nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒07‒20
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Unbundling Polarization By Canen, Nathan; Kendall, Chad; Trebbi, Francesco
  2. Terrorist Attacks, Cultural Incidents and the Vote for Radical Parties: Analyzing Text from Twitter By Giavazzi, Francesco; Iglhaut, Felix; Lemoli, Giacomo; Rubera, Gaia
  3. Representative Committees of Peers By Reshef Meir; Fedor Sandomirskiy; Moshe Tennenholtz
  4. The Performance of Diverse Teams: Evidence from U.S. Mutual Funds By Evans, Richard B.; Prado, Melissa; Rizzo, A. Emanuele; Zambrana, Rafael
  5. Welfare-improving misreported polls By Felipe R. Durazzo; David Turchick
  6. Minority Protection in Voting Mechanisms - Experimental Evidence By Engelmann, Dirk; Grüner, Hans Peter; Hoffmann, Timo; Possajennikov, Alex
  7. Efficient democratic decisions via nondeterministic proportional consensus By Jobst Heitzig; Forest W. Simmons
  8. Analysis of the possibilities for coordinating the positions of the BRICS countries on key tasks of the international community By Larionova, Marina (Ларионова, Марина); Shelepov, Andrey (Шелепов, Андрей); Sakharov, Andrey (Сахаров, Андрей)
  9. Teamwise Mean Field Competitions By Xiang Yu; Yuchong Zhang; Zhou Zhou
  10. Optimizing Voting Order on Sequential Juries: A Median Voter Theorem By Steve Alpern; Bo Chen
  11. Social Groups and the Effectiveness of Protests By Battaglini, Marco; Morton, Rebecca; Patacchini, Eleonora
  12. Democratic Support for the Bolshevik Revolution: An Empirical Investigation of 1917 Constituent Assembly Elections By Dower, Castaneda; Markevich, Andrei
  13. Structural Reforms and Elections: Evidence from a World-Wide New Dataset By Alesina, Alberto F; Furceri, Davide; Ostry, Jonathan D.; Papageorgiou, Chris; Quinn, Dennis
  14. Decision-Making in Complex Households By Rangel, Marcos; Thomas, Duncan
  15. Racial Diversity, Electoral Preferences, and the Supply of Policy: the Great Migration and Civil Rights By Calderon, Alvaro; Fouka, Vasiliki; Tabellini, Marco
  16. Does Party Competition Affect Political Activism? By Hager, Anselm; Hensel, Lukas; Hermle, Johannes; Roth, Christopher
  17. On the Internal and External Stability of Coalitions and Application to Group Purchasing Organizations By Dongshuang Hou; Aymeric Lardon; Hao Sun
  18. A Semiparametric Network Formation Model with Unobserved Linear Heterogeneity By Candelaria, Luis E.
  19. Inequality, macroeconomic performance and political polarization: A panel analysis of 20 advanced democracies By Proaño Acosta, Christian; Peña, Juan Carlos; Saalfeld, Thomas

  1. By: Canen, Nathan; Kendall, Chad; Trebbi, Francesco
    Abstract: This paper investigates the determinants of political polarization, a phenomenon of increasing relevance in Western democracies. How much of polarization is driven by divergence in the ideologies of politicians? How much is instead the result of changes in the capacity of parties to control their members? We use detailed internal information on party discipline in the context of the U.S. Congress - whip count data for 1977-1986 - to identify and structurally estimate an economic model of legislative activity in which agenda selection, party discipline, and member votes are endogenous. The model delivers estimates of the ideological preferences of politicians, the extent of party control, and allows us to assess the effects of polarization through agenda setting (i.e. which alternatives to a status quo are strategically pursued). We find that parties account for approximately 40 percent of the political polarization in legislative voting over this time period, a critical inflection point in U.S. polarization. We also show that, absent party control, historically significant economic policies would have not passed or lost substantial support. Counterfactual exercises establish that party control is highly relevant for the probability of success of a given bill and that polarization in ideological preferences is more consequential for policy selection, resulting in different bills being pursued.
