nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒05‒18
five papers chosen by
Stan C. Weeber, McNeese State University

  1. Social Epistemology By Franz Dietrich; Kai Spiekermann
  2. High Finance, Political Money, and the U.S. Congress: A Quantitative Assessment of the Campaign to Roll Back Dodd-Frank By Thomas Ferguson; Paul Jorgenson; Jie Chen
  3. Belief-Averaged Relative Utilitarianism By Florian Brandl
  4. Ingroup Love Drives Ingroup Bias within Natural Groups By Gönül Dogan; Luke Glowacki; Hannes Rusch
  5. Identification and Inference of Network Formation Games with Misclassified Links By Candelaria, Luis E.; Ura, Takuya

  1. By: Franz Dietrich (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, CES - Centre d'économie de la Sorbonne - CNRS - Centre National de la Recherche Scientifique - UP1 - Université Panthéon-Sorbonne); 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
  2. By: Thomas Ferguson (Institute for New Economic Thinking); Paul Jorgenson (University of Texas Rio Grande Valley); Jie Chen (UMass Boston)
    Abstract: The extent to which governments can resist pressures from organized interest groups, and especially from finance, is a perennial source of controversy. This paper tackles this classic question by analyzing votes in the U.S. House of Representatives on measures to weaken the Dodd-Frank financial reform bill in the years following its passage. To control as many factors as possible that could influence floor voting by individual legislators, the analysis focuses on representatives who originally cast votes in favor of the bill but then subsequently voted to dismantle key provisions of it. This design rules out from the start most factors normally advanced by skeptics to explain vote shifts, since these are the same representatives, belonging to the same political party, representing substantially the same districts. Our panel analysis, which also controls for spatial influences, highlights the importance of time-varying factors, especially political money, in moving representatives to shift their positions on amendments such as the “swaps push out†provision. Our results suggest that the links between campaign contributions from the financial sector and switches to a pro-bank vote were direct and substantial: For every $100,000 that Democratic representatives received from finance, the odds they would break with their party’s majority support for the Dodd-Frank legislation increased by 13.9 percent. Democratic representatives who voted in favor of finance often received $200,000–$300,000 from that sector, which raised the odds of switching by 25–40 percent.
    Keywords: banking and financial regulation, political economy, financial crisis, political parties, political money.
    JEL: G20 L5 N22 D72 G38 P16 K22
    Date: 2020–01
  3. By: Florian Brandl
    Abstract: We study preference aggregation under uncertainty when individual and collective preferences are based on subjective expected utility. A natural procedure for determining the collective preferences of a group then is to average its members' beliefs and add up their $(0,1)$-normalized utility functions. This procedure extends the well-known relative utilitarianism to decision making under uncertainty. We show that it is the only aggregation function that gives tie-breaking rights to agents who join a group and satisfies an independence condition in the spirit of Arrow's independence of irrelevant alternatives as well as four undiscriminating axioms.
    Date: 2020–05
  4. By: Gönül Dogan; Luke Glowacki; Hannes Rusch
    Abstract: Humans often favor their own group members over others, a preference that drives discrimination and intergroup conflicts. Whether such ingroup bias is a result of elevated concerns for one's group members or diminished concerns for outgroup members remains an open question. We test this experimentally with natural groups in Ethiopia that have varying intergroup relations (neutral vs. enmity) and strengths of group identity (weak vs. strong). We find that ingroup bias manifests as concern toward ingroup but not outgroup members and that a strong group identity amplifies ingroup concerns, whereas enmity has no effect. Our results thus identify shared group identity as a primary driver of concerns for others.
    Date: 2020–05–07
  5. By: Candelaria, Luis E. (University of Warwick); Ura, Takuya (University of California, Davis)
    Abstract: This paper considers a network formation model when links are potentially measured with error. We focus on a game-theoretical model of strategic network formation with incomplete information, in which the linking decisions depend on agents’ exogenous attributes and endogenous network characteristics. In the presence of link misclassification, we derive moment conditions that characterize the identified set for the preference parameters associated with homophily and network externalities. Based on the moment equality conditions, we provide an inference method that is asymptotically valid when a single network of many agents is observed. Finally, we apply our proposed method to study trust networks in rural villages in southern India.
    Keywords: Misclassification ; Network formation models ; Strategic interactions ; Incomplete information JEL codes: C13 ; C31
    Date: 2020

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