nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒04‒06
eight papers chosen by
Stan C. Weeber, McNeese State University

  1. Identity Politics, Clientelism, and Public Goods Provision: Theory and Evidence By Rohit Ticku; Raghul S. Venkatesh
  2. Divided They Fall. Fragmented Parliaments and Government Stability By Felipe Carozzi; Davide Cipullo; Luca Repetto
  3. The Dynamic Electoral Returns of a Large Anti-Poverty Program By Zimmermann, Laura
  4. Commitment and Conflict in Multilateral Bargaining By Miettinen, Topi; Vanberg, Christoph
  5. Big Data and Democracy By van Gils, Freek; Müller, Wieland; Prüfer, Jens
  6. Public Goods and Future Audiences: Acting as Role Models? By Giuseppe Attanasi; Roberta Dessi; Frédéric Moisan; Donald Robertson
  7. Discounting by committee By Millner, Antony; Healey, Andrew
  8. On Public Spending and Unions By Fernando Broner; Alberto Martín; Jaume Ventura

  1. By: Rohit Ticku (Institute for the Study of Religion, Economics and Society, Chapman University); Raghul S. Venkatesh (University of Aix-Marseille)
    Abstract: We study how identity politics determines clientelism and provision of public goods in representative democracies. Parties cultivate vote banks—a group of voters who vote along identity lines — in exchange for clientelistic transfers, and provide public goods to nonpartisan voters. There is ex-post identity formation among non-partisans that depends on the party in power. This generates an asymmetry in ex-post conflict payoff for the majority identity. The main theoretical result proposes a new mechanism for clientelism and rent seeking that is driven by identity politics. We further show that asymmetry in identity payoffs i) increases investment in conflict when the party with the support of minorities wins; and ii) increases public goods provision by both parties when income of minorities is below a threshold. We provide empirical evidence from state level elections in India for the period from 1983 till 2000. Results show that identity conflict is more intense when the party with minority identity vote bank is in power. This effect is magnified by the income of minorities. Further, provision of public goods under the party with minority vote bank increases with asymmetry in identity payoffs.
    Keywords: Identity Politics; Clientalism; Inter-group Conflict; Public Goods
    JEL: D0 H0 H4
    Date: 2020
  2. By: Felipe Carozzi (London School of Economics); Davide Cipullo (Uppsala University); Luca Repetto (Uppsala University)
    Abstract: This paper studies how political fragmentation affects government stability. Exploiting variation in the number of parties induced by a 5% vote share entry threshold in Spanish local councils, we show that the entry of an additional party in Parliament increases the probability of unseating the incumbent by 4 percentage points. We also document that mayors with more resources at their disposal for legislative bargaining are half as likely to be unseated. Challengers are younger, better educated, and more likely to win the following elections, suggesting that instability may induce positive selection on politicians. We interpret our results in light of a two-period bargaining model of coalition formation featuring government instability.
    Keywords: Government stability, fragmentation, no-confidence votes, policy uncertainty, alignment effect.
    JEL: H1 H7 R50
    Date: 2019–05
  3. By: Zimmermann, Laura
    Abstract: Short-term re-election strategies are widely used by governments around the world. This is problematic if governments can maximize their re-election chances by prioritizing short-term spending before an election over long-term reforms. This paper tests whether longer program exposure has a causal effect on election outcomes in the context of a large anti-poverty program in India. Using a regression-discontinuity framework, the results show that length of program exposure lowers electoral support for the government. The paper discusses a couple of potential explanations, finding that the most plausible mechanism is that voters hold the government accountable for the program's implementation quality.
    Keywords: election outcomes,voting behavior,accountability,India,anti-poverty programs
    JEL: D72 H53 I38
    Date: 2020
  4. By: Miettinen, Topi; Vanberg, Christoph
    Abstract: We extend the Baron and Ferejohn (1989) model of multilateral bargaining by allowing the players to attempt commiting to a bargaining position prior to negotiating. If successful,commitment binds a player to reject any proposal which allocates to her a share below a self-imposed threshold. Any such attempted commitment fails and decays with an exogenously given probability. We characterize and compare symmetric stationary subgame perfect equilibria under unanimity rule and majority rules. Under unanimity rule, there are potentially many equilibria which can be ordered from the least to most inefficient, according to how how many commitment attempts must fail in order for an agreement to arise. The most inefficient equilibrium exists independently of the number of players, and the delay in this equilibrium is increasing in the number of players. In addition, more efficient commitment profiles cannot be sustained in equilibrium if the number of players is sufficiently large. The expected inefficiency due to delay at the least and at the most efficient equilibrium increases as the number of players increases. Under any (super)majority rule, however, there is no equilibrium with delay or inefficiency. The reason is that competition to be included in the winning coalition discourages attempts to commit to an aggressive bargaining position. We also show that inefficiencies related to unanimity decision making may be aggravated by longer lags between consecutive bargaining rounds. The predicted patterns are by and large consistent with observed inefficiencies in many international arenas including the European Union, WTO, and UNFCCC. The results suggest that the unanimity rule is particularly damaging if the number of legislators is large and the time lags between consecutive sessions are long.
