nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒01‒20
sixteen papers chosen by
Stan C. Weeber, McNeese State University

  1. One strike and you’re out! The Master Lever’s effect on senatorial policy-making By Olga Gorelkina; Ioanna Grypari; Erin Hengel
  2. Fiscal Illusion and Progressive Taxation with Retrospective Voting By Abatemarco, Antonio; Dell'Anno, Roberto
  3. Cooperation in an Uncertain and Dynamic World By Gallo, Edoardo; Riyanto, Yohanes E.; Roy, Nilanjan; Teh, Tat-How
  4. Populist strategy of Polish political parties By Natalia Str?k
  5. Free Riding and Workplace Democracy – Heterogeneous Task Preferences and Sorting By Kenju Kamei; Thomas Markussen
  6. Housing insecurity, homelessness and populism: Evidence from the UK By Fetzer, Thiemo; Sen, Srinjoy; Souza, Pedro CL
  7. Secession with Natural Resources By Dhillon, Amrita; Krishnan, Pramila; Patnam, Manasa; Perroni, Carlo
  8. Towards a genuinely humanizing smart urbanism By Kitchin, Rob
  9. When the Government Attempts to Change the Board, Investors Should Know By Lentz-Meyer, Molly; Fisher, William O.
  10. No harm done? An experimental approach to the non-identity problem By Bruner, Justin; Kopec, Matthew
  11. Cartel Formation with Quality Differentiation By Iwan Bos; Marco Marini; Riccardo Saulle
  12. All Keynesian Now? Public Support for Countercyclical Government Borrowing By Barnes, Lucy; Hicks, Timothy
  13. Coalition-Proof Risk Sharing Under Frictions By Harold L. Cole; Dirk Krueger; George J. Mailath; Yena Park
  14. Social Connectivity, Media Bias, and Correlation Neglect By Denter, Philipp; Dumav, Martin; Ginzburg, Boris
  15. Southern Solutions for Wisconsin Woes By Lentz-Meyer, Molly; Hodges, Ann C.
  16. Use-Based Welfare: Property Experiments in Chicago, 1895-1935 By Ela, Nate

  1. By: Olga Gorelkina; Ioanna Grypari; Erin Hengel
    Abstract: We investigate the impact a straight-ticket voting option—a.k.a. the Master Lever—has on U.S. senators’ roll-call voting records in Congress. Using a difference-in-differences framework, we find the Master Lever leads to a 3–6 percent rightward shift in senators’ policy positions. The effect is largely driven by the Republican party. To interpret our results, we analyse the Master Lever’s impact on electoral incentives and outcomes. Our findings suggest that ballot design has a non-negligible impact on policy-making. They also imply that electoral outcomes in moderate to right-leaning Master Lever states may be especially vulnerable to right-wing, non-partisan voters.
    Keywords: Ballot Design, Elections, Political Positions, U.S. Senate
    JEL: D72 N42
    Date: 2019–08
  2. By: Abatemarco, Antonio; Dell'Anno, Roberto
    Abstract: We consider the tax progressivity decision of a rent‐maximizing government when voters’ perceptions of the tax price of public goods are biased by cognitive anomalies (i.e., fiscal illusion), and the electorate opts for re‐appointing or for dismissing the incumbent according to a retrospective voting logic. Given electoral and constitutional constraints, we show that the design of the tax system can be sensibly affected by fiscal illusion within the population of voters. Specifically, we find that (i) the tax system is more (less) progressive when taxes and public expenditures are perceived less (more), and (ii) an increase in the median voter’s income may positively or negatively affect tax progressivity depending on the nature (pessimistic or optimistic) of fiscal illusion. The impact of fiscal illusion on tax progressivity is validated by econometric analysis.
