nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒01‒06
thirteen papers chosen by
Stan C. Weeber
McNeese State University

  1. The Winner-Take-All Dilemma By Kazuya Kikuchi; Yukio Koriyama
  2. Why do the poor vote for low tax rates? A (real-effort task) experiment on income redistribution. By Natalia Jimenez; Elena Molis-Bañales; Angel Solano-Garcia
  3. Participation in rural development – the view of non-participants By Pollermann, Kim
  4. Delegation and Coordination with Multiple Threshold Public Goods: Experimental Evidence By Corazzini, Luca; Cotton, Christopher; Reggiani, Tommaso G.
  5. A Lingua Franca in the post-Brexit EU By Victor Ginsburgh; Juan D. Moreno-Ternero
  6. Semicooperation under curved strategy spacetime By Paramahansa Pramanik; Alan M. Polansky
  7. A Participatory Stakeholder Process for Evaluating Sustainable Energy Transition Scenarios By Höfer, Tim; Madlener, Reinhard
  8. Cartel Formation with Quality Differentiation By Bos, Iwan; Marini, Marco A.; Saulle, Riccardo
  9. Citizens' trade-offs in state merger decisions: Evidence from a randomized survey experiment By Blesse, Sebastian; Heinemann, Friedrich
  10. The Employment Effects of Ethnic Politics By Amodio, Francesco; Chiovelli, Giorgio; Hohmann, Sebastian
  11. Anti-Immigrant Parties and Western European Society: Analyzing the Role of Immigration and Forecasting Voting By Breznau, Nate
  12. Affirmative Action with Overlapping Reserves By Tayfun Sönmez; M. Bumin Yenmez
  13. Electoral cycles in macroprudential regulation By Müller, Karsten

  1. 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
  2. By: Natalia Jimenez (Department of Economics, Universidad Pablo de Olavide & Middlesex University); Elena Molis-Bañales (Departamento de Teoria e Historia Economica, University of Granada & Globe); Angel Solano-Garcia (Departamento de Teoria e Historia Economica, University of Granada & Globe)
    Abstract: The main purpose of this paper is to shed some light on the voting behavior of low-income voters over income redistribution. To this end, we test a model based on Meltzer and Richard’s (1981) framework through a lab experiment in which individuals vote over two exogenous tax rates and their pre-tax income is determined according to their performance in a real-effort task. We classify individuals into high-skilled and low-skilled participants according to their performance in a tournament at the beginning of the experiment. We find that a large proportion of low-skilled workers vote for the lowest tax rate (the one that gives them the lowest payoff), especially when the alternative tax rate is very high. However, this proportion is significantly reduced in treatments in which the subjects are given extra information about how the tax operates in redistributing income. This result suggests that the lack of information about the role of taxes in income redistribution may be an important factor in explaining the counter-intuitive voting behavior of low-income voters over income redistribution. We also find that both the prospect of upward mobility and the belief in the negative effect of taxes on productivity make low-income voters support low tax rates, especially when the alternative tax rate is very high.
    Keywords: income inequality, income redistribution, voting, taxation, real-effort task.
    JEL: C92 D72 H30 J41
    Date: 2019–12
  3. By: Pollermann, Kim
    Abstract: To address the challenges in rural areas the support for rural development with participatory approaches has a long tradition in EU funding programmes. One corresponding instrument is LEADER, which is a place-based, participatory approach to bring together public, private and civil society organisations. Within LEADER the different stakeholders come together in a Local Action Group (LAG) as a type of a public-private partnership. Those groups collaborate on the basis of an integrated local development strategy (LDS) and administer own budgets to support projects. Although there are usually broad participation opportunities, some observations in literature mention problems like that only the “usual suspects” (age over 40, higher education, male) get involved in such participations. It is a well established instrument to ask the participants of such processes about their view of the cooperation within their LEADER decision making body to examine their satisfaction with decision making procedures or their estimations about the output quality. But for some research questions an external view would be more appropriate. Thus, this contribution brings into focus the estimations of non-participants to examine their opinions about possibilities for participation or the legitimacy of decision-making within LEADER-processes. To collect this information an online-survey is used. Therefore, in eight LEADER-Regions about 50-100 non-participants (per region) got e-mail invitations for this survey in four different federal states in Germany. The “non-participants” were defined as persons who are neither members of the decision making body nor beneficiaries of the LEADER-projects. Respondents come from municipalities as well as from different associations of the civil society. This presentation contains preliminary results concerning the external views of the work of LEADER to gain insights about the possibilities of participation and possible obstacles to participate.
    Keywords: LEADER,participation,rural development
    JEL: R58
    Date: 2019
  4. By: Corazzini, Luca (Ca' Foscari University of Venice); Cotton, Christopher (Queen's University); Reggiani, Tommaso G. (Masaryk University)
    Abstract: When multiple charities, social programs and community projects simultaneously vie for funding, donors risk miscoordinating their contributions leading to an inefficient distribution of funding across projects. Community chests and other intermediary organizations facilitate coordination among donors and reduce such risks. To study this, we extend a threshold public goods framework to allow donors to contribute through an intermediary rather than directly to the public goods. Through a series of experiments, we show that the presence of an intermediary increases public good success and subjects' earnings only when the intermediary is formally committed to direct donations to socially beneficial goods. Without such a restriction, the presence of an intermediary has a negative impact, complicating the donation environment, decreasing contributions and public good success.
