nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2021‒01‒25
thirteen papers chosen by
Stan C. Weeber, McNeese State University

  1. Terrorism and Voting Behavior: Evidence from the United States By Baccini, Leonardo; Brodeur, Abel; Nossek, Sean; Shor, Eran
  2. Homo moralis goes to the voting booth: coordination and information aggregation By Ingela Alger; Jean-François Laslier
  3. Collective intertemporal decisions and heterogeneity in groups By Daniela Glätzle-Rützler; Philipp Lergetporer; Matthias Sutter
  4. A Theory of Elite-Biased Democracies By Raouf Boucekkine; Rodolphe Desbordes; Paolo Melindi-Ghidi
  5. Political Constraints and Sovereign Default Premia By Nirvana Mitra
  6. Elections, Political Connections and Cash Holdings: Evidence from Local Assemblies By David Adeabah; Charles Andoh; Simplice A. Asongu; Isaac Akomea-Frimpong
  7. Bihar Assembly Elections 2020: An Analysis By Mudit Kapoor; Shamika Ravi
  8. Voting Corrupt Politicians Out of Office? Evidence from a Survey Experiment in Paraguay By Rumilda Cañete; Josepa Miquel-Florensa; Stéphane Straub; Karine van der Straeten
  9. Multi-Scale Games: Representing and Solving Games on Networks with Group Structure By Kun Jin; Yevgeniy Vorobeychik; Mingyan Liu
  10. Restructuring sovereign bonds: Holdouts, haircuts and the effectiveness of CACs By Fang, Chuck; Schumacher, Julian; Trebesch, Christoph
  11. Autonomy Of Subnational Party Systems: Comparative Analysis Of Federations By Rostislav Turovsky; Elizabeth Luizidis
  12. A political economy of loose means-testing in targeted social programs By Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
  13. Partisan Alignment and Political Corruption: Evidence from a New Democracy By Alexander Stoecker

  1. By: Baccini, Leonardo (McGill University); Brodeur, Abel (University of Ottawa); Nossek, Sean (McGill University); Shor, Eran (McGill University)
    Abstract: This paper examines the impact of terrorism on voting behavior in the United States. We rely on an exhaustive list of terror attacks over the period 1970-2016 and exploit the inherent randomness of the success or failure of terror attacks to identify the political impacts of terrorism. We first confirm that the success of terror attacks is plausibly random by showing that it is orthogonal to potential confounders. We then show that on average successful attacks have no effect on presidential and non-presidential elections. As a benchmark, we also rely on a more naïve identification strategy using all the counties not targeted by terrorists as a comparison group. We show that using this naïve identification strategy leads to strikingly different results overestimating the effect of terror attacks on voting behavior. Overall, our results indicate that terrorism has less of an influence on voters than is usually thought.
    Keywords: terrorism, voting behavior
    JEL: D72 D74
    Date: 2021–01
  2. By: Ingela Alger (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, Institute for Advanced Study Toulouse); Jean-François Laslier (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, 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)
    Abstract: This paper revisits two classical problems in the theory of voting-viz. the divided majority problem and the strategic revelation of information by majority vote-in the light of evolutionarily founded partial Kantian morality. It is shown that, compared to electorates consisting of purely self-interested voters, such Kantian morality helps voters solve coordination problems and improves the information aggregation properties of equilibria, even for modest levels of morality.
    Keywords: Condorcet jury theorem,divided majority problem,voting,Homo moralis,Kantian morality,social dilemmas
    Date: 2020–11
  3. By: Daniela Glätzle-Rützler (Department of Public Finance, University of Innsbruck); Philipp Lergetporer (Center for the Economics of Education, ifo Institute Munich, and CESifo); Matthias Sutter (Max Planck Institute for Research on Collective Goods, University of Cologne, University of Innsbruck and IZA Bonn)
    Abstract: Many important intertemporal decisions are made by groups rather than individuals. What happens to collective decisions when there is internal conflict about the tradeoff between present and future has not been thoroughly investigated so far. We study experimentally the causal effect of group members’ heterogeneous payoffs from waiting on intertemporal choices. We find that three-person groups behave more patiently than individuals. This effect stems from the presence of at least one group member with a high payoff from waiting. We analyze additional treatments, group chat content, and survey data to uncover the mechanism through which heterogeneity in groups increases patience.
