nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒09‒21
nineteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Incomplete Political Contracts with Secret Ballots: Reciprocity as a Force to Enforce Sustainable Clientelistic Relationships By Kamei, Kenju
  2. Voter Attention and Distributive Politics By Carl Heese
  3. Collective Action Problems and Resource Allocation During Market Formation By Jeroen Struben; Brandon H. Lee; Christopher B. Bingham
  4. Network Structures of Collective Intelligence: The Contingent Benefits of Group Discussion By Joshua Becker; Abdullah Almaatouq; Agnes Horvat
  5. Does Vote Trading Improve Welfare? By Alessandra Casella; Antonin Macé
  6. Evolution of Conditional Cooperation in Prisoner's Dilemma By Saral, Ali Seyhun
  7. An Analysis of Random Elections with Large Numbers of Voters By Matthew Harrison-Trainor
  8. Passing on the Baton: Positive Spillovers from the Olympics to Female Representation in US Politics By Lee, S-M.
  9. Segregation versus assimilation in friendship networks with farsighted and myopic agents By LUO Chenghong,; MAULEON Ana,; VANNETELBOSCH Vincent,
  10. Wind of Change? Experimental Survey Evidence on the COVID-19 Shock and Socio-Political Attitudes in Europe By Gianmarco Daniele; Andrea F.M. Martinangeli; Francesco Passarelli; Willem Sas; Lisa Windsteiger
  11. What Do Americans Want From (Private) Government? Experimental Evidence Demonstrates that Americans Want Workplace Democracy By Mazumder, Soumyajit; Yan, Alan
  12. Ten isn’t large! Group size and coordination in a large-scale experiment By Jasmina Arifovic; Cars Hommes; Anita Kopányi-Peuker; Isabelle Salle
  13. Electoral Accountability and Selection with Personalized News Aggregation By Anqi Li; Lin Hu; Ilya Segal
  14. Against All Odds: Tentative Steps Toward Efficient Information Sharing in Groups By Schlangenotto, Darius; Schnedler, Wendelin; Vadovic, Radovan
  15. Conflict Economics and Psychological Human Needs By Thomas Gries; Veronika Müller
  16. Selection into Leadership and Dishonest Behavior of Leaders: A Gender Experiment By Kerstin Grosch; Stephan Müller; Holger A. Rau; Lilia Zhurakhovska
  17. Compound games, focal points, and the framing of collective and individual interests By Stefan Penczynski; Stefania Sitzia; Jiwei Zheng
  18. Political Activists as Free-Riders: Evidence from a Natural Field Experiment By Anselm Hager; Lukas Hensel; Johannes Hermle; Christopher Roth
  19. Majority Decision Making Works Best under Conditions of Leadership Ambiguity and Shared Task Representations By Schippers, M.C.

  1. By: Kamei, Kenju
    Abstract: Clientelism is frequently observed in our societies. Various mechanisms that help sustain incomplete political contracts (e.g., monitoring and punishment) have been studied in the literature to date. However, do such contracts emerge in elections with secret ballots when the interactions are one-shot? How does repetition affect the evolution of incomplete political contracts? Using an incentivized experiment, this paper finds that even during one-shot interactions where monitoring is not possible, candidates form incomplete contracts through vote buying and promise-making. The candidates’ clientelistic behaviors are heterogeneous: some target swing voters, whereas others offer the most to loyal voters, or even opposition voters. These tactics distort voting behaviors as well as election outcomes. Repeated interactions significantly magnify candidates’ offers and deepen clientelistic relationships. These results underscore the possibility that clientelism evolves due to people’s strategic behaviors and interdependent preferences, without relying on alternative mechanisms.
    Keywords: experiment, cooperation, vote buying, election, clientelism
    JEL: C92 D72
    Date: 2020–06–09
  2. By: Carl Heese
    Abstract: This paper studies theoretically how endogenous attention to politics affects social welfare and its distribution. When information of citizens about uncertain policy consequences is exogenous, a median voter theorem holds. When information is endogenous, attention shifts election outcomes into a direction that is welfare-improving. For a large class of settings, election outcomes maximize a weighted welfare rule. The implicit decision weight of voters with higher utilities is higher, but less so, when information is more cheap. In general, decision weights are proportional to how informed voters are. The results imply that uninformed voters have effectively almost no voting power, that the ability to access and interpret information is a critical determinant of democratic participation, and that elections are susceptible to third-party manipulation of voter information.
