nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒01‒27
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Perceived Immigration and Voting Behavior By Davide Bellucci; Pierluigi Conzo; Roberto Zotti
  2. Social Epistemology By Franz Dietrich; Kai Spiekermann
  3. Voting Corrupt Politicians Out of Office? Evidence from a Survey Experiment in Paraguay By Cañete, Rumilda; Miquel-Florensa, Josepa; Straub, Stéphane; Van Der Straeten, Karine
  4. Trust, Trustworthiness, and the Behavioral Foundations of Corporate Law By Blair, Margaret M; Stout, Lynn; Library, Cornell
  5. Jam-barrel Politics By Leonardo Bonilla-Mejía; Juan S. Morales
  6. A characterization of Approval Voting without the approval balloting assumption By Federica Ceron; Stéphane Gonzalez
  7. Dynamic Campaign Spending By Avidit Acharya; Edoardo Grillo; Takuo Sugaya; Eray Turkel
  8. Enfranchising Foreigners: What Drives Natives’ Willingness to Share Power? By Anna Maria Koukal; Reiner Eichenberger; Patricia Schafera
  9. Fear and Loathing on the Campaign Trail: Did Immigration Cause Brexit? By Max Viskanic
  10. Free Riding and Workplace Democracy – Heterogeneous Task Preferences and Sorting By Kenju Kamei; Thomas Markussen
  11. On Globalization and the Concentration of Talent By Ulrich Schetter; Oriol Tejada
  12. Restructuring sovereign bonds: holdouts, haircuts and the effectiveness of CACs By Schumacher, Julian; Trebesch, Christoph; Fang, Chuck
  13. Communication, Observability and Cooperation: a Field Experiment on Collective Water Management in India By O'Garra, Tanya; Alfredo, Katherine A.

  1. By: Davide Bellucci; Pierluigi Conzo; Roberto Zotti
    Abstract: A growing number of studies have found significant effects of inflows of migrants on electoral outcomes. However, the role of perceived immigration, which in many European countries is above official migration statistics, is overlooked. This paper investigates the effects of perceived threat of immigration on voting behavior, by looking at whether local elections in Italy were affected by sea arrivals of refugees before the election day. While, upon arrival, refugees cannot freely go to the destination municipality, landing episodes were discussed in the media especially before the elections, thereby influencing voters’ perceptions about the arrivals. We develop an index of exposure to arrivals that varies over time and across municipalities depending on the nationality of the incoming refugees. This index captures the impact of perceived immigration on voting behavior, on top of the effects of real immigration as proxied for by the stock of immigrants and the presence of refugee centers. Results show that, in municipalities where refugees are more expected to arrive, participation decreases, whereas protest votes and support for extreme-right, populist and anti-immigration parties increase. Since these effects are driven by areas with fast broadband availability, we argue that anti-immigration campaigns played a key role.
    Keywords: Immigration; Voting; Political Economy; Populism; Electoral campaigns; Media exposure.
    JEL: D62 P16 J61
    Date: 2019
  2. By: Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Kai Spiekermann (LSE - London School of Economics and Political Science)
    Abstract: Social epistemology studies knowledge in social contexts. Knowledge is 'social' when its holder communicates with or learns from others (Epistemology in groups), or when its holder is a group as a whole, literally or metaphorically (Epistemology of groups). Group knowledge can emerge explicitly, through aggregation procedures like voting, or implicitly, through institutions like deliberation or prediction markets. In the truth-tracking paradigm, group beliefs aim at truth, and group decisions at 'correctness', in virtue of external facts that are empirical or normative, real or constructed, universal or relativistic, etc. Procedures and institutions are evaluated by epistemic performance: Are they truth-conducive? Do groups become 'wiser' than their members? We review several procedures and institutions, discussing epistemic successes and failures. Jury theorems provide formal arguments for epistemic success. Some jury theorems misleadingly conclude that 'huge groups are infallible', an artifact of inappropriate premises. Others have defensible premises, and still conclude that groups outperform individuals, without being infallible.
    Date: 2020
  3. By: Cañete, Rumilda; Miquel-Florensa, Josepa; Straub, Stéphane; Van Der Straeten, Karine
    Abstract: This paper challenges the conventional wisdom that giving voters more power{both formally through the use of more "open" electoral systems and informally through easier access to information on politicians' wrongdoings will necessarily result in them voting corrupt politicians out of office. Focusing on a comparison between closed-list and open-list proportional representation systems, we theoretically show that opening the lists is likely to generate a large shift of vote shares in favor of the traditional, most corrupt parties. We design a survey experiment to test these predictions in Paraguay and nd strong supporting evidence. We do not nd in our context that the lack of information is a major obstacle preventing voters from voting out corrupt politicians; if anything, under the more open system, supporters of the incumbent party tend to cast more votes for politicians with a recent history of corruption.