    Keywords: patience, time preferences, group decisions, payoff heterogeneity, experiment
    JEL: C91 C92 D03 D90
    Date: 2021–01
  4. By: Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université, UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain); Rodolphe Desbordes (SKEMA BS - UCA - Université Côte d'Azur); Paolo Melindi-Ghidi (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université, UCL IRES - Institut de recherches économiques et sociales - UCL - Université Catholique de Louvain)
    Abstract: Elite-biased democracies are those democracies in which former political incumbents and their allies coordinate to impose part of the autocratic institutional rules in the new political regime. We document that this type of democratic transition is much more prevalent than the emergence of pure (popular) democracies in which the majority decides the new political rules. We then develop a theoretical model explaining how an elitebiased democracy may arise in an initially autocratic country. To this end, we extend the benchmark political transition model of Acemoglu and Robinson (2006) along two essential directions. First, population is split into majority versus minority groups under the initial autocratic regime. Second, the minority is an insider as it benefits from a more favourable redistribution by the autocrat. We derive conditions under which elite-biased democracies emerge and characterise them, in particular with respect to pure democracies.
    Keywords: elite-biased democracy,institutional change,minority/majority,economic favouritism,inequality,revolution
    Date: 2020–12–01
  5. By: Nirvana Mitra (Department Of Economics, Shiv Nadar University)
    Abstract: I study the relationship between political constraints and the probability of sovereign default using a dynamic model of fiscal policy augmented with legislative bargaining and default. I find that the tightness of political constraints and default probability are inversely related if the output cost of default is not too high. The model government consists of legislators who bargain over multidimensional fiscal policy, including over a local public good that benefits only the regions they represent. Tighter political constraints are equivalent to more legislators with veto power over fiscal policies. In this case, a default implies that the released resources need to be distributed among more regions as local public goods. Thus, a smaller benefit accrues to each region, decreasing the incentive to default. However, if default is too costly, even relatively unconstrained governments default less frequently because the individual share of cost is too high. Empirical evidence from South American countries is consistent with this result. I calibrate the infinite horizon model to Argentina. It confirms the inverse relationship. A counterfactual exercise with even higher political constraints shows that the default by Argentina in 2001 could not be avoided.
    Keywords: Sovereign debt, Default risk, Interest rates, Political economy, Minimum winning coalition, Endogenous borrowing constraints.
    JEL: D72 E43 F34 E62 F41
    Date: 2021–01–15
  6. By: David Adeabah (Legon, Ghana); Charles Andoh (Legon, Ghana); Simplice A. Asongu (Yaoundé, Cameroon); Isaac Akomea-Frimpong (Sydney University, Australia)
    Abstract: We examine the relationship between elections, political connections, and cash holdings in Ghanaian local assemblies. Using a panel dataset of 179local assemblies over a period 2012 to 2017, a panel regression and the generalized method of moments estimation techniques was employed for the analysis. We find that local assemblies hold less cash during election years, which suggests that election may be one of the potential factors to mitigate agency conflict in weak governance environment. Further, we demonstrate that local assemblies that have political connections hold less cash; however, political uncertainty makes these entities conducive to agency problems than their non-connected peers because they hold more cash. Additional analysis indicates that one year prior to elections, managerial conservatism kicks-in and leads managers to hold more cash in local assemblies that have political connections, which continues and becomes more pronounced in election years. Our results have implications for regulations on the cash management practices of local assemblies.
    Keywords: agency problem; cash holdings; generalized method of moments;panel regression; political connections
    Date: 2021–01
  7. By: Mudit Kapoor; Shamika Ravi
    Abstract: We analyse the Bihar assembly elections of 2020, and find that poverty was the key driving factor, over and above female voters as determinants. The results show that the poor were more likely to support the NDA. The relevance of this result for an election held in the midst of a pandemic, is very crucial, given that the poor were the hardest hit. Secondly, in contrast to conventional commentary, the empirical results show that the AIMIM-factor and the LJP-factor hurt the NDA while benefitting the MGB, with their presence in these elections. The methodological novelty in this paper is combining elections data with wealth index data to study the effect of poverty on elections outcomes.
    Date: 2020–12
  8. By: Rumilda Cañete; Josepa Miquel-Florensa (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Stéphane Straub (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karine van der Straeten (IAST - Institute for Advanced Study in Toulouse)
    Abstract: This paper challenges the conventional wisdom that giving voters more power – both formally through the use of more "open" electoral systems and informally through easier access to information on politicians' wrongdoings – will necessarily result in them voting corrupt politicians out of office. Focusing on a comparison between closed-list and open-list proportional representation systems, we theoretically show that opening the lists is likely to generate a large shift of vote shares in favor of the incumbent parties, which in many countries happen to be the most corrupt. We design a survey experiment to test these predictions in Paraguay and find strong supporting evidence. We do not find in our context that the lack of information is a major obstacle preventing voters from voting out corrupt politicians; if anything, under the more open system, supporters of the incumbent party tend to cast more votes for politicians with a recent history of corruption.