    Keywords: Ideology; Political parties; Political Polarization; US Congress
    JEL: D72 P48
    Date: 2020–01
  2. By: Giavazzi, Francesco; Iglhaut, Felix; Lemoli, Giacomo; Rubera, Gaia
    Abstract: We study the role of perceived threats from cultural diversity induced by terrorist attacks and a salient criminal event on public discourse and voters' support for far-right parties. We first develop a rule which allocates Twitter users in Germany to electoral districts and then use a machine learning method to compute measures of textual similarity between the tweets they produce and tweets by accounts of the main German parties. Using the dates of the aforementioned exogenous events we estimate constituency-level shifts in similarity to party language. We find that following these events Twitter text becomes on average more similar to that of the main far-right party, AfD, while the opposite happens for some of the other parties. Regressing estimated shifts in similarity on changes in vote shares between federal elections we find a significant association. Our results point to the role of perceived threats on the success of nationalist parties.
    Keywords: National elections; Political parties; social media; Terrorism; Text Analysis
    JEL: C45 D72 H56
    Date: 2020–02
  3. By: Reshef Meir; Fedor Sandomirskiy; Moshe Tennenholtz
    Abstract: A population of voters must elect representatives among themselves to decide on a sequence of possibly unforeseen binary issues. Voters care only about the final decision, not the elected representatives. The disutility of a voter is proportional to the fraction of issues, where his preferences disagree with the decision. While an issue-by-issue vote by all voters would maximize social welfare, we are interested in how well the preferences of the population can be approximated by a small committee. We show that a k-sortition (a random committee of k voters with the majority vote within the committee) leads to an outcome within the factor 1+O(1/k) of the optimal social cost for any number of voters n, any number of issues $m$, and any preference profile. For a small number of issues m, the social cost can be made even closer to optimal by delegation procedures that weigh committee members according to their number of followers. However, for large m, we demonstrate that the k-sortition is the worst-case optimal rule within a broad family of committee-based rules that take into account metric information about the preference profile of the whole population.
    Date: 2020–06
  4. By: Evans, Richard B.; Prado, Melissa; Rizzo, A. Emanuele; Zambrana, Rafael
    Abstract: We use the U.S. mutual fund industry to study the relation between team diversity and performance. Focusing on diversity concerning political ideology, we find that diverse portfolio manager teams outperform homogeneous teams and have a higher active share, and tracking error. These results are robust to controlling for manager and family fixed effects, as well as other dimensions of diversity, manager political connections, and incentives. We also find that political polarization has a strong limiting effect of diversity on performance, consistent with a reversal of the benefits of diversified perspectives when external forces negatively affect team trust and cooperation. In assessing possible mechanisms for the observed outperformance, we find evidence consistent both with improved decision-making due to the increased variety of perspectives, as well as increased monitoring by heterogeneous team members. Lastly, in exploring why diverse teams are not more prevalent in the industry, we find that entrenched managers prefer homogeneous teams and that local labor markets are constrained in their supply of ideologically diverse managers.
    Keywords: Â Mutual fund; Campaign Contributions; Dispersion in Beliefs; diversity; Labor incentives; PACs; Polarization; Political Ideology; Teams
    JEL: G11 G23 J33 J44 L22 L25 L84 M12 M52
    Date: 2020–01
  5. By: Felipe R. Durazzo; David Turchick
    Abstract: An often-heard criticism about electoral pollsters is that they might misreport pre-election poll results. We show that this can happen even in the absence of partisan motives, but purely for reputational ones. By underreporting the expected number of supporters of the most preferred candidate, the pollster is able to induce an election result more in line with its report. By doing so, not only victory chances of the most preferred candidate in society rise above 50%, but also total election costs are reduced, thus yielding welfare gains. Our model also allows for the accommodation of both the underdog effect (a feature of pivotal voting models) and the apparently inconsistent bandwagon effect, in the sense that the latter may be an illusion on the part of an observer who disregards the possibility of nontruthful polls. All of these results hold even as the electorate size grows without bound.
