peers participate more in canvassing than previously believed. These treatment effects are particularly large for supporters who have weaker social ties to the party, and for supporters with higher career concerns within the party. The evidence implies that effort choices of political activists are, on average, strategic substitutes. However, social ties to other activists can act as a force for strategic complementarity.
    Keywords: political activism, natural field experiment, strategic behavior, beliefs
    JEL: D8 P16
    Date: 2019–11
  7. By: O D Delaney, Marianne
    Abstract: This paper aims to contribute to the extant literature on the matter by highlighting how and why it is necessary to delineate between matters of public interests, national security – and ultimately the need to balance interests of democratic accountability and parliamentary (legislative) sovereignty from a background of the context, content and prevailing matters of public policy and constitutional relevance – even as intended by the rule of law and the application of separation of powers. Further, it highlights why the role of the judiciary becomes all the more important in ensuring that an appropriate balance and favorable consensus is reached between politically motivated goals and the need to uphold democratic accountability – particularly given the fact that the legislative and executive branches are more intricately linked – such that there are greater possibilities of conflicts of interest between these two branches.
    Keywords: democratic accountability; rule of law; separation of powers; parliamentary sovereignty; Congress; parliament; Brexit
    JEL: E4 E44 K2 K23 K49
    Date: 2019–09
  8. By: Roberto Galbiati (OSC - Observatoire sociologique du changement - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: How does the exposure to past institutions affect current cooperation? While a growing literature focuses on behavioral channels, we show how cooperation-enforcing institutions affect rational learning about the group's value. Strong institutions, by inducing members to cooperate , may hinder learning about intrinsic values in the group. We show, using a lab experiment with independent interactions and random rematching, that participants behave in accordance with a learning model, and in particular react differently to actions of past partners whether they were played in an environment with coercive enforcement or not.
    Keywords: Enforcement,social values,cooperation,learning,spillovers,persistence of insti- tutions,repeated games,experiments
    Date: 2019–06–03
  9. By: Marcos Fernandes
    Abstract: I propose a social learning model that investigates how confimatory bias affects public opinion when agents exchange information over a social network. For that, besides exchanging opinions with friends, individuals observe a public sequence of potentially ambiguous signals and they interpret it according to a rule that accounts for confirmation bias. I first show that, regardless the level of ambiguity and both in the case of a single individual or of a networked society, only two types of opinions might be formed and both are biased. One opinion type, however, is necessarily less biased (more efficient) than the other depending on the state of the world. The size of both biases depends on the ambiguity level and the relative magnitude of the state and confirmatory biases. In this context, long-run learning is not attained even when individuals interpret ambiguity impartially. Finally, since it is not trivial to ascertain analytically the probability of emergence of the efficient consensus when individuals are connected through a social network and have different priors, I use simulations to analyze its determinants. Three main results derived from this exercise are that, in expected terms, i) some network topologies are more conducive to consensus efficiency, ii) some degree of partisanship enhances consensus efficiency even under confirmatory bias and iii) open-mindedness, i.e. when partisans agree to exchange opinions with other partisans with polar opposite beliefs, might harm efficiency in some cases.
    Date: 2019
  10. By: Louis A. Ferleger (Boston University); Matthew Lavallee (Boston University)
    Abstract: A large literature has detailed the seminal roles played in the Civil Rights Movement by activists, new political organizations, churches, and philanthropies. But black-owned businesses also provided a behind-the-scenes foundation for the movement’s success. Many black-owned businesses operated across the South because they provided goods and services to black customers who could not attain them from white businesses because of segregation. These small business owners very often played roles in civic matters that their counterparts in larger firms did not. Their civic participation and support contributed far more to the potential for political progress than scholars have recognized. Some accounts of the Montgomery Bus Boycott, for example, underestimate the significance of the role played by Montgomery`s community of black-owned businesses, from taxis to pharmacies. Examples from the Civil Rights Movement in Mississippi also illustrate the importance of local small businesses: black business owners were on the front lines, resisting strong pressures from the white community. This paper analyzes these episodes and places them in the context of black-owned businesses in the United States in the 1950s and 1960s, albeit descriptively given the unevenness and unavailability of standardized statistics. It also traces the debates over “Black Capitalism†and how the decline of segregation led to dramatic reorganizations of black businesses.