    Keywords: Voting, Information Aggregation, Attention, Costly Information Acquisition, Welfare
    JEL: D72
    Date: 2020–09
  3. By: Jeroen Struben (emlyon business school); Brandon H. Lee (University of Melbourne); Christopher B. Bingham (UNC - University of North Carolina [Chapel Hill] - UNC - University of North Carolina System)
    Abstract: Collective action is critical for successful market formation. However, relatively little is known about how and under what conditions actors overcome collective action problems to successfully form new markets. Using the benefits of simulation methods, we uncover how collective action problems result from actor resource allocation decisions interacting with each other and how the severity of these problems depends on central market- and actor-related characteristics. Specifically, we show that collective action problems occur when actors undervalue the benefits of market-oriented resource allocation and when actors contribute resources that are imperfectly substitutable. Furthermore, we show that collective action problems occur when actors are embedded in networks with others sharing a similar role in market formation. Collectively, our findings contribute new insights to organization theory regarding collective action and market formation and to strategy on value creation and strategic decision making regarding resource allocation.
    Keywords: market formation,industry emergence,collective action,collective action problems,Resource allocation,Decision making,Simulation
    Date: 2020
  4. By: Joshua Becker; Abdullah Almaatouq; Agnes Horvat
    Abstract: Research on belief formation has produced contradictory findings on whether and when communication between group members will improve the accuracy of numeric estimates such as economic forecasts, medical diagnoses, and job candidate assessments. While some evidence suggests that carefully mediated processes such as the "Delphi method" produce more accurate beliefs than unstructured discussion, others argue that unstructured discussion outperforms mediated processes. Still others argue that independent individuals produce the most accurate beliefs. This paper shows how network theories of belief formation can resolve these inconsistencies, even when groups lack apparent structure as in informal conversation. Emergent network structures of influence interact with the pre-discussion belief distribution to moderate the effect of communication on belief formation. As a result, communication sometimes increases and sometimes decreases the accuracy of the average belief in a group. The effects differ for mediated processes and unstructured communication, such that the relative benefit of each communication format depends on both group dynamics as well as the statistical properties of pre-interaction beliefs. These results resolve contradictions in previous research and offer practical recommendations for teams and organizations.
    Date: 2020–09
  5. By: Alessandra Casella; Antonin Macé
    Abstract: Voters have strong incentives to increase their influence by trading votes, a practice indeed believed to be common. But is vote trading welfare-improving or welfare-decreasing? We review the theoretical literature and, when available, its related experimental tests. We begin with the analysis of logrolling – the exchange of votes for votes, considering both explicit vote exchanges and implicit vote trades engineered by bundling issues in a single bill. We then focus on vote markets, where votes can be traded against a numeraire. We cover competitive markets, strategic market games, decentralized bargaining, and more centralized mechanisms, such as quadratic voting, where votes can be bought at a quadratic cost. We conclude with procedures allowing voters to shift votes across decisions – to trade votes with oneself only – such as storable votes or a modified form of quadratic voting. We find that vote trading and vote markets are typically inefficient; more encouraging results are obtained by allowing voters to allocate votes across decisions.
    JEL: D6 D7 D71 D72
    Date: 2020–08
  6. By: Saral, Ali Seyhun
    Abstract: In this study, we investigate conditional types and their evolution in an iterated Prisoner's Dilemma, comparing different continuation probabilities, by using a computational model. In our setting, agents are characterized by their responses to each level of cooperation in a linearly extended Prisoner's Dilemma. By using repeated simulations, we estimate the likelihood of cooperation and the conditional strategies that are likely to succeed. Our results show that, when the continuation probability is sufficiently large, full cooperation is achieved. In this case, the most successful strategies are the ones who employ an all-or-none type of conditional cooperation, followed by perfect conditional cooperators. In the intermediate levels of continuation probability, however, hump-shaped contributor types are the ones that are most likely to exist, followed by imperfect conditional cooperators. Those agents cooperate in a medium level of cooperation within themselves and each other. Our results provide an explanation for the commonly observed hump-shaped strategy and imperfect conditional cooperators in experiments. Furthermore, a potential implication of our results is that the heterogeneity of conditional strategies might stem from the diverse interaction frequencies among real-world interactions.
