nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2020‒10‒19
fifteen 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 Kenju Kamei
  2. War, Socialism and the Rise of Fascism: An Empirical Exploration By Daron Acemoglu; Giuseppe De Feo; Giacomo De Luca; Gianluca Russo
  3. Party Preference Representation By André Blais; Eric Guntermann; Vincent Arel-Bundock; Ruth Dassonneville; Jean-François Laslier; Gabrielle Péloquin-Skulski
  4. Endogenous Monitoring through Gossiping in an Infinitely Repeated Prisoner’s Dilemma Game: Experimental Evidence By Kenju Kamei; Artem Nesterov
  5. Roots of dissent: Trade liberalization and the rise of populism in Brazil By Iacoella, Francesco; Justino, Patrica; Martorano, Bruni
  6. Ethical Voting in Heterogenous Groups By Alberto Grillo
  7. Decomposition of interaction indices: alternative interpretations of cardinal-probabilistic interaction indices * By Sebastien Courtin; Rodrigue Tido Takeng; Frédéric Chantreuil
  8. Political Favoritism by Powerful Politicians: Evidence from Chief Ministers in India By Umair Khalil; Mandar Oak; Sundar Ponnusamy
  9. Scaling up alternatives to capitalism: A social movement approach to alternative organizing (in) the economy By Schiller-Merkens, Simone
  10. Information Versus Control: The Electoral Consequences of Polling Place Creation By Bowles, Jeremy; Larreguy, Horacio; Woller, Anders
  11. Transfer Paradox in a General Equilibrium Economy: a First Experimental Investigation By Kenju Kamei
  12. How coopetition influences the development of a dominant design: evidence from the pinball industry By Fanny Simon; Alberic Tellier
  13. The New Intergovernmentalism and the Euro Crisis: A Painful Case? By Dermot Hodson
  14. Who Debates, Who Wins? At-Scale Experimental Evidence on the Supply of Policy Information in a Liberian Election By Bowles, Jeremy; Larreguy, Horacio
  15. How much you talk matters: cheap talk and collusion in a Bertrand oligopoly game By Lee, Jun Yeong; Hoffman, Elizabeth

  1. By: Kenju Kamei (Durham University Business School)
    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 mechanism
    Keywords: experiment, cooperation, vote buying, election, clientelism
    JEL: C92 D72
    Date: 2020–09
  2. By: Daron Acemoglu; Giuseppe De Feo; Giacomo De Luca; Gianluca Russo
    Abstract: The recent ascent of right-wing populist movements in many countries has rekindled interest in understanding the causes of the rise of Fascism in inter-war years. In this paper, we argue that there was a strong link between the surge of support for the Socialist Party after World War I (WWI) and the subsequent emergence of Fascism in Italy. We first develop a source of variation in Socialist support across Italian municipalities in the 1919 election based on war casualties from the area. We show that these casualties are unrelated to a battery of political, economic and social variables before the war and had a major impact on Socialist support (partly because the Socialists were the main anti-war political movement). Our main result is that this boost to Socialist support (that is “exogenous” to the prior political leaning of the municipality) led to greater local Fascist activity as measured by local party branches and Fascist political violence (squadrismo), and to significantly larger vote share of the Fascist Party in the 1924 election. We document that the increase in the vote share of the Fascist Party was not at the expense of the Socialist Party and instead came from right-wing parties, thus supporting our interpretation that center-right and right-wing voters coalesced around the Fascist Party because of the “red scare”. We also show that the veterans did not consistently support the Fascist Party and there is no evidence for greater nationalist sentiment in areas with more casualties. We provide evidence that landowner associations and greater presence of local elites played an important role in the rise of Fascism. Finally, we find greater likelihood of Jewish deportations in 1943-45 and lower vote share for Christian Democrats after World War II in areas with greater early Fascist activity.
    JEL: D72
    Date: 2020–09
  3. By: André Blais (UdeM - Université de Montréal); Eric Guntermann (UC BERKELEY - Berkeley University of California); Vincent Arel-Bundock (UdeM - Université de Montréal); Ruth Dassonneville (UdeM - Université de Montréal); Jean-François Laslier (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics); Gabrielle Péloquin-Skulski (UdeM - Université de Montréal)
    Abstract: Political parties are key actors in electoral democracies: they organize the legislature, form governments, and citizens choose their representatives by voting for them. How citizens evaluate political parties and how well the parties that citizens evaluate positively perform thus provide useful tools to estimate the quality of representation from the individual's perspective. We propose a measure that can be used to assess party preference representation at both the individual and aggregate levels, both in government and in parliament. We calculate the measure for over 160,000 survey respondents following 111 legislative elections held in 38 countries. We find little evidence that the party preferences of different socio-economic groups are systematically over or underrepresented. However, we show that citizens on the right tend to have higher representation scores than their left-wing counterparts. We also find that whereas proportional systems do not produce higher levels of representation on average, they reduce variance in representation across citizens.