    Keywords: fiscal illusion; tax progressivity; median voter; cognitive anomalies
    JEL: D63 D72 E62 H23 H3
    Date: 2019–09–12
  3. By: Gallo, Edoardo; Riyanto, Yohanes E.; Roy, Nilanjan; Teh, Tat-How
    Abstract: We investigate how reputational uncertainty and the rate of change of the social environment interact to influence cooperation in social networks. Reputational uncertainty significantly decreases cooperation and welfare, induces more forgiveness toward defectors, and promotes opportunistic play. Compared to reputational uncertainty, a fast-changing social environment only causes a second-order qualitative increase in cooperation by making individuals more lenient in imposing a network-punishment (link removal). The interaction between reputational uncertainty and a fast-changing social environment induces more lenient strategies by reducing the frequency of action-punishment (retaliatory defection). Although neither of them affects the aggregate network metrics, their interaction decreases homophily among cooperators.
    Keywords: Cooperation, experiments, prisoner's dilemma, uncertainty, repeated games, networks
    JEL: C72 C73 C92 D8
    Date: 2019–12–30
  4. By: Natalia Str?k (Jagiellonian University)
    Abstract: With the rise of populism, its concept and the very idea of populism have been developing in recent years. This research aims to critically analyse the difference between political parties that are of populist nature and those only using populist strategies in their activities. The already existing literature on populist parties and populist leaders who defeated their political opponents in the last elections is already abundant. However, an impasse regarding the concept of populist strategy is yet to be analysed. Through a qualitative collective case studies, the methodological framework of the research aims to analyse Polish political parties? strategies used during election campaign. Data are sourced from political parties programs, speeches, modus operandi, communications, and publications. The aim of the study is to develop a better understanding of the concept of populist strategy within the current political climate, and the issue of emerging illiberal democracies in Europe. The presentation will focus on the three aspects of populism: antiestablishment sentiments, artificial social divisions between ?us and the others, and appeal to the will of the people.
    Keywords: populism, election strategy, Polish political parties
    JEL: D72 E65 H11
    Date: 2019–10
  5. By: Kenju Kamei (Business School, Durham University, United Kingdom); Thomas Markussen (Department of Economics, University of Copenhagen, Denmark)
    Abstract: A novel laboratory experiment is used to show that mismatching between task preferences and task assignment undermines worker productivity and leads to free riding in teams. We elicit task preferences from all workers. Workers’ endogenous sorting into tasks significantly improves productivity under individual-based remuneration (performance pay). Under team-based remuneration (revenue sharing), free riding is significant, but almost exclusively among those working on undesired tasks. Task selection by majority voting in teams alleviates free riding, but only partly so, because some workers are still assigned to undesired tasks. Our findings have broad implications for research using real effort tasks.
    Keywords: free riding, team, workplace democracy, experiment, real effort
    JEL: C92 C91 H41 D82 J01
    Date: 2020–01–08
  6. By: Fetzer, Thiemo (University of Warwick); Sen, Srinjoy (University of Warwick); Souza, Pedro CL (University of Warwick)
    Abstract: Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits exogenous variation in the affordability of rents due to a cut that substantially lowered housing benefit – a welfare benefit aimed at helping low income households pay rent. Before April 2011, local housing allowance covered up to the median level of market rents; from April 2011 onwards, only rents lower than the 30th percentile were covered. We exploit that the extent of cuts significantly depend on statistical noise due to estimation of percentiles. We document that the affordability shock caused a significant increase in: evictions; individual bankruptcies; property crimes; share of households living in insecure temporary accommodation; statutory homelessness and actual rough sleeping. The fiscal savings of the cut are much smaller than anticipated. We estimate that for every pound saved by the central government, council spending to meet statutory obligations for homelessness prevention increases by 53 pence. We further document political effects: the housing benefit cut causes lower electoral registration rates and is associated with lower turnout and higher support for Leave in the 2016 EU referendum, most likely driven by its unequal impact on the composition of those that engage with democratic processes.
    Keywords: housing markets, welfare cuts, austerity, voting JEL Classification: H2, H3, H5, P16, D72
    Date: 2019
  7. By: Dhillon, Amrita (Kings College, London); Krishnan, Pramila (University of Oxford); Patnam, Manasa (CREST-ENSAE); Perroni, Carlo (University of Warwick)
    Abstract: We look at the formation of new Indian states in 2001 to uncover the effects of political secession on the comparative economic performance of natural resource rich and natural resource poor areas. Resource rich constituencies fared comparatively worse within new states that inherited a relatively larger proportion of natural resources. We argue that these patterns reflect how political reorganisation affected the quality of state governance of natural resources. We describe a model of collusion between state politicians and resource rent recipients that can account for the relationships we see in the data between natural resource abundance and post-breakup local outcomes.