    Keywords: American Political Economy, Black Capitalism, Civil Rights Movement, Small Businesses, African American Businesses, Civic Participation, Martin Luther King, Jr., Andrew Brimmer
    JEL: A13 A14 B15 B52 D29 D72 G18 G21 J15 J48 L11 L21 N12 N82 N92 P48
    Date: 2017–12
  11. By: Kirk, H.
    Abstract: This paper investigates the relative role of religion in trust networks and proposes a model of the interaction between material payoffs and norm-dependent utility, permitting cooperative equilibria. Four influences on decision-making - believing in religion, stereotyping, belonging to a group, and priming - are tested in the laboratory, using an adapted trust game. The experimental design builds on a classic trust game but reveals characteristics of Responders and Proposers in multiple rounds, better aligning with societal interactions where both parties condition actions and reactions on available information. Religious individuals are both more trusting and trusted; stereotyped trust is a rational strategy. A Cambridge University sample provides unique collegiate affiliation confirming that dense secular networks equally but less intensely promote trust.
    Keywords: Decision-Making, Trust, Reciprocity, Religiosity, Design of Experiments, Group Affiliation
    JEL: C9 D03 D91 Z12 Z13
    Date: 2019–11–18
  12. By: Daniel Chomsky (University of Texas Rio Grande Valley)
    Abstract: Over the last four decades, Americans have consistently told pollsters that they favor higher taxes on business and the wealthy, even as tax policy has moved sharply in the other direction. Political scientists and political commentators regularly assume that elected officials respond to the preferences of citizens, despite recent findings that the correlations between public preferences and policy outcomes disappear when accounting for the preferences of the wealthy. This paper quantitatively assesses the failure of democratic responsiveness on this issue. It examines coverage of American’s tax policy preferences in two major national newspapers, the New York Times and USA Today. Both newspapers exhibit nearly identical behavior: they privilege elite sources, ignore the voices of ordinary citizens, and misrepresent public preferences. They also highlight expressions of public opposition to taxes and suppress evidence of persistent public support for higher taxes on business and the wealthy.
    Keywords: Tax Policy, Democratic Theory, Mass Media, Public Opinion, New York Times, USA Today
    JEL: D72 H20 H30 L82 M38 P16 Z1
    Date: 2018–04
  13. By: Perry, Logan; Gavrilets, Sergey
    Abstract: Leadership can be effective in promoting cooperation within a group, but as the saying goes “heavy is the head that wears the crown.” A lot of debate still surrounds exactly what motivates individuals to expend the effort necessary to lead their groupmates. Evolutionary game theoretic models represent individual’s thought processes by strategy update protocols. The most common of these are random mutation, individual learning, selective imitation, and myopic optimization. Recently we introduced a new strategy update protocol - foresight - which takes into account future payoffs, and how groupmates respond to one’s own strategies. Here we apply our approach to a new 2x2 game, where one player, a leader, ensures via inspection and punishment that the other player, a subordinate, produces collective good. We compare the levels of inspection and production predicted by Nash Equilibrium, Quantal Response Equilibrium, level-k cognition, fictitious play, reinforcement learning, selective imitation, and foresight. We show that only foresight and selective imitation are effective at promoting contribution by the subordinate and inspection and punishment by the leader. The role of selective imitation in cultural and social evolution is well appreciated. In line with our prior findings, foresight is a viable alternative route to cooperation.
    Date: 2019–08–07
  14. By: Persefoni Zeri; Charalambos Tsekeris; Theodore Tsekeris
    Abstract: The present study starts from the premise that, for human communities, it is difficult to penetrate each other, so that even the globally diffused communication infrastructure is not enough to create an effective common life. This grounds our assumptions about the way the Greek young interviewees, aged between 18 and 32, belonging to main political orientations (centre right, centre left, radical left, and extreme right), are perceiving themselves and their transnational sociopolitical environment, especially Europe and the powerful foreign institutions in the era of financial crisis. We first focus on the question of collective identity, on how the sense of we-ness (the self-perception of the Greek citizens as a human group) is represented in the consciousness and attitudes of the young interviewees of different ideological orientations. A theoretical starting point pertains to the assumption that the collective identity does involve imagining or representing things;but the imaginary it involves is an insti ting social imaginary in the sense of an implicit cognitive infrastructure of the Greek society, which originates in the past and shapes the image Greeks have about the world, their values, their common reality. The main research objective is to make intelligible how the young interviewees perceive the diverse facets of their collective identity, how the Greek instituting social imaginary and the imaginary significations it produces (values, ideas, habits, and so on) are expressed in their individual imaginary, what it means for them as responsible citizens, how they frame religion and the ancient Greek past, whether they feel represented by the representatives they have supported, how they perceive the powerful foreign institutions, the European Union and their relationship to the Greek society.