    Keywords: Corruption; Electoral systems; Information
    Date: 2020–01
  4. By: Blair, Margaret M; Stout, Lynn; Library, Cornell
    Abstract: 149 University of Pennsylvania Law Review 1735 (2001) Conventional legal and economic analysis assumes that opportunistic behavior is discouraged and that cooperation is encouraged within firms primarily through the use of legal and market incentives. This presumption is embedded in the modern view that the corporation is best described as a "nexus of contracts, " a collection of explicit and implicit agreements voluntarily negotiated among the rationally selfish parties who join in the corporate enterprise. In this Article we take a different approach. We start from the observation that, in many circumstances, legal and market sanctions provide, at best, imperfect means of regulating behavior within the firm. We consider an alternate hypothesis: that corporate participants often cooperate with each other not because of external constraints but because of internal ones. In particular, we argue that the behavioral phenomena of internalized trust and trustworthiness play important roles in encouraging cooperation within films. In support of this claim, we survey the extensive experimental evidence that has been produced over the past four decades on human behavior in "social dilemmas." This evidence demonstrates that internalized trust is a common phenomenon, that it is at least in part learned rather than innate, and that different individuals vary in their inclinations toward trust. Most importantly, the experimental evidence indicates that decisions whether or not to trust others are in large part determined by social context rather than external payoffs. By altering social con text-subjects' perceptions of others' beliefs, expectations, likely actions, and relationships to themselves-experimenters can reliably produce in subjects in social dilemmas everything from nearly universal trust to an almost complete absence of trust. In other words, most people behave as if they have two personalities or preference functions. One is competitive and self-regarding. The other is cooperative and other-regarding. Social framing is key in triggering when the cooperative personality emerges. These behavioral findings carry important implications for corporate law. For example, in this Article we demonstrate first that the phenomenon of trust offers insight into the substantive structure of corporate law and particularly into the nature and purpose of that elusive legal concept, fiduciary duty. Second, the experimental evidence on trust sheds light on how corporate law works, by suggesting that judicial opinions in corporate cases influence corporate office' and directors' behavior not only by altering their external incentives but also by changing their internalized preferences. This possibility helps explain the notoriously puzzling relationship between the duty of care and the business judgment rule. Third, trust highlights the limits of law by explaining how cooperative patterns of behavior can sometimes develop within firms even when external incentives, such as legal sanctions, are unavailable or ineffective. In the process, it underscores the dangers of the contractarian approach by suggesting that an excessive emphasis on external sanctions - including formal contract and even the rhetoric of contract - may be not only ineffective but counterproductive, serving to undermine trust and trustworthiness within the firm.
    Date: 2018–04–15
  5. By: Leonardo Bonilla-Mejía; Juan S. Morales
    Abstract: We study the executive-legislative exchange of centrally-allocated and individually targeted benefits (jam) for legislative support in Colombia. We use data from road building contracts, roll-call votes, and a leaked document which allegedly revealed the secret assignment of road projects to specific legislators. We find that assigned projects were more expensive relative to similar non-assigned projects, legislators who appeared in the leak were more likely to be "swing" voters in the congress, and legislators increased their support for the president’s party after their assigned contracts were signed. The results are stronger for legislators representing remote regions, where political institutions are weaker.
    Keywords: legislatures; distributive politics; pork-barrel; legislative vote-buying; spatial isolation
    JEL: D72 D73 H54 H57 R11
    Date: 2019
  6. By: Federica Ceron (Paris School of Economics, Université Paris 1 Panthéon-Sorbonne, Université Paris-Est Créteil); Stéphane Gonzalez (Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint- Etienne)
    Abstract: We provide an axiomatic characterization of Approval Voting without the approval balloting assumption. The dichotomous structure of the informational basis of Approval voting as well as its aggregative rationale are jointly derived from a set of normative conditions on the voting procedure. The first one is the well-known social-theoretic principle of consistency; the second one, ballot richness, requires voters to be able to express a sufficiently rich set of opinions; the last one, dubbed no single-voter overrides, demands that the addition of a voter to an electorate cannot radically change the outcome of the election. Such result is promising insofar it suggests that the informational basis of voting may have a normative relevance that deserves formal treatment.
    Keywords: Informational basis, balloting procedure, Approval voting, Evaluative voting
    JEL: C71
    Date: 2019
  7. By: Avidit Acharya; Edoardo Grillo; Takuo Sugaya; Eray Turkel
    Abstract: We build a model of electoral campaigning in which two oce-motivated candidates each allocate their budgets over time to a ect their relative popularity, which evolves as a mean-reverting stochastic process. We show that in each period, the equilibrium ratio of spending by each candidate equals the ratio of their available budgets. This result holds across di erent specifications and extensions of the model, including extensions that allow for early voting, and an endogenous budget process. We also characterize how the path of spending over time depends not just on the rate of decay of popularity leads, but also the rate at which returns to spending are diminishing, rates of participation in early voting, and any feedback that short run leads in popularity have on the budget process.