    Keywords: party preference representation,party like/dislike,elections,cabinet,legislature
    Date: 2020–09
  4. By: Kenju Kamei (Durham University Business School); Artem Nesterov (Durham University Business School)
    Abstract: Exogenously given reputational information is known to improve cooperation. This paper experimentally studies how people create such information through reporting of partner’s action choices, and whether the endogenous monitoring helps sustain cooperation, in an indefinitely repeated prisoner’s dilemma game. The experiment results show that most subjects report their opponents’ action choices, thereby successfully cooperating with each other, when reporting does not involve a cost. However, subjects are strongly discouraged from reporting when doing so is costly. As a result, they fail to achieve strong cooperation norms when the reported information is privately conveyed only to their next-round interaction partner. Costly reporting occurs only occasionally, even when there is a public record whereby all future partners can check the reported information. However, groups can then foster cooperation norms aided by the public record, because reported information gets gradually accumulated and becomes more informative over time. These findings suggest that the efficacy of endogenous monitoring depends on the quality of platforms that store reported information.
    Keywords: experiment, cooperation, prisoner’s dilemma game, reputation, reporting, infinitely repeated game.
    JEL: C92 C73 D70 H41
    Date: 2020–09
  5. By: Iacoella, Francesco (UNU-MERIT); Justino, Patrica (UNU-WIDER); Martorano, Bruni (UNU-MERIT, Maastricht University)
    Abstract: This paper investigates the long-term impact of economic shocks on populism, by exploiting a natural experiment created by the trade liberalization process implemented in Brazil between 1990 and 1995. This high impact and low duration event generated a profound shock to the economy with, we argue, long term implications for political outcomes. We focus on the 2002 and 2018 presidential elections in Brazil, which resulted in the election of a left-wing and a right-wing populist president, respectively. The results show that trade reforms explain the rise of populism in Brazil during the last two decades. Microregions with larger tariff cuts in the early 1990s had significantly higher preferences for Lula in 2002 and were also more likely to support Bolsonaro in 2018. The link between trade liberalization and populism is mediated by austerity in both cases. The shift between left-wing and right-wing preferences is driven by the supply side of populism, whereby each leader took advantage of existing cleavages in the country at the time of their election-driven by inequality in the case of Lula and by insecurity and corruption in the case of Bolsonaro-to develop narratives against austerity that would appeal to their target audiences.
    Keywords: trade liberalization, populism, austerity, inequality, insecurity, Brazil
    JEL: D72 F14 I38 O12
    Date: 2020–10–05
  6. By: Alberto Grillo (Aix Marseille Univ, CNRS, AMSE, Marseille, France)
    Abstract: Voting in large elections appears to be both ethically motivated and influenced by strategic considerations. One way to capture this interplay postulates a rule-utilitarian calculus, which abstracts away from heterogeneity in the intensity of support (Feddersen and Sandroni 2006, Coate and Conlin 2004). I argue that this approach is unsatisfactory when such heterogeneity is considered, since it implies that idiosyncratic preferences are irrelevant for participation, in contrast to the empirical evidence. A model of Kantian optimizationà la Roemer (2019), based on the maximization of individual utility under a universalization principle, predicts instead differential participation and links ethical motivation to the spatial theory of voting.
    Keywords: voting, turnout, ethical voter, rule-utilitarian, kantian optimization
    JEL: D72
    Date: 2020–10
  7. By: Sebastien Courtin (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Rodrigue Tido Takeng (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Frédéric Chantreuil (UNC - Université de la Nouvelle-Calédonie)
    Abstract: In cooperative game theory, the concept of interaction index is an extension of the concept of value, considering interaction among players. In this paper we focus on cardinal-probabilistic interaction indices which are generalizations of the class of semivalues. We provide two types of decompositions. With the first one, a cardinal-probabilistic interaction index for a given coalition equals the difference between its external interaction index (or co-Möbius transfom) and a weighted sum of the individual impact of the remaining players on the interaction index of the considered coalition. The second decomposition, based on the notion of the "decomposer", splits an interaction index into a direct part, the decomposer, which measures the interaction in the coalition considered, and an indirect part, which indicates how all remaining players individually affect the interaction of the coalition considered. We propose alternative characterization of the cardinal-probabilistic interaction indices. We then propose an illustration with a well-known example in Multicriteria Aid for Decisions.