    Keywords: Corruption,Electoral systems,Information
    Date: 2020–11
  9. By: Kun Jin; Yevgeniy Vorobeychik; Mingyan Liu
    Abstract: Network games provide a natural machinery to compactly represent strategic interactions among agents whose payoffs exhibit sparsity in their dependence on the actions of others. Besides encoding interaction sparsity, however, real networks often exhibit a multi-scale structure, in which agents can be grouped into communities, those communities further grouped, and so on, and where interactions among such groups may also exhibit sparsity. We present a general model of multi-scale network games that encodes such multi-level structure. We then develop several algorithmic approaches that leverage this multi-scale structure, and derive sufficient conditions for convergence of these to a Nash equilibrium. Our numerical experiments demonstrate that the proposed approaches enable orders of magnitude improvements in scalability when computing Nash equilibria in such games. For example, we can solve previously intractable instances involving up to 1 million agents in under 15 minutes.
    Date: 2021–01
  10. By: Fang, Chuck; Schumacher, Julian; Trebesch, Christoph
    Abstract: Sovereign debt crises are difficult to solve. This paper studies the "holdout problem", meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external creditors since 1994. We then study the determinants of holdouts and find that the size of creditor losses (haircuts) is among the best predictors at the bond level. In a restructuring, bonds with higher haircuts see higher holdout rates, and the same is true for small bonds and those issued under foreign law. Collective action clauses (CACs) are effective in reducing holdout risks. However, classic CACs, with bond-by-bond voting, are not sufficient to assure high participation rates. Only the strongest form of CACs, with single-limb aggregate voting, minimizes the holdout problem according to our simulations. The results help to inform theory as well as current policy initiatives on reforming sovereign bond markets.
    Keywords: Sovereign default,debt restructuring,international financial architecture,creditor Coordination
    JEL: F34 G15 H63 K22
    Date: 2021
  11. By: Rostislav Turovsky (National Research University Higher School of Economics); Elizabeth Luizidis (National Research University Higher School of Economics)
    Abstract: This research is based on theories of federalized party systems, second-order elections and nationalization of party system comparing long-established democratic federations in terms of actual autonomy of their subnational party systems. The study shows that despite obvious prerequisites for subnational autonomy (such as federal institutions, different timing of elections, freedom to establish regional parties and blocs) most federations have created solidly nationalized party systems. Nevertheless, we explore striking differences among the federations in terms of presence and strength of regional parties, while our thorough comparative analysis of electoral turnout and parties support at federal and regional levels of elections reveals that federations are very different and sometimes unique. Also, we see that the theory of second-order elections does not work consistently which in our point of view means the decisive role of regional agenda and emphasizes the presence of national parties consistently inclined to local politics. We conclude that the development of partially autonomous subnational party systems and biases of electoral outcomes in federal and regional elections depend on the historical evolution of political institutions in the state rather than create similar patterns across the federations
    Keywords: second-order elections, nationalization of party system, federalism, subnational elections, federalized party system.
    JEL: D72
    Date: 2021
  12. By: Cremer, Helmuth; Klimaviciute, Justina; Pestieau, Pierre
    Abstract: This paper studies the political sustainability of programs that are targeted towards the poor. Given that the poor to whom these programs cater do not constitute a majority, we show that for their own good it pays to let the middle class benefit from them in a random way. This approach mimics the actual institutional arrangements whereby middle-class individuals feel that they can successfully apply to the programs. We consider a two stage decision process: first a Rawlsian government chooses the probability at which the middle class is allowed to benefit from a given program; then, majority voting determines the level of benefit and the rate of contribution. At the first, constitutional stage, the government cannot commit to a specific level of taxes and benefit but anticipates that these are set by majority voting in the second stage.
    Keywords: Targeted transfers; Political support; Redistribution paradox.
    Date: 2021–01–04
  13. By: Alexander Stoecker (University of Siegen)
    Abstract: I analyze the link between partisan alignment of local politicians and the incidence of political corruption, using novel hand-collected data on local political corruption in Ghana. In line with political ambition theory, I hypothesize that local politicians aligned with the national government have incentives to control fiscal irregularities within their localities in order to appease their national party leaders and preserve their party’s reputation. The empirical analysis, based on 205 districts observed over the period 2013-2018, indeed suggests significantly lower levels of political corruption in aligned districts. Partisan alignment reduces corruption by 2.0 percentage points, equivalent to roughly 50 percent of the 3.9 percent mean-level of non-aligned districts. This effect is more pronounced in districts with (i) less competitive local legislative elections, (ii) better financial endowments, and (iii) female local parliamentarians. It appears that high levels of political polarization and intense party competition, as observed in Ghana, are important explanations for this finding.
    Keywords: corruption, political alignment, local public finance, intergovernmental transfers, political career concerns, Africa
    Date: 2021

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