    Keywords: Natural Resources and Economic Performance, Political Secession, Fiscal Federalism JEL Classification: D72, H77, O13
    Date: 2020
  8. By: Kitchin, Rob (National University of Ireland Maynooth)
    Abstract: This paper considers, following David Harvey (1973), how to produce a genuinely humanizing smart urbanism. It does so through utilising a future-orientated lens to sketch out the kinds of work required to reimagine, reframe and remake smart cities. I argue that, on the one hand, there is a need to produce an alternative ‘future present’ that shifts the anticipatory logics of smart cities to that of addressing persistent inequalities, prejudice, and discrimination, and is rooted in notions of fairness, equity, ethics and democracy. On the other hand, there is a need to disrupt the ‘present future’ of neoliberal smart urbanism, moving beyond minimal politics to enact sustained strategic, public-led interventions designed to create more-inclusive smart city initiatives. Both tactics require producing a deeply normative vision for smart cities that is rooted in ideas of citizenship, social justice, the public good, and the right to the city that needs to be developed in conjunction with citizens.
    Date: 2018–10–17
  9. By: Lentz-Meyer, Molly; Fisher, William O.
    Abstract: In 2008 and 2009, the federal government effectively hired and fired directors at American International Group and Bank of America. At AIG, the government exercised its power through the ownership of voting stock, which meant that the company�s public securities filings revealed the government influence, though at times slowly and at times only by inference. At BofA, by contrast, the government imposed its will through an unpublished bank regulatory action, and no securities filing provided even a hint of the federal role. The fact that current law allows the government to secretly reconstitute the governing bodies of multi-billion-dollar, publicly traded companies is cause for concern, for who controls the board controls the company. This article argues that, just as securities filings alert investors when private parties attempt board change, a new required filing should inform investors when the government seeks to push sitting directors out or bring new ones in.
    Date: 2018–10–03
  10. By: Bruner, Justin; Kopec, Matthew
    Abstract: A driving force behind much of the literature on the non-identity problem is the widely shared intuition that actions or policies that change who comes into existence don't, as a result, lose their morally problematic features. We hypothesize that this intuition isn’t entirely shared by the general public, which might have widespread implications concerning how to best motivate public support for large-scale, identity-affecting policies like those involved in climate change mitigation. To test our hypothesis, we ran a behavioural economic experiment, a version of the well-known dictator game, designed to mimic the public's morally loaded behaviour in identity-affecting choice problems. As predicted, we found that the public does seem to behave more selfishly when making identity-affecting choices. We further hypothesised that one possible mechanism involved in this change is the notion of harm that plays a role in the public’s normatively loaded decision making. So, during our study, we also solicited subjects’ attitudes about harm, in particular about whether the “dictators” had done harm through their choices. The data suggest that substantial portions of the population each employ distinct notions of harm in their normative thinking, which raises some puzzling features about the public’s normative thinking that call out for further empirical examination.
    Date: 2018–12–03
  11. By: Iwan Bos; Marco Marini (Department of Social and Economic Sciences, Sapienza University of Rome and CREI, Italy); Riccardo Saulle (DSEA, University of Padova, Italy)
    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: D42 D43 L1 L12 L13 L41
    Date: 2019–12
  12. By: Barnes, Lucy (University College London); Hicks, Timothy (University College London)
    Abstract: In the wake of the 2008 financial crisis, macroeconomic policy returned to the political agenda, and the influence of Keynesian ideas about fiscal stimulus rose (and then fell) in expert circles. Much less is known, however, about whether and when Keynesian prescriptions for countercyclical spending have any support among the general public. We use a survey experiment, fielded twice, to recover the extent to which UK respondents hold such countercyclical attitudes. Our results indicate that public opinion was countercyclical — Keynesian — in 2016. We then use Eurobarometer data to estimate the same basic parameter for the population for the period 2010-2017. The observational results validate our experimental findings for the later period, but also provide evidence that the UK population held procyclical views at the start of the period. Thus, there appear to be important dynamics in public opinion on a key macroeconomic policy issue.