    Keywords: costly voting; pivotal voting model; pre-election polls; misreporting; bandwagon effect
    JEL: C70 C72 D72 C46
    Date: 2020–07–09
  6. By: Engelmann, Dirk; Grüner, Hans Peter; Hoffmann, Timo; Possajennikov, Alex
    Abstract: Under simple majority voting an absolute majority of voters may choose policies that are harmful to minorities. It is the purpose of sub- and super-majority rules to protect legitimate minority interests. We study how voting rules are chosen under the veil of ignorance. In our experiment, individuals choose voting rules for given distributions of gains and losses that can arise from a policy, but before learning their own valuation of the policy. We find that subjects on average adjust the voting rule in line with the skewness of the distribution. As a result, a higher share of the achievable surplus can be extracted with the suggested rules than with exogenously given simple majority voting. The rule choices, however, imperfectly reflect the distributions of benefits and costs, in expectation leading to only 63% of the surplus being extracted. Both under-protection and over-protection of minorities contribute to the loss. Voting insincerely leads to a further surplus loss of 5-15%. We classify subjects according to their rule choices and show that most subjects' rule choices follow the incentives embedded in the distributions. For a few participants, however, this is not the case, which leads to a large part of the surplus loss.
    Date: 2020–02
  7. By: Jobst Heitzig; Forest W. Simmons
    Abstract: Are there voting methods which (i) give everyone, including minorities, an equal share of effective power even if voters act strategically, (ii) promote consensus rather than polarization and inequality, and (iii) do not favour the status quo or rely too much on chance? We show the answer is yes by describing two nondeterministic voting methods, one based on automatic bargaining over lotteries, the other on conditional commitments to approve compromise options. Our theoretical analysis and agent-based simulation experiments suggest that with these, majorities cannot consistently suppress minorities as with deterministic methods, proponents of the status quo cannot block decisions as in consensus-based approaches, the resulting aggregate welfare is comparable to existing methods, and average randomness is lower than for other nondeterministic methods.
    Date: 2020–06
  8. By: Larionova, Marina (Ларионова, Марина) (The Russian Presidential Academy of National Economy and Public Administration); Shelepov, Andrey (Шелепов, Андрей) (The Russian Presidential Academy of National Economy and Public Administration); Sakharov, Andrey (Сахаров, Андрей) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper presents a comparative analysis of the initiatives and positions of the members of the BRICS and the “Group of Seven” within the framework of the “Group of Twenty”, as well as the decisions of the “Twenty” on issues historically central to the agenda. The analysis showed that, despite the presence of contradictions within the alliances and common interests between the BRICS members and some members of the G7 on a number of issues, the replacement of existing ad hoc clubs by groups of developed and developing countries does not occur. At the same time, members of the Seven more successfully used coordination within their club to resolve internal contradictions and develop a common position for joint promotion in the G20. Accordingly, strengthening the BRICS partnership, increasing the effectiveness of its own cooperation mechanisms, strengthening coordination in the G20, developing cooperation with international institutions and enhancing interaction within the existing multilateral institutions (IMF, WB, multilateral development banks) are necessary to achieve the key goal - the goals of the Five are the formation of a more democratic and just multipolar world order. Based on the analysis, recommendations were formulated to strengthen the mechanisms of interaction and promote the interests of the Russian Federation within the framework of informal global governance institutions for the chairmanship of the BRICS in 2020.