    Keywords: bargaining; commitment; conflict; delay; environmental agreements; international negotiations; legislative; majority; multilateral; unanimity
    Date: 2020–03–30
  5. By: van Gils, Freek (Tilburg University, TILEC); Müller, Wieland (Tilburg University, TILEC); Prüfer, Jens (Tilburg University, TILEC)
    Abstract: Recent technological developments have raised concerns about threats to democracy because of their potential to distort election outcomes: (a) data-driven voter research enabling political microtargeting, and (b) growing news consumption via social me- dia and news aggregators that obfuscate the origin of news items, leading to voters’ unawareness about a news sender’s identity. We provide a theoretical framework in which we can analyze the effects that microtargeting by political interest groups and unawareness have on election outcomes in comparison to “conventional” news report- ing. We show which voter groups suffer from which technological development, (a) or (b). While both microtargeting and unawareness have negative effects on voter welfare, we show that only unawareness can flip an election. Our model framework allows the theory-based discussion of policy proposals, such as to ban microtargeting or to require news platforms to signal the political orientation of a news item’s originator.
    Keywords: disinformation; interest groups; news platforms; microtargeting; voter awarness
    JEL: C72 D72 D82 D83
    Date: 2020
  6. By: Giuseppe Attanasi (Université Côte d'Azur, CNRS, GREDEG, France); Roberta Dessi (Toulouse School of Economics (TSE)); Frédéric Moisan (University of Cambridge); Donald Robertson (University of Cambridge)
    Abstract: Individuals' decisions to behave prosocially (or the contrary) can often be observed by other individuals, with no direct connection to them, but who may nevertheless be influenced by them (e.g. through social media). Does knowing that they may be viewed as role models by other, notably younger, people a ect the way individuals behave? Does it make them more likely to behave prosocially? We study how participants' behavior in an experimental public good game is affected when they know that information about their choices and outcomes, together with different sets of information about their identity, will be transmitted the following year to a set of new, unknown, younger participants - with no payoff linkages between the two sets of players. When subjects know their photo, choices and outcomes will be transmitted, they contribute significantly less. We consider different possible explanations, and argue that the most convincing is based on image concerns, but in a surprising way: subjects in the photo treatment care about not being perceived as "suckers" by future players.
    Keywords: Role models, image concerns, identity, audience, public goods
    JEL: C91 C92 H41
    Date: 2020–03
  7. By: Millner, Antony; Healey, Andrew
    Abstract: We study a dynamic social choice problem in which a sequence of committees must decide how to consume a public asset. A committee convened at time t decides on consumption at t, accounting for the behaviour of future committees. Committee members disagree about the appropriate value of the pure rate of time preference, but must nevertheless reach a decision. If each committee aggregates its members' preferences in a utilitarian manner, the collective preferences of successive committees will be time inconsistent, and they will implement inefficient consumption plans. If however committees decide on the level of consumption by a majoritarian vote in each period, they may improve on the consumption plans implemented by utilitarian committees. Using a simple model, we show that this occurs in empirically plausible cases. Application to the problem of choosing the social discount rate is discussed.
    Keywords: collective decisions; intertemporal choice; time inconsistency; social discounting; ES/K006576/1
    JEL: D60 D71 D90
    Date: 2018–11–01
  8. By: Fernando Broner; Alberto Martín; Jaume Ventura
    Abstract: We analyze the conduct of fiscal policy in a financially integrated union in the presence of financial frictions. Frictions create a wedge between the return to investment and the union interest rate. This leads to an over-spending externality. While the social cost of spending is the return to investment, governments care mostly about the (depressed) interest rate they face. In other words, the crowding out effects of public spending are partly "exported" to the rest of the union. We argue that it may be hard for the union to deal with this externality through the design of fiscal rules, which are bound to be shaped by the preferences of the median country and not by efficiency considerations. We also analyze how this overspending externality -and the union's ability to deal with it effectively- changes when the union is financially integrated with the rest of the world. Finally, we extend our model by introducing a zero lower bound on interest rates and show that, if financial frictions are severe enough, the union is pushed into a liquidity trap and the direction of the spending externality is reversed. At such times, fiscal rules that are appropriate during normal times might backfire.
    Keywords: public spending, crowding out, financial frictions, fiscal union, spending externalities, fiscal coordination
    JEL: E62 F32 F34 F36 F41 F42 F45
    Date: 2020–02

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