nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2021‒02‒15
ten papers chosen by
Stan C. Weeber, McNeese State University

  1. Unstructured Bargaining Experiment on Three-person Cooperative Games By Taro Shinoda; Yukihiko Funaki
  2. Strategic Ambiguity with Probabilistic Voting By Yasushi Asako
  3. Polarization in Parliamentary Speach By Jon H. Fiva; Oda