    Date: 2020–04
  9. By: Xiang Yu; Yuchong Zhang; Zhou Zhou
    Abstract: This paper studies competitions with rank-based reward among a large number of teams. Within each sizable team, we consider a mean-field contribution game in which each team member contributes to the jump intensity of a common Poisson project process; across all teams, a mean field competition game is formulated on the rank of the completion time, namely the jump time of Poisson project process, and the reward to each team is paid based on its ranking. On the layer of teamwise competition game, three optimization problems are introduced when the team size is determined by: (i) the team manager; (ii) the central planner; (iii) the team members' voting as partnership. We propose a relative performance criteria for each team member to share the team's reward and formulate some mean field games of mean field games, which are new to the literature. In all problems with homogeneous parameters, the equilibrium control of each worker and the equilibrium or optimal team size can be computed in an explicit manner, allowing us to analytically examine the impacts of some model parameters and discuss their economic implications. Two numerical examples are also presented to illustrate the parameter dependence and comparison between different team size decision making.
    Date: 2020–06
  10. By: Steve Alpern; Bo Chen
    Abstract: We consider an odd-sized "jury", which votes sequentially between two states of Nature (say A and B, or Innocent and Guilty) with the majority opinion determining the verdict. Jurors have private information in the form of a signal in [-1,+1], with higher signals indicating A more likely. Each juror has an ability in [0,1], which is proportional to the probability of A given a positive signal, an analog of Condorcet's p for binary signals. We assume that jurors vote honestly for the alternative they view more likely, given their signal and prior voting, because they are experts who want to enhance their reputation (after their vote and actual state of Nature is revealed). For a fixed set of jury abilities, the reliability of the verdict depends on the voting order. For a jury of size three, the optimal ordering is always as follows: middle ability first, then highest ability, then lowest. For sufficiently heterogeneous juries, sequential voting is more reliable than simultaneous voting and is in fact optimal (allowing for non-honest voting). When average ability is fixed, verdict reliability is increasing in heterogeneity. For medium-sized juries, we find through simulation that the median ability juror should still vote first and the remaining ones should have increasing and then decreasing abilities.
    Date: 2020–06
  11. By: Battaglini, Marco; Morton, Rebecca; Patacchini, Eleonora
    Abstract: We present an informational theory of public protests, according to which public protests allow citizens to aggregate privately dispersed information and signal it to the policy maker. The model predicts that information sharing of signals within social groups can facilitate information aggregation when the social groups are sufficiently large even when it is not predicted with individual signals. We use experiments in the laboratory and on Amazon Mechanical Turk to test these predictions. We find that information sharing in social groups significantly affects citizens' protest decisions and as a consequence mitigates the effects of high conflict, leading to greater efficiency in policy makers' choices. Our experiments highlight that social media can play an important role in protests beyond simply a way in which citizens can coordinate their actions; and indeed that the information aggregation and the coordination motives behind public protests are intimately connected and cannot be conceptually separated.
    Keywords: Petitions; Public Protests; Social groups
    JEL: D72 D78
    Date: 2020–02
  12. By: Dower, Castaneda; Markevich, Andrei
    Abstract: Scholars have long-debated the causes of the Russian Revolution. We systematically investigate the role of key factors in these debates by exploiting cross-district variation in Bolsheviks' popular support in 1917. We analyze voting outcomes of the Constituent Assembly elections, which occurred right after the Bolsheviks seized power. We find that the Bolsheviks mobilized greater support in districts with a larger share of industrial workers, a greater presence of historically private land, which the Bolsheviks redistributed to peasants, and in districts with garrisons and military hospitals. We also provide evidence that the underpinnings of this support conflicted with the Bolsheviks' development strategy, forewarning the autocratic command economy to come.