    Date: 2020–08–24
  7. By: Matthew Harrison-Trainor
    Abstract: In an election in which each voter ranks all of the candidates, we consider the head-to-head results between each pair of candidates and form a labeled directed graph, called the margin graph, which contains the margin of victory of each candidate over each of the other candidates. A central issue in developing voting methods is that there can be cycles in this graph, where candidate $\mathsf{A}$ defeats candidate $\mathsf{B}$, $\mathsf{B}$ defeats $\mathsf{C}$, and $\mathsf{C}$ defeats $\mathsf{A}$. In this paper we apply the central limit theorem, graph homology, and linear algebra to analyze how likely such situations are to occur for large numbers of voters. There is a large literature on analyzing the probability of having a majority winner; our analysis is more fine-grained. The result of our analysis is that in elections with the number of voters going to infinity, margin graphs that are more cyclic in a certain precise sense are less likely to occur.
    Date: 2020–09
  8. By: Lee, S-M.
    Abstract: Female representation in politics may be influenced by positive spillovers from the success of women in other professions. I exploit the timing of the Olympic games to isolate the spillover effect of female Olympic medallists on demand for female representation in US state elections a few months after the Olympics. I estimate that the female medals effect is around a 1 per cent increase in female candidate vote shares in the Olympian's state of birth. This is driven entirely by the 3.8 per cent increase for female Democrat candidates, exacerbating existing polarisation between parties. I do not find evidence of voters changing their attitudes about women in politics in response to female Olympic success, but find evidence consistent with female representation becoming a more important issue for Democrat voters. I estimate a 2.7 per cent decrease in female representation associated with the postponement of the 2020 Olympics.
    Keywords: Female Representation, Political Representation, Elections, Gender Inequality, Sport
    JEL: D72 D91 J16
    Date: 2020–09–03
  9. By: LUO Chenghong, (CORE, UCLouvain and Ca’Foscoari University); MAULEON Ana, (Université Saint Louis, Bruxelles); VANNETELBOSCH Vincent, (CORE, UCLouvain)
    Abstract: We reconsider die Marti and Zenou (2017) model of friendship network formation where individuals belong to two different communities. Benefits from direct and indirect connections decay with distance while costs of forming links depend on community memberships. Individuals are now either farsighted or myopic when deciding about the friendship links they want to form. When all individuals are myopic many inefficient friendship networks (e.g. complete segregation) can arise. When the larger (smaller) community is farsighted while the smaller (larger) community is myopic, the friendsip network where the myopic community is assimilated into the farsighted community is the unique stable network when inter-community costs are large. In fact, farsightedness helps the society to avoid ending up segregated. Once inter-community costs are small enough, the coplete integration network become stable. Finally, when all individuals are farsighted, the friendship network where the smaller community ends up being assimilated into the dominant community is likely to arise.
    Keywords: friendship networks; stable sets; myopic and farsighted players; assimilation; segregation
    JEL: A14 C70 D20
    Date: 2020–02–11
  10. By: Gianmarco Daniele; Andrea F.M. Martinangeli; Francesco Passarelli; Willem Sas; Lisa Windsteiger
    Abstract: This paper investigates whether the COVID-19 crisis has affected the way we think about (political) institutions, as well as our broader (policy) attitudes and values. We fielded large online survey experiments in Italy, Spain, Germany and the Netherlands, well into the first wave of the epidemic (May-June), and included outcome questions on trust, voting intentions, policies & taxation, and identity & values. With a randomised survey ow we vary whether respondents are given COVID-19 priming questions first, before answering the outcome questions. With this treatment design we can also disentangle the health and economic effects of the crisis, as well as a potential “rally around the ag” component. We find that the crisis has brought about severe drops in interpersonal and institutional trust, as well as lower support for the EU and social welfare spending financed by taxes. This is largely due to economic insecurity, but also because of health concerns. A rallying effect around (scientific) expertise combined with populist policies losing ground forms the other side of this coin, and suggests a rising demand for competent leadership.