    Keywords: Greek Crisis, Youth, Social Media, Collective Identity, Social Imaginary
    Date: 2019–11
  15. By: Pietro Battiston; Sharon G. Harrison
    Abstract: Models with sunspot equilibria have long been a topic of interest among economists. It then becomes an interesting question to ask whether there is empirical support for their existence. One approach to answer this question is through lab experiments. Such equilibria have been successfully reproduced in the lab, but little is known about their determinants and, most importantly, about their convergence dynamics: when, and how, do individuals assign a coordination role to signals which are publicly known to have no fundamental value? In order to answer this question, we run a laboratory experiment in which individuals are connected through a network, and each of them directly observes the actions of her neighbors as well as aggregated information. By manipulating both the type of information available and the structure of the network, we study the extent to which players are able to converge, and how convergence happens over time. We show that general information about other players' behavior hinders coordination, while information specifically related to the sunspot enhances it.
    Keywords: sunspot equilibrium, laboratory experiment, coordination, social networks, communication.
    JEL: C92 D81 D85
    Date: 2019–11
  16. By: Krishna Dasaratha
    Abstract: We study a model of innovation with a large number of firms that create new technologies by combining several discrete ideas. These ideas can be acquired by private investment or via social learning. Firms face a choice between secrecy, which protects existing intellectual property, and openness, which facilitates social learning. These decisions determine interaction rates between firms, and these interaction rates enter our model as link probabilities in a resulting learning network. Higher interaction rates impose both positive and negative externalities on other firms, as there is more learning but also more competition. We show that the equilibrium learning network is at a critical threshold between sparse and dense networks. A corollary is that at equilibrium, the positive externality from interaction dominates: the innovation rate and even average firm profits would be dramatically higher if the network were denser. So there are large returns to increasing interaction rates above the critical threshold---but equilibrium remains critical even after natural interventions. One policy solution is to introduce informational intermediaries, such as public innovators who do not have incentives to be secretive. These intermediaries can facilitate a high-innovation equilibrium by transmitting ideas from one private firm to another.
    Date: 2019–11
  17. By: Thomas Ferguson (Institute for New Economic Thinking); Benjamin Page (Northwestern University); Jacob Rothschild (Northwestern University); Jie Chen (University of Massachusetts); Arturo Chang (Northwestern University)
    Abstract: This paper critically analyzes voting patterns in the 2016 U.S. presidential election. Using survey data from the American National Election Survey and aggregate data on Congressional districts, it assesses the roles that economic and social factors played in Donald J. Trump’s `Populist` candidacy. It shows the hollowness of claims that economic issues played little or no role in the campaign and that social factors such as race or gender suffice to explain the outcome. While agreeing that racial resentment and sexism were important influences, the paper shows how various economic considerations helped Trump win the Republican primary and then led significant blocs of voters to shift from supporting Democrats or abstaining in 2012 to vote for him. It also presents striking evidence of the importance of political money and Senators` `reverse coattails` in the dramatic final result.
    Keywords: political economy, voting, 2016 presidential election, Donald Trump, Populism, political parties, political money, international economic policy, free trade
    JEL: D71 D72 G38 P16 N22 L51
    Date: 2018–10
  18. By: Kohnert, Dirk; Preuss, Hans-Joachim
    Abstract: A 'democratic recession' is to be observed, which is not restricted to Sub-Sahara Africa. It went along with the rise of populist new nationalism and lack of regard of the concerned for the need to defend democracy actively. On the other hand, recent examples of African social movements that successfully campaigned for a democratic renaissance in Africa and elsewhere are promising indicators of progressive social forces that counteract global trends of the resurgence of right-wing nationalism and autocratic rule.
    Keywords: Democratization, democratic institutions, democratic recession, Africa, Benin, Senegal, Togo, social movements
    JEL: F35 F5 N47 N97 Z1
    Date: 2019–11–11
  19. By: Brian Efird; Saleh Al Muhanna; Imtenan Al-Mubarak; Shahad Turkistani; Faisal Al-Ghamadi (King Abdullah Petroleum Studies and Research Center)
    Abstract: The Japanese government’s decision to continue restarting nuclear power is shaped by a combination of domestic political concerns, energy security challenges, and its ability to meet climate change commitments and targets. Nuclear power plants have started to come back online, but there is still a question regarding the scope and timing for restarting the remaining reactors. In this paper, we apply a model of collective decision-making processes (CDMPs) to assess the political will for restarting nuclear power plants in Japan.
    Keywords: Collective Decision Making Processes (CDMPs), Electric Power, Nuclear Power, KAPSARC Toolkit for Behavioral Analysis (KTAB)
    Date: 2018–12

This nep-cdm issue is ©2019 by Stan C. Weeber. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.