    Keywords: Communism; elections; Regime Change; Revolution; Russia
    JEL: D72 H7 N44 P26
    Date: 2020–02
  13. By: Alesina, Alberto F; Furceri, Davide; Ostry, Jonathan D.; Papageorgiou, Chris; Quinn, Dennis
    Abstract: We assemble two unique databases. One is on reforms in domestic finance, external finance, trade, product markets and labor markets, which covers 90 advanced and developing economies from 1973 to 2014. The other is on electoral results and timing of elections. In the 66 democracies considered in the paper, we show that liberalizing reforms engender benefits for the economy, but they materialize only gradually over time. Partly because of this delayed effect, and possibly because voters are impatient or do not anticipate future benefits, liberalizing reforms are costly to incumbents when implemented close to elections. We also find that the electoral effects depend on the state of the economy at the time of reform: reforms are penalized during contractions; liberalizing reforms undertaken in expansions are often rewarded. Voters seem to attribute current economic conditions to the reforms without gully internalizing the delay that it takes for reforms to bear fruit.
    Keywords: Capital Account; current account; elections; employment protection; Finance; Labor market; Product market; reform; regulation; Trade
    JEL: D72 J65 L43 L51 O43 O47 P16
    Date: 2020–01
  14. By: Rangel, Marcos; Thomas, Duncan
    Abstract: Extremely rich data on farm households in Burkina Faso are used to test whether resources are allocated Pareto efficiently. The complexity of household structures, including multi-generation and polygynous households, is taken into account to developing tests from theoretical models of behavior. Credible measures of bargaining power are constructed exploiting the fact that individuals within a household have well-defined property rights over the plots they own. Using data on consumption choices, we establish that in farm households headed by a monogamous couple (with no co-resident adult sons), resource allocations are consistent with efficiency. In more complex household structures, including polygynous households, efficiency in allocations is not rejected in models that allow more than two household members to have agency in decision-making. In contrast, tests for efficiency based on whether the same farm households maximize profits by equating marginal products across plots are rejected for all household types. Further, these same tests indicate individuals do not equate marginal products across their own plots. We conclude, therefore, that tests of models of resource allocation based on production-side decisions are likely to be misleading. In contrast, the consumption-side tests provide novel insights into the nature of decision-making within complex households.
    Keywords: Consumption; Household resource allocation; Pareto efficiency; Production
    JEL: J1 O13 Q15
    Date: 2020–01
  15. By: Calderon, Alvaro; Fouka, Vasiliki; Tabellini, Marco
    Abstract: How does the racial composition of local constituencies affect voters' preferences and politicians' behavior? We study the effects of one of the largest episodes of internal migration in US history, the 1940-1970 Great Migration of African Americans, on both demand for racial equality and supply of civil rights legislation. We predict black inflows by interacting historical settlements of southern born blacks across northern counties with differential emigration rates from different southern states after 1940. We find that black in-migration increased support for the Democratic Party and encouraged grassroots activism. Data on pro-civil rights demonstrations and historical surveys reveal that segments of the white electorate, such as Democrats and union members, supported blacks' struggle for racial equality. At the same time, backlash against civil rights erupted among Republicans and whites more exposed to racial mixing of their neighborhoods. Mirroring the responses of the electorate, Congress members representing areas more exposed to black in-migration became more supportive of civil rights legislation. Such average effects, however, mask substantial heterogeneity, as Democratic and Republican legislators became, respectively, more liberal and more conservative on racial issues. Taken together, our findings suggest that, under certain conditions, cross-race coalitions can emerge, but also that changes in the composition of the electorate can polarize both voters and politicians.
    Keywords: civil rights; diversity; Great Migration; race
    JEL: D72 J15 N92
    Date: 2020–01
  16. By: Hager, Anselm (University of Oxford); Hensel, Lukas (University of California, Berkeley and IZA); Hermle, Johannes (Humboldt-Universität zu Berlin); Roth, Christopher (University of Warwick)
    Abstract: Does party competition affect political activism? This paper studies the decision of party supporters to join political campaigns. We present a framework that incorporates supporters’ instrumental and expressive motives and illustrates that party competition can either increase or decrease party activism. To distinguish between these competing predictions, we implemented a field experiment with a European party during a national election. In a seemingly unrelated party survey, we randomly assigned 1,417 party supporters to true information that the canvassing activity of the main competitor party was exceptionally high. Using unobtrusive, real-time data on party supporters’ canvassing behavior, we find that treated respondents are 30 percent less likely to go canvassing. To investigate the causal mechanism, we leverage additional survey evidence collected two months after the campaign. Consistent with affective accounts of political activism, we show that increased competition lowered party supporters’ political self-efficacy, which plausibly led them to remain inactive.