    Date: 2018–10–15
  13. By: Harold L. Cole (University of Pennsylvania); Dirk Krueger (University of Pennsylvania); George J. Mailath (University of Pennsylvania); Yena Park (University of Rochester)
    Abstract: We analyze e?cient risk-sharing arrangements when coalitions may deviate. Coalitions form to insure against idiosyncratic income risk. Self-enforcing contracts for both the original coalition and any deviating coalition rely on a belief in future cooperation, and we treat the contracting conditions of original and deviating coalitions symmetrically. We show that better belief coordination (higher social capital) tightens incentive constraints since it facilitates both the formation of the original as well as a deviating coalition. As a consequence, the payo? of successfully formed coalitions might be declining in the degree of belief coordination and equilibrium allocations might feature resource burning or utility burning.
    Keywords: Financial Coalition, Limited Enforcement, Risk Sharing, Coalition-Proof Equi-librium
    JEL: E21 G22 D11 D91
    Date: 2019–01–08
  14. By: Denter, Philipp; Dumav, Martin; Ginzburg, Boris
    Abstract: We propose a model of political persuasion in which a biased newspaper aims to convince voters to vote for the government. Each voter receives the newspaper's report, as well as an independent private signal. Voters then exchange this information on social media and form posterior beliefs, neglecting correlation among signals. An increase in connectivity increases the newspaper's bias if voters are ex ante predisposed to vote against the government, and reduces the bias if they are predisposed in favour of the government. While more precise independent signals reduce the newspaper's optimal bias, the bias remains positive even when connectivity becomes large. Thus, even with a large number of social connections, the election produces an inefficient outcome with positive probability, implying a failure of the Condorcet jury theorem.
    Keywords: social media; media bias; correlation neglect; Bayesian persuasion; voting; deliberation
    JEL: D72 D83 P16
    Date: 2019–12–13
  15. By: Lentz-Meyer, Molly; Hodges, Ann C.
    Abstract: Since 2011, a number of states have amended their collective bargaining laws covering state and local government employees. Debate rages about whether the goal of the proponents of change was to address budget shortfalls or weaken labor unions. Regardless of motive, legislatures in several states accomplished the goal of severely limiting or eliminating collective bargaining for some or all employees. The question facing unions, employers and employees in those states is �what now?� An answer may lie in looking to southern states like Virginia and North Carolina that have historically prohibited or severely restricted bargaining. This article explores the lessons that that might lie in the labor relations climates there for parties in states facing new and unfamiliar landscapes.The article first discusses labor relations in the southern states, with a primary emphasis on Virginia, and analyzes the factors that contribute to successful union-management relations where they exist. Then, the article considers how these factors might apply in states with newly enacted changes to their collective bargaining laws, focusing specifically on those states that eliminated or virtually eliminated bargaining rights. The article concludes that while labor relations might change in those states, unionization will survive as employees continue to seek a voice in the workplace.
    Date: 2018–10–03
  16. By: Ela, Nate (American Bar Foundation)
    Abstract: Use-based welfare achieves redistribution by reallocating rights to use and benefit from idle resources, rather than via tax and transfer. How and why has this form of welfare provision emerged as an urban institution, and what affects whether it endures? This article compares projects to grant poor and unemployed Chicagoans access to land for gardens and small farms between 1895 and 1935, explaining how this form of social support came about through experiments with rules, norms, and forms of property. While social policy is typically understood as emerging through the realization of rights to public support, use-based welfare turns instead on efforts to create a legal privilege for the needy to use idle resources. During the Progressive Era and the Great Depression, this form of relief was pitched as both an alternative and a complement to welfare based on tax and transfer. Yet efforts to establish it as a permanent institution repeatedly failed, due to implementation challenges, opposition from people committed to treating land and food as commodities, and the non-emergence of a social movement to defend land access. Recognizing the historical dynamics of use-based welfare offers a new perspective on the contemporary resurgence of urban farming as a strategy for addressing unemployment and poverty.
    Date: 2018–11–16

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