    Keywords: Game theory,Multicriteria Aid for Decisions,Cardinal-probabilistic interaction indices,External interaction index JEL Codes: C71
    Date: 2020–08–22
  8. By: Umair Khalil (School of Economics, University of Adelaide); Mandar Oak (School of Economics, University of Adelaide); Sundar Ponnusamy (School of Economics, University of Adelaide)
    Abstract: We study whether in single-member-district legislative systems, powerful politicians engage in political favoritism towards their constituents. The focus is on the chief ministers of Indian state governments. Using night light intensity as a measure of economic activity, we find that a constituency represented by a sitting chief minister exhibits about 13 percentage increase in luminosity relative to all other constituencies. The effect comes predominantly from the cases where the chief minister’s constituency lies outside their birth region. Neighboring constituencies, particularly those with strategic political value, also benefit from this windfall, suggesting the mechanism at play is likely to be political expediency rather than in-group favoritism.
    Keywords: Distributive Politics, Ethnic Favoritism, Rent-seeking
    JEL: D72 R11
    Date: 2020–10
  9. By: Schiller-Merkens, Simone
    Abstract: In these times of crises, capitalism and the far-reaching marketization of our societies has again become a subject of contestation and critique. Alternative organizing is one response to the critique of capitalism. As an embodied and constructive form of critique it takes place in prefigurative organizations and communities on the ground that experiment with alternative forms of organizing economic exchanges and lives. These prefigurative initiatives are seen as central actors in a social transformation toward an alternative economy. However, they oftentimes remain autonomous and disconnected, questioning their potential to contribute to a broader social change. This paper sets out to explore how and when alternative organizing as practiced in communities and organizations can scale upwards to lead to a more profound social transformation of our societies. Building on insights from scholarship on social movement outcomes, I discuss the collective actions, contextual conditions, and social mechanisms that are likely to allow an upward scale shift of alternative organizing.
    Keywords: alternative organizing,critique of capitalism,diffusion,movement outcome,postcapitalism,prefiguration,scale shift,social movement studies,social transformation,alternative Organisationsformen,Bewegungsforschung,Diffusion,Kapitalismuskritik,Postkapitalismus,Präfiguration,scale shift,soziale Transformation,Wirkungen sozialer Bewegungen
    Date: 2020
  10. By: Bowles, Jeremy; Larreguy, Horacio; Woller, Anders
    Abstract: We examine the incentives incumbents face when creating new polling places. First, doing so improves incumbents’ ability to monitor brokers and voters by reducing the number of registered voters per polling station. Second, it reduces the distance traveled by citizens to vote, which undercuts incumbents’ ability to control the electorate via turnout buying. We evaluate this trade-off in the context of Uganda, where the incumbent significantly influences electoral administration. Drawing on rich administrative data, we leverage discontinuities in the creation of polling places to causally identify the independent effects of the number of voters per polling station and distance to vote on electoral outcomes. We find that decreasing improves incumbent electoral outcomes, while reducing worsens them. The benefits for incumbent outweigh the costs, which rationalizes recent developments to expand polling infrastructure in Uganda and elsewhere.
    Keywords: electoral administration manipulation, turnout buying
    Date: 2020–09
  11. By: Kenju Kamei (Durham University Business School)
    Abstract: The transfer paradox, whereby a transfer of resources that influences the equilibrium price benefits the donor while harming the recipient, is a classic paradox in general equilibrium theory. This paper pursues an experimental investigation of the transfer paradox using a theoretical framework of a three-agent pure exchange economy that is predicted to have such a paradox. Two treatments were conducted. In the first treatment, there was one subject for each agent role in the experimental economy. In the other treatment, there were five subjects for each agent role (a total of 15 subjects) in the experimental economy. The experiment results indicate that a transfer of endowments among agents influenced the market clearing price, and consequently the donors benefited from this transfer, consistent with the competitive equilibrium theory. The equilibrium effects were strongest in the treatment with larger group size, resonating with the idea that having a larger number of market participants encourages them to behave competitively. Further, when given an option to make a transfer, the majority of the donor agents endogenously decide to adjust the endowment distribution. A detailed analysis found that the subjects’ decisions to transfer were mainly driven by the equilibrium effects on prices, and their decisions were largely unaffected by their measured level of cognitive ability.