    Keywords: Party Activism ; Electoral Competition ; Field Experiment ; Campaigns
    Date: 2020
  17. By: Dongshuang Hou (NPU - Northwestern Polytechnical University [Xi'an]); Aymeric Lardon (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS - Centre National de la Recherche Scientifique - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UL2 - Université Lumière - Lyon 2 - ENS Lyon - École normale supérieure - Lyon); Hao Sun (NPU - Northwestern Polytechnical University [Xi'an])
    Abstract: Two new notions of stability of coalitions, based on the idea of exclusion or integration of players depending on how they affect allocations, are introduced for cooperative transferable utility games. The first one, called internal stability, requires that no coalition member would find that her departure from the coalition would improve her allocation or those of all her partners. The second one, called external stability, requires that coalitions members do not wish to recruit a new partner willing to join the coalition, since her arrival would hurt some of them. As an application of these two notions, we study the stability of Group Purchasing Organizations using the Shapley value to allocate costs between buyers. Our main results suggest that, when all buyers are initially alone, while small buyers will form internally and externally stable Group Purchasing Organizations to benefit from the best price discount, big buyers will be mutually exclusive and may cooperate with only small buyers.
    Keywords: Internal and external stability,Group purchasing organization,Cost allocation,Shapley value
    Date: 2020
  18. By: Candelaria, Luis E. (University of Warwick)
    Abstract: This paper analyzes a semiparametric model of network formation in the presence of unobserved agent-specific heterogeneity. The objective is to identify and estimate the preference parameters associated with homophily on observed attributes when the distributions of the unobserved factors are not parametrically specified. This paper offers two main contributions to the literature on network formation. First, it establishes a new point identification result for the vector of parameters that relies on the existence of a special regressor. The identification proof is constructive and characterizes a closed-form for the parameter of interest. Second, it introduces a simple two-step semiparametric estimator for the vector of parameters with a first-step kernel estimator. The estimator is computationally tractable and can be applied to both dense and sparse networks. Moreover, I show that the estimator is consistent and has a limiting normal distribution as the number of individuals in the network increases. Monte Carlo experiments demonstrate that the estimator performs well in finite samples and in networks with different levels of sparsity.
    Keywords: Network formation ; Unobserved heterogeneity ; Semiparametrics ; Special regressor ; Inverse weighting
    Date: 2020
  19. By: Proaño Acosta, Christian; Peña, Juan Carlos; Saalfeld, Thomas
    Abstract: This paper investigates the macroeconomic and social determinants of voting behavior, and especially of political polarization, in 20 advanced countries using annual data ranging from 1970 to 2016 and covering 291 parliamentary elections. Using a panel estimation approach and rolling regressions, our analysis indicates that a significant change in the link between income inequality and political polarization appears to have taken place over the last twenty years. Indeed, we find that both average inequality, measured by the post-tax Gini coefficient, as well as the bottom 10%income share are statistically linked to the recent success of far-right parties, while the top 10% or top 20% incomes shares are not. The link of income inequality and political polarization thus seems to be based on the deterioration of the relative economic position especially of the poorest fraction of the population. Furthermore, we find no empirical support for the notion that social and economic globalization has led to an increase in the popularity of far-right parties.
    Keywords: Income Inequality,Political Polarization,Globalization,Economic Voting Behavior
    JEL: P16 D6 D72 O15
    Date: 2020

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