    Keywords: delegation, threshold public goods, laboratory experiment, fundraising
    JEL: C91 C92 H40 H41 L31
    Date: 2019–12
  5. By: Victor Ginsburgh (ECARES, Université Libre de Bruxelles, Belgium and CORE, Université catholique de Louvain, Belgium); Juan D. Moreno-Ternero (Department of Economics, Universidad Pablo de Olavide;)
    Abstract: Confidence in the institutions of the EU was obviously shocked by the intention of Great Britain to Brexit. We suggest introducing a lingua franca in the EU which could partly repair this irritation, as surveys show that citizens would be very favourable to such an idea. We also advocate that the EU should help member countries by contributing to the cost of such an endeavour. Each country would have the right to claim a compensation based on the number of young citizens who do not (yet) speak the chosen common language. The EU budget would then be distributed fairly, in proportion to the claims. We assume that the choice should be made among three languages: English (yes, even if Brexit takes place), German and French, and analyze the pros and cons of each of them. We finally look at what the existing voting procedures used by EU bodies would lead to. The result of such a vote is far from being obvious, and maybe the vote should be left to countries, with the exception of those whose native languages are English, German and French.
    Keywords: European Union; lingua franca; resource allocation; sacrifices; Brexit
    JEL: D63 D72 Z13
    Date: 2019–12
  6. By: Paramahansa Pramanik; Alan M. Polansky
    Abstract: Mutually beneficial cooperation is a common part of economic systems as firms in partial cooperation with others can often make a higher sustainable profit. Though cooperative games were popular in 1950s, recent interest in non-cooperative games is prevalent despite the fact that cooperative bargaining seems to be more useful in economic and political applications. In this paper we assume that the strategy space and time are inseparable with respect to a contract. Under this assumption we show that the strategy spacetime is a dynamic curved Liouville-like 2-brane quantum gravity surface under asymmetric information and that traditional Euclidean geometry fails to give a proper feedback Nash equilibrium. Cooperation occurs when two firms' strategies fall into each other's influence curvature in this strategy spacetime. Small firms in an economy dominated by large firms are subject to the influence of large firms. We determine an optimal feedback semi-cooperation of the small firm in this case using a Liouville-Feynman path integral method.
    Date: 2019–12
  7. By: Höfer, Tim (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN)); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper presents an evaluation of four energy transition scenarios under consideration of multiple stakeholder opinions. We construct a multi-criteria group decision model that applies Value-Focused Thinking to construct a holistic objective system and Multi-Attribute Utility Theory to evaluate the energy transition scenarios. Although the individual scenario evaluations show that the opinions of the stakeholders towards a sustainable energy transition differ largely, we are able to derive three main strands of opinions among the considered stakeholders. For this, we apply a clustering technique to identify and bundle the stakeholders into three groups. This bundling of stakeholder interests enables the identification of the most important policy recommendations for a sustainable energy transition. For the case of Germany, these are to reduce GHG and pollutant emissions and at the same time enable citizens’ participation, limit the visual impact on landscapes, and ensuring internationally comparable energy-related political frameworks for the economy. For the case of a sustainable energy transition in Germany, we find that the stakeholders considered prefer either the highly ambitious climate protection scenario (Scenario B) or the Pan-European scenario (Scenario C). The reference scenario, which was developed by the German Transmission System Operators (TSOs), turns out to be relatively unpopular.
    Keywords: Value-Focused Thinking; Group Decision Making; MAUT; Energy Scenarios
    JEL: D70 D81 O52 Q48
    Date: 2019–05–01
  8. By: Bos, Iwan; Marini, Marco A.; Saulle, Riccardo
    Abstract: Research on collusion in vertically differentiated markets is conducted under one or two potentially restrictive assumptions. Either there is a single industry-wide cartel or costs are assumed to be independent of quality or quantity. We explore the extent to which these assumptions are indeed restrictive by relaxing both. For a wide range of coalition structures, profit-maximizing cartels of any size price most of their lower quality products out of the market as long as production costs do not increase too much with quality. If these costs rise sufficiently, however, then market share is maintained for all product variants. All cartel sizes may emerge in equilibrium when exclusively considering individual deviations, but the industry-wide cartel is the only one immune to deviations by coalitions of members. Overall, our findings suggest that firms have a strong incentive to coordinate prices when the products involved are vertically differentiated.
    Keywords: Cartel Formation, Collusion, Vertical Differentiation, Endogenous Coalition Formation, Industry-wide Cartel, Partial Cartels.