    Keywords: experiments, transfer paradox, general equilibrium, equilibrium effects
    JEL: C92 D51
    Date: 2020–09
  12. By: Fanny Simon (NIMEC - Normandie Innovation Marché Entreprise Consommation - UNICAEN - Université de Caen Normandie - NU - Normandie Université - ULH - Université Le Havre Normandie - NU - Normandie Université - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Alberic Tellier (DRM - Dauphine Recherches en Management - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Most studies concerning dominant designs focus on ‘collective' or ‘competitive' strategies that companies deploy to impose their choices on the market. The objective of this research is to assess the extent to which ‘coopetitive' strategies may lead to a dominant design. We analyzed the development of a dominant design over an 84-year period through a historical study in the field of pinball machines. Our study focuses on the five main manufacturers of pinball machines and analyzes data from 1930 to 2014. We demonstrate that companies undergo three phases that involve the progressive development of coopetitive relationships with different impacts on the generation of innovation. Because manufacturers differentiated their offerings, innovated and simultaneously imitated others, increased competition resulted. Simultaneously, external threats and the need to collectively respond to clients and partners prompted the manufacturers to cooperate with one another. Thus, our research provides a better understanding of how specific horizontal coopetitive relationships among manufacturers of the same type of products impact the development of a dominant design at the industry level. This case study suggests that as a theoretical framework, coopetition introduces new insights into the comprehension of relational dynamics during the development of dominant designs. Our observations also confirm or invalidate conclusions drawn in previous works related to coopetition strategies. In particular, this case is interesting as although the appropriability regime was weak, companies still developed coopetitive relationships, contradicting previous studies.
    Keywords: absorptive capacity,cooperation,Pinball industry,Innovation
    Date: 2020
  13. By: Dermot Hodson
    Abstract: The new intergovernmentalism seeks to understand the changing dynamics of contemporary European integration. It emphasises, inter alia, member states’ preference for deliberative modes of decision-making and their reluctance to delegate new powers to traditional supranational institutions. The euro crisis is sometimes seen as a difficult case for the new intergovernmentalism because of the perceived importance of hard bargaining over crisis measures during this episode and the new roles entrusted to the European Commission and the European Central Bank under crisis reforms. Such criticisms, this paper argues, overlook: the importance of high-level consensus-seeking and deliberation in saving the single currency; the disparate forms of delegation deployed to preserve member state influence over Economic and Monetary Union; and the extent to which the euro crisis has amplified the European Union’s political disequilibrium. Far from running counter to the new intergovernmentalism, it concludes, the euro crisis exemplifies the turbulent dynamics of the post-Maastricht period.
    Keywords: European integration, euro crisis, integration theory, new intergovernmentalism
    Date: 2019–06
  14. By: Bowles, Jeremy; Larreguy, Horacio
    Abstract: We examine how candidate selection into the supply of policy information determines its electoral effects. In a nationwide debate initiative designed to solicit and rebroadcast policy promises from Liberian legislative candidates, we randomized the encouragement of debate participation across districts. The intervention substantially increased the debate participation of leading candidates but led to uneven electoral returns for these candidates, with incumbents benefiting at the expense of challengers. These results are driven by differences in compliance: complying incumbents, but not challengers, positively selected into debate participation based on the alignment of their policy priorities with those of their constituents.
    Keywords: accountability, information, selection
    JEL: D72 O12
    Date: 2020–10
  15. By: Lee, Jun Yeong; Hoffman, Elizabeth
    Abstract: This study investigates the impact of cheap talk on price in a repeated Bertrand oligopoly experiment. Each participant plays 20 rounds. Participants are placed in three-person bidding groups where the lowest bid wins. During the first 10 rounds, participants are not allowed to communicate with each other. All three-person groups converged to the zero-profit equilibrium in the first 10 periods. We then play another 10 rounds where participants can text with one another using an instant message system. Some groups were allowed to text before every round, some to text before every other round, some to text every third round, some to text every fourth round, and some to text only every fifth round. When texting is allowed, All groups attempt to collude to raise the price after being allowed to text, but the only groups who can maintain the higher price and converge over time to the joint-profit maximum are the groups who can text before every period. Hence, cheap talk is only effective when subjects can continuously monitor or converse.
    Date: 2020–05–01

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