nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒10‒05
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Does cohesion policy reduce EU discontent and Euroscepticism? By Andres Rodriguez-Pose; Lewis Dijkstra;
  2. After Eastern German State Elections 2019: Germany Facing Serious Politico-Economic Problem By Paul J.J. Welfens
  3. The Democratic Peace: An Experimental Test of a Causal Relation and of Underlying Mechanisms By Jordi Brandts; Catherine Eckel; Enrique Fatas; Shaun Hargreaves-Heap
  4. Why Beauty Matters: Candidates' Facial Appearance and Electoral Success By ONO Yoshikuni; ASANO Masahiko
  5. Coalition formation with optimal transfers when players are heterogeneous and inequality averse By Rogna, Marco; Vogt, Carla
  6. Anger and Strategic Behavior: A Level-k Analysis By Castagnetti, Alessandro; Proto, Eugenio
  7. A Political Model of Trust By Marina Agranov; Ran Eilat; Konstantin Sonin
  8. A Political Economy Model of the Ganges Pollution Cleanup Problem By Batabyal, Amitrajeet; Beladi, Hamid
  9. Economic Shocks and Populism: The Political Implications of Reference-Dependent Preferences By Fausto Panunzi; Nicola Pavoni; Guido Tabellini
  10. Abstentions and Social Networks in Congress By Marco Battaglini; Valerio Leone Sciabolazza; Eleonora Patacchini
  11. Security actors in fragile contexts By Erik Forsberg
  12. Delay and dilution in the implementation of environmental norms: business groups and the regulation of car emissions in Switzerland in the 1970s–1980s By Pitteloud, Sabine
  13. Agricultural Comparative Advantage and Legislators’ Support for Trade Agreements By Amodio, Francesco; Baccini, Leonardo; Chiovelli, Giorgio; Di Maio, Michele

  1. By: Andres Rodriguez-Pose; Lewis Dijkstra;
    Abstract: Some regions in Europe that have been heavily supported by the European Union’s cohesion policy have recently opted for parties with a strong Eurosceptic orientation. The results at the ballot box have been put forward as evidence that cohesion policy is ineffective for tackling the rising, European- wide wave of discontent. However, the evidence to support this view is scarce and, often, contradictory. This paper analyses the link between cohesion policy and the vote for Eurosceptic parties. It uses the share of votes cast for Eurosceptic parties in more than 63,000 electoral districts in national legislative elections in the EU28 to assess whether cohesion policy investment since 2000 has made a difference for the electoral support for parties opposed to European integration. The results indicate that cohesion policy investment is linked to a lower anti-EU vote. This result is robust to employing different econometric approaches, to considering the variety of European development funds, to different periods of investment, to different policy domains, to shifts in the unit of analysis, and to different levels of opposition by parties to the European project.
    Keywords: Euroscepticism, anti-system voting, populism, cohesion policy, elections, regions, Europe
    JEL: D72 R11 R58
    Date: 2020–09
  2. By: Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW))
    Abstract: The state elections in the former East German states of Brandenburg, Saxony and Thuringia stand for a rise of the right-wing Alternative für Deutschland (AfD) [Alternative for Germany], a relatively new populist party which was created in 2013. This party has won seats in all state parliaments and also has achieved a considerable voting share in the European Parliament elections in 2019 and the federal German Parliament in 2017; the voting shares obtained in the state elections of Brandenburg and Saxony were close to 25% and thus force the traditionally leading parties CDU (Christian Democrats) and SPD (Social Democrats) to form broader coalitions that take on board at least a third party. There are apparent reasons for the expansion of the AfD; the makeup of the current German government – a grand coalition of center right (CDU) and center left (SPD) – and its weak policy play a strong role in this. Germany’s economic system is facing major new adjustment problems and people, at least in eastern Germany, continue to face considerable personal and other fears. The situation in 2019 has improved, however, in western Germany. Major policy initiatives and reforms are needed to successfully cope with the challenges in Germany and the EU, respectively.
    Keywords: State Elections, Eastern Germany, German Unification, Populism, AfD, Inequality, Fears
    JEL: D63 D72 D74 D78
    Date: 2019–09
  3. By: Jordi Brandts; Catherine Eckel; Enrique Fatas; Shaun Hargreaves-Heap
    Abstract: Democracies go to war with each other less frequently than dictatorships do with each other. This is an established empirical regularity. However, it is not clear whether there is a causal link between democracy and peace. We use laboratory experiments to study whether there is a causal impact. We study the bellicosity of democracies compared with two types of dictatorships, inclusive and exclusive, where each society is composed of three members. We also analyze how bellicosity depends on the presence of the possibility of deliberation among the members of a society. Neither the ‘voting’ nor ‘inclusion’ aspect of democracy nor ‘deliberation’ in isolation has a positive causal impact on peace. However, when all three are combined, there is evidence that their combination produces less bellicosity than some kinds of dictatorship. It is the availability of deliberation that makes the crucial distinguishing difference for democracy in our experiment. We observe democratic peace only in the presence of deliberation.