    JEL: C70 C71 C72 D0 D01 D02 D04 D4 D42 D43
    Date: 2019–12–23
  9. By: Blesse, Sebastian; Heinemann, Friedrich
    Abstract: Voters dealing with jurisdictional merger decisions face a trade-off between economies of scale and preference costs. Larger jurisdictions may offer cost advantages, yet the downside is that policies in larger units may be less aligned to voter preferences. Our study is the first to provide evidence on this trade-off on the individual level in an experimental set-up. For this purpose, we designed a randomized survey experiment and inquired about preferences on state mergers on a representative sample of the German population. In line with the decentralization theorem, the support for mergers increases with cost savings and falls with preference costs measured as political alignment, respectively. The effects of the cost treatments on merger support are lower for respondents from states that are actually discussed as merger candidates. Effects are also weaker for citizens who have a positive view of their own political participation under the status quo.
    Keywords: state-level mergers,optimal design of federations,economies of scale,political representation,survey experiment,decentralization theorem
    JEL: H11 H77
    Date: 2019
  10. By: Amodio, Francesco (McGill University); Chiovelli, Giorgio (Universidad de Montevideo); Hohmann, Sebastian (Stockholm School of Economics)
    Abstract: This paper studies the labor market consequences of ethnic politics in African democracies. We combine geo-referenced data from 15 countries, 32 parliamentary elections, 62 political parties, 243 ethnic groups, 2,200 electoral constituencies, and 400,000 individuals. We implement a regression discontinuity design that compares individuals from ethnicities connected to parties at the margin of electing a local representative in the national parliament. We find that having a local ethnic politician in parliament increases the likelihood of being employed by 2-3 percentage points. We hypothesize that this effect originates from strategic interactions between ethnic politicians and traditional leaders, the latter retaining the power to allocate land and agricultural jobs in exchange for votes. The available evidence supports this hypothesis. First, the employment effect is concentrated in the historical homelands of ethnicities with strong pre-colonial institutions. Second, individuals from connected ethnicities are more likely to be employed in agriculture, and in those countries where customary land tenure is officially recognized by national legislation. Third, they are also more likely to identify traditional leaders as partisan, and as being mainly responsible for the allocation of land. Evidence shows that ethnic politics shapes the distribution of productive resources across sectors and ethnic groups.
    Keywords: ethnic politics, employment, democracy, traditional leaders, Africa
    JEL: J15 J70 O10 P26 Q15
    Date: 2019–12
  11. By: Breznau, Nate (University of Bremen)
    Abstract: This project analyzes and predicts the trajectory of immigration and anti-immigration parties in Western Europe from 1962 to 2035. Immigration increased steadily until the 2000s when it reached unprecedented levels. By 2017, countries in Western Europe average 11% of votes cast for anti-immigrant parties. The percentage of the population that are first generation immigrants predicts between 50 and 94% of the variance in these votes across countries in Western Europe. A blog post and a working paper discuss the findings of this research and implications for the future of Europe drawing on theories of group dynamics and empirical research on politics and societies. (Results not altered since the day before the Italian election to preserve scientific integrity).
    Date: 2018–05–23
  12. By: Tayfun Sönmez (Boston College); M. Bumin Yenmez (Boston College)
    Abstract: In a wide variety of real-life resource allocation problems such as school choice or assignment of public positions, implementation of affirmative action policies rely on choice rules that balance meritocracy with equity. We study choice rules where meritocracy is attained through reliance on a priority list, and equity is attained through reserved positions for target groups of disadvantaged individuals. Focusing on overlapping reserves, the case where an individual can belong to multiple types of reserved positions, we characterize choice rules that satisfy maximal compliance with reservations, elimination of justified envy, and non-wastefulness. When an individual accommodates only one of the reserved positions, the horizontal envelope choice rule is the only rule to satisfy these three axioms. When an individual accommodates each of the reserved positions she qualifies for, there are complementarities between individuals. Under this alternative convention, and assuming there are only two target groups, such as women and minorities, we show that paired-admission choice rules are the only ones to satisfy the three axioms. Building on these results, we provide improved allocation mechanisms for school choice in Chile, public position allocation in India, and college admissions in Brazil.
    Keywords: Market design, matching, affirmative action, deferred acceptance
    JEL: C78 D47
    Date: 2019–12–15
  13. By: Müller, Karsten
    Abstract: Do politics matter for macroprudential policy? I show that changes to macroprudential regulation exhibit a predictable electoral cycle in the run-up to 221 elections across 58 countries from 2000 through 2014. Policies restricting mortgages and consumer credit are systematically less likely to be tightened before elections during credit booms and economic expansions. Consistent with theories of opportunistic political cycles, this pattern is stronger when election outcomes are uncertain or in countries where political interference is more likely. In contrast to monetary policy, I find limited evidence that central banks are uniquely insulated from political cycles in macroprudential policy. These results suggest that political pressures may limit the ability of regulators to “lean against the wind.” JEL Classification: G18, G21, G28, D72, D73, P16
    Keywords: central bank independence, electoral cycles, macroprudential regulation, political economy, regulatory cycles
    Date: 2019–12

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