    Keywords: COVID-19, social trust, institutional trust, survey experiment, European Union, welfare, health, taxation, accountability, populism, values
    JEL: D72 H51 H53 H55 O52 P52
    Date: 2020
  11. By: Mazumder, Soumyajit; Yan, Alan
    Abstract: Much of the American labor force spends time in "private governments" over which they have little say during and beyond the work day. Do Americans prefer to work for businesses that look more like democracies or autocracies? We study this question using conjoint experimental techniques on a nationally representative sample of Americans. This design allows us to vary a large number of features of the workplace--especially their governance structures and the degree to which these structures allow for meaningful democratic decision-making. We hypothesize that workers should have a preference for democratic corporate governance structures such as employee ownership, co-determination, and the direct election of management. We find strong support that Americans have a preference for workplace democratization and that the magnitude is economically significant. Overall, this article marshals new data and analyses to better understand public preferences over "corporate regime type."
    Date: 2020–08–20
  12. By: Jasmina Arifovic; Cars Hommes; Anita Kopányi-Peuker; Isabelle Salle
    Abstract: This paper provides experimental evidence on coordination within genuinely large groups that could proxy the atomistic nature of real-world markets and organizations. We use a bank-run game where the two pure-strategy equilibria “run” and “wait” can be ranked by payoff and risk-dominance and a random sequence of public announcements introduces stochastic sunspot equilibria. We find systematic group size differences that theory fails to predict. In the presence of strategic uncertainty, the behavior of small groups is uninformative of behavior in large groups: in contrast to groups of 10, large groups only coordinate on the safest but Pareto-inferior “run” strategy and never coordinate on sunspots. Our results entail a series of theoretical and experimental implications.
    Keywords: Financial markets; Financial stability
    JEL: C92 D90 G20
    Date: 2020–07
  13. By: Anqi Li; Lin Hu; Ilya Segal
    Abstract: We study a model of electoral accountability and selection (EAS) in which voters with heterogeneous horizontal preferences pay limited attention to the incumbent's performance using personalized news aggregators. Extreme voters' news aggregators exhibit an own-party bias, which hampers their abilities to discern good and bad performances. While this effect alone would undermine EAS, there is a countervailing effect stemming from the disagreement between extreme voters, which makes the centrist voter pivotal and could potentially improve EAS. Thus increasing mass polarization and shrinking attention spans have ambiguous effects on EAS, whereas nuanced regulations of news aggregators unambiguously improve EAS and voter welfare.
    Date: 2020–09
  14. By: Schlangenotto, Darius (University of Paderborn); Schnedler, Wendelin (University of Paderborn); Vadovic, Radovan (Carleton University)
    Abstract: When groups face difficult problems, the voice of experts may be lost in the noise of others' contributions. We present results from a 'naturally noisy' setting, a large first-year undergraduate class, in which the 'expert's voice is lost' to such a degree that it is in fact optimal for all non-experts to contribute their bits of information. A single individual has little chance to improve the outcome and coordinating with the whole group is impossible. In this setting, we examine the change in behavior before and after people can talk to their neighbors. We find that the number of people who reduce noise by holding back their information strongly and significantly increases.
    Keywords: information aggregation, coordination, communication, swing voter's curse
    JEL: D71 D72 D81 D82 C99
    Date: 2020–07
  15. By: Thomas Gries (Paderborn University); Veronika Müller (Paderborn University)
    Abstract: The basic approach in conflict economics, to explain motives and conditions for civil strife, is based on the assumption of choice. Wars, civil conflicts, or terrorism are thus analyzed as outcomes of goal-driven choices according to underlying incentives and constraints. Because conflict involves choices between nonviolent and violent alternatives, it is perceived as a pure result of strategic choice – that is, calculated, rational thinking with the aim to achieve profitable ends. While this would imply that rational agents are primarily motivated by material gains, we argue that individuals may also join groups and use violence for psychological reasons – and this choice is not subject to irrationality. Factors such as group belongingness, threat, a shared group-identity, and self-esteem are important determinants in explaining violent mobilization. In this regard, the current paper postulates that agents make foremost choices in order to serve their mental preferences, or in psychological terms, their fundamental human needs, i.e. needs that address the human drive to survive, to understand and control their environment, to find their role and purpose in life, and to feel accepted and efficacious in their choices and actions. We reviewed a vast amount of interdisciplinary literature and identified three need dimensions: existential, relational, and self-related human needs. Each of these needs is shaped by internal determinants, such as agent´s dispositions, and by external determinants, such as economic, social, political, or environmental factors. Therefore, to properly understand why individuals join rebel groups and are willing to accept a high level of personal risk to advance their groups´ goals, we have to consider, beyond economic incentives, also their psychological human needs.