    Keywords: conflict, governance, democracy, dictatorship, inclusivity, lab experiment
    JEL: C72 C91 C92 H11
    Date: 2020–09
  4. By: ONO Yoshikuni; ASANO Masahiko
    Abstract: Why do better-looking candidates gain more votes in elections? Existing research shows that candidates' facial appearance—perceived beauty, in particular—affects the fate of their election outcomes. Yet, little is known about the mechanisms by which the beauty of candidates creates a premium in elections. To solve this puzzle, we ran a survey that asked around 1,500 people to subjectively evaluate more than 400 real candidates' facial appearance, including beauty. We then conducted a survey experiment with about 3,000 people that explored the effects of candidate beauty on voter perceptions. Our findings demonstrate that neither candidates' facial expression nor the impressions they impart on the viewer, such as smiling, competence and trustworthiness, hinder the positive influence of perceived beauty of the candidates on election outcomes. We find that the beauty of the candidates attracts the attention of voters and alters voters' impressions of the candidates' prospects of winning the election, suggesting that voters' incentives to seek information and get on the bandwagon are driving them to support good-looking candidates.
    Date: 2020–09
  5. By: Rogna, Marco; Vogt, Carla
    Abstract: Obtaining significant levels of cooperation in public good and environmental games, under the assumption of players being purely selfish, is usually prevented by the problem of freeriding. Coalitions, in fact, generally fail to be internally stable and this cause a serious underprovision of the public good together with a significant welfare loss. The assumption of relational preferences, capable of better explaining economic behaviors in laboratory experiments, helps to foster cooperation, but, without opportune transfers scheme, no substantial improvements are reached. The present paper proposes an optimal transfers scheme under the assumption of players having Fehr and Schmidt (1999) utility functions, whose objective is to guarantee internal stability and to maximize the sum of utilities of coalition members. The transfers scheme is tested on a public good contribution game parameterized on the data provided by the RICE model and benchmarked with other popular transfers scheme in environmental economics. The proposed scheme outperforms its benchmarking counterparts in stabilizing coalitions and sensibly increases cooperation compared to the absence of transfers. Furthermore, for high but not extreme values of the parameter governing the intensity of dis-utility from disadvantageous inequality, it manages to support very large coalitions including three quarters of all players.
    Keywords: climate policy,coalitions,inequality aversion,RICE model,transfers scheme
    JEL: C72 D63 H41 Q54
    Date: 2020
  6. By: Castagnetti, Alessandro (University of Warwick); Proto, Eugenio (University of Glasgow)
    Abstract: Anger is an important driver in shaping economic activities, particularly in instances that involve strategic interactions between individuals. Here we test whether anger impairs the capacity to think strategically, and we analyze the implications of our result on bargaining and cooperation games. Accordingly, with a preregistered experiment (Experiment 1), we externally induce anger to a subgroup of subjects following a standard procedure that we verify by using a novel method of text analysis. We show that anger can impair the capacity to think strategically in a beauty contest game. Angry subjects choose numbers further away from the Nash equilibrium, and earn significantly lower profits. A structural analysis estimates that there is an increase in the share of level-zero players in the treated group compared to the control group. Furthermore, with a second preregistered experiment (Experiment 2), we show that this effect is not common to all negative emotions. Sad subjects do not play significantly further away from the Nash equilibrium than the control group in the same beauty contest game of Experiment 1, and sadness does not lead to more level-zero play.
    Keywords: anger, induced emotions, strategic interactions, beauty-contest
    JEL: C92 D90 D91
    Date: 2020–09
  7. By: Marina Agranov (Caltech - Division of Humanities and Social Sciences); Ran Eilat (Ben-Gurion University - Department of Economics); Konstantin Sonin (University of Chicago - Harris School of Public Policy)
    Abstract: We analyze a simple model of political competition, in which the uninformed median voter chooses whether to follow or ignore the advice of the informed elites. In equilibrium, information transmission is possible only if voters trust the elitesÕ endorsement of potentially biased candidates. When inequality is high, the elitesÕ informational advantage is minimized by the votersÕ distrust. When inequality reaches a certain threshold, the trust, and thus the information transmission, breaks down completely. Finally, the size of the elite forming in equilibrium depends on the amount of trust they are able to maintain.