    Keywords: campaigns, dynamic allocation problems, contests
    JEL: C72
    Date: 2019
  8. By: Anna Maria Koukal; Reiner Eichenberger; Patricia Schafera
    Abstract: Universal suffrage is a core element for the functioning of democracy. However, with growing international mobility, an increasing share of the resident population has no suffrage. This paper analyzes the conditions under which domestic citizens are willing to extend suffrage to foreign residents. We explore a new municipality level dataset of 35 Swiss referenda on the enfranchisement of foreigners at the cantonal level. The Swiss setting provides a unique laboratory for capturing the drivers of the enfranchisement of foreigners, as it allows for measuring the actual native electorate’s revealed preferences. We find evidence that perceived cultural and economic threats hinder the enfranchisement of foreigners.
    Keywords: foreigners’ voting rights; political integration; threat hypothesis; democratization
    JEL: D72 J15 P16
    Date: 2019–12
  9. By: Max Viskanic (Sciences Po)
    Abstract: Can large immigration inflows impact electoral outcomes and specifically, what impact did immigration have on the vote in favour of leaving the European Union (Brexit) in the United Kingdom? In particular, I focus on how the increase in Polish immigration, the major group of immigrants post 2004, affected votes in favour of leaving the EU. I find a percentage point increase in Polish immigration to the UK to have caused an increase in votes in favour of Brexit of about 2.72-3.12 percentage points, depending on the specification. To obtain exogenous variation in Polish immigration, I collect data from the archives that reveals the location of Polish War Resettlement Camps after Word War II, which location is plausibly exogenous to current political outcomes. Discussing potential mechanisms, I examine public opinion data in the British Election Study 2015 and find evidence of adversity towards immigration to be a root cause. Other considerations such as the National Health Service (NHS), incumbency and the general trust in politicians as well as the political institutions seem not to play a role.
    Keywords: Political Economy; Voting; Migration; Brexit; EU; UK
    Date: 2020–01
  10. By: Kenju Kamei (Durham University Business School); Thomas Markussen (University of Copenhagen)
    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: C91 C92 H41 D82 J01
    Date: 2020–01
  11. By: Ulrich Schetter (Center for International Development at Harvard University); Oriol Tejada
    Abstract: We analyze how globalization affects the allocation of talent across competing teams in large matching markets. Assuming a reduced form of globalization as a convex transformation of payoffs, we show that for every economy where positive assortative matching is an equilibrium without globalization, it is also an equilibrium with globalization. Moreover, for some economies positive assortative matching is an equilibrium with globalization but not without. The result that globalization promotes the concentration of talent holds under very minimal restrictions on how individual skills translate into team skills and on how team skills translate into competition outcomes. Our analysis covers many interesting special cases, including simple extensions of Rosen (1981) and Melitz (2003) with competing teams.
    Keywords: competing teams, globalization, inequality, matching
    JEL: C78 D3 D4 F61 F66
    Date: 2019–12
  12. By: Schumacher, Julian; Trebesch, Christoph; Fang, Chuck
    Abstract: Sovereign debt crises are difficult to solve. This paper studies the “holdout problem”, meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external creditors since 1994. We then study the determinants of holdouts and find that the size of creditor losses (haircuts) is among the best predictors at the bond level. In a restructuring, bonds with higher haircuts see higher holdout rates, and the same is true for small bonds and those issued under foreign law. Collective action clauses (CACs) are effective in reducing holdout risks. However, classic CACs, with bond-by-bond voting, are not sufficient to assure high participation rates. Only the strongest form of CACs, with single-limb aggregate voting, minimizes the holdout problem according to our simulations. The results help to inform theory as well as current policy initiatives on reforming sovereign bond markets. JEL Classification: F34, G15, H63, K22
    Keywords: creditor coordination, debt restructuring, international financial architecture, sovereign default
    Date: 2020–01
  13. By: O'Garra, Tanya (Middlesex University); Alfredo, Katherine A.
    Abstract: This study is an empirical investigation of the potential for communication and observability interventions to increase cooperation around communal water treatment systems amongst villagers in rural India. Despite the dependence of many rural communities in India on communal water sources and treatment plants for safe drinking water, they often fail to collectively manage these resources, resulting in abandoned water points and treatment systems with consequent health and mortality impacts. Results of public goods games framed in terms of the management of communal water treatment systems suggest that observability (public disclosure of behaviour) had the very significant effect of decreasing contributions to the public good. Analysis suggests this was mainly due to conformity to frequently-observed free-riding. Only when participants were actively encouraged to negotiate agreements, did cooperation increase significantly - albeit intermittently. These results show that the success of institutional design principles devised to increase cooperation depends on existing social norms and practices in the community of interest. A failure to account for these informal rules and standards of behaviour may result in unintended consequences, such as a decline in collective action around the public good.
    Date: 2018–06–22

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