    Keywords: Conflict economics; Psychological human needs; Reconciliation; Individual decision-making
    JEL: D74 D91 I31 Z1
    Date: 2020–09
  16. By: Kerstin Grosch; Stephan Müller; Holger A. Rau; Lilia Zhurakhovska
    Abstract: Leaders often have to weigh ethical against monetary consequences. Such situations may evoke psychological costs from being dishonest and dismissing higher monetary benefits for others. In a within-subjects experiment, we analyze such a dilemma. We first measure individual dishonest behavior when subjects report the outcome of a die roll, which determines their payoffs. Subsequently, they act as leaders and report payoffs for a group including themselves. In our main treatment, subjects can apply for leadership, whereas in the control treatment, we assign leadership randomly. Results reveal that women behave more dishonestly as leaders while men behave similarly in both the individual and the group decision. For female leaders, we find that sorting into leadership is not related to individual honesty preferences. In the control we find that female leaders do not increase dishonesty. A follow-up study reveals that female leaders become more dishonest after assuming leadership, as they align dishonest behavior with their belief on group members’ honesty preferences.
    Keywords: leadership, decision for others, lab experiment, gender differences, dishonesty
    JEL: C91 H26 J16
    Date: 2020
  17. By: Stefan Penczynski; Stefania Sitzia; Jiwei Zheng
    Abstract: This study introduces the concept of “compound games†and investigates whether the decomposition of a game – when implemented – influences behaviour. For example, we investigate whether separating battle of the sexes games into a pure coordination component and the remaining battle of the sexes component changes coordination success. The literature attributes high coordination rates in pure coordination games with focal points to team reasoning and low coordination rates in related battle of the sexes games to level-k reasoning. We find that coordination success in compound games depends on the decomposition and order of component games.
    Keywords: Compound games, focal points, framing, collective interest
    JEL: C72 C91 D90
    Date: 2020
  18. By: Anselm Hager; Lukas Hensel; Johannes Hermle; Christopher Roth
    Abstract: How does a citizen’s decision to participate in political activism depend on the participation of others? We conduct a nation-wide natural field experiment in collaboration with a major European party during a recent national election. In a seemingly unrelated survey, we randomly provide canvassers with true information about the canvassing intentions of their peers. When learning that more peers participate in canvassing than previously believed, canvassers significantly reduce both their canvassing intentions and behavior as measured through a smartphone application. Treatment effects are larger for supporters with weaker social ties to the party and for supporters with higher career concerns within the party.
    Keywords: political activism, natural field experiment, strategic behaviour, beliefs
    JEL: D80 P16
    Date: 2020
  19. By: Schippers, M.C.
    Abstract: The effectiveness of decision-making teams depends largely on their ability to integrate and make sense of information. Consequently, teams which more often use majority decision making may make better quality decisions, but particularly so when they also have task representations which emphasize the elaboration of information relevant to the decision, in the absence of clear leadership. In the present study I propose that (a) majority decision making will be more effective when task representations are shared, and that (b) this positive effect will be more pronounced when leadership ambiguity (i.e. team members’ perceptions of the absence of a clear leader) is high. These hypotheses were put to the test using a sample comprising 81 teams competing in a complex business simulation for seven weeks. As predicted, majority decision making was more effective when task representations were shared, and this positive effect was more pronounced when there was leadership ambiguity. The findings extend and nuance earlier research on decision rules, the role of shared task representations, and leadership clarity.
    Keywords: group decision making, decision rules, shared task representations, leadership ambiguity, team performance
    Date: 2020–09–08

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