    Keywords: trust, inequality, political economy, cheap talk, information club
    JEL: D72 D83
    Date: 2020
  8. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We study pollution cleanup in the Ganges in Varanasi, India. Voters elect politicians and elected politicians decide how much pollution to clean up. Between the two time periods, there is an election. Politicians are sincere or insincere. The marginal cost of public funds ζ measures how efficiently elected politicians transform tax receipts into pollution cleanup. Voters have identical per period utility functions. We ascertain the equilibrium outcome and per period voter welfare. Second, we show that an increase in ζ reduces the equilibrium pollution cleanup and voter welfare. Third, an insincere politician can delay the revelation of his insincerity. We show that a critical value of ζ,ζ^*, exists such that the insincere incumbent separates and loses the election if and only if ζ>ζ^* and that he pools and is re-elected otherwise. Finally, we note that an increase in ζ can raise voter welfare when politicians are more likely to be insincere.
    Keywords: Ganges River, Politician, Pollution Cleanup, Uncertainty, Voting
    JEL: D72 Q52
    Date: 2020–01–09
  9. By: Fausto Panunzi; Nicola Pavoni; Guido Tabellini
    Abstract: This paper studies electoral competition over redistributive taxes between a safe incumbent and a risky opponent. As in prospect theory, economically disappointed voters bcome risk lovers, and hence are intrinsically attracted by the more risky candidate. We show that, after a large adverse economic shock, the equilibrium can display policy divergence: the more risky candidate proposes lower taxes and is supported by a coalition of very rich and very disappointed voters, while the safe candidate proposes higher taxes. This can explain why new populist parties are often supported by economically dissatisfied voters and yet they run on economic policy platforms of low redistribution. We show that survey data on the German SOEP are consistent with our theoretical predicions on voters' behavior.
    Keywords: international taxation, multinational firms, financial statement income, book-tax conformity
    JEL: H25 M41
    Date: 2020
  10. By: Marco Battaglini; Valerio Leone Sciabolazza; Eleonora Patacchini
    Abstract: We study the extent to which personal connections among legislators influence abstentions in the U.S. Congress. Our analysis is conducted by observing representatives' abstention for the universe of roll call votes held on bills in the 109th-113th Congresses. Our results show that a legislator's propensity to abstain increases when the majority of his or her alumni connections abstains, even after controlling for other well-known predictors of abstention choices and a vast set of fixed effects. We further reveal that a legislator is more prone to abstain than to take sides when the demands from personal connections conflict with those of the legislator's party.
    JEL: D72 D74 D91
    Date: 2020–09
  11. By: Erik Forsberg
    Abstract: Security actors are important actors in the international community’s efforts to support peace in fragile contexts. Their activities affect not only the immediate security conditions in fragile contexts, but also the conditions for humanitarian assistance, development co-operation and peacebuilding. This paper explores the relationship between security actors and the broader international community in fragile contexts. It argues that security actors are needed to build peace in many fragile contexts, but that they can only contribute to peace where their activities are coherent with and complemented by appropriate civilian engagement. In doing so, it assists Development Assistance Committee members in their efforts to operationalise the Humanitarian-Development-Peace Nexus and to step up efforts to prevent conflict and build peace in fragile contexts. The paper is one of ten working papers supporting States of Fragility 2020 and together with Diplomacy and peace in fragile contexts, Conflict prevention in fragile contexts, and Peacebuilding in fragile contexts provides comprehensive background to Chapter 2 on peace in States of Fragility 2020.
    JEL: D74 F51 F50
    Date: 2020–09–17
  12. By: Pitteloud, Sabine
    Abstract: During the last decade, we have witnessed increased public concern about vehicle emissions and growing frustration with political inaction and businesses’ preference for the status quo. This paper offers a historical perspective on this debate by shedding light on the political struggle that occurred around the implementation of new regulations reducing air pollution caused by motor vehicles in Switzerland in the 1970s. Relying on archival material from the Swiss Federation of Commerce and Industry and the Federal Archives, the paper analyzes the processes of dilution and delay that characterized these regulations, and the complex interplay of various influences both in Switzerland and at the European level that contributed to this political outcome.
    Keywords: Environmental norms, Vehicle emissions, Lobbying, Business history, Switzerland
    JEL: N54 N84 F64 K32 D72
    Date: 2020
  13. By: Amodio, Francesco; Baccini, Leonardo; Chiovelli, Giorgio; Di Maio, Michele
    Abstract: Does comparative advantage explain legislators’ support for trade liberalization? We use data on potential crop yields as determined by weather and soil characteristics to derive a new, plausibly exogenous measure of comparative advantage in agriculture for each district in the US. Evidence shows that comparative advantage in agriculture predicts how legislators vote on the ratification of preferential trade agreements in Congress. We show that legislators in districts with high agricultural comparative advantage are more likely to mention that trade agreements are good for agriculture in House floor debates preceding roll-call votes on their ratifications. Individuals living in the same districts are also more likely to support free trade. Our analysis and results contribute to the literature on the political economy of trade and its distributional consequences, and to our understanding of the economic determinants of legislators voting decisions.
    Keywords: Comparative Advantage, Trade Liberalization, Politicians, US
    JEL: D72 F14 Q17
    Date: 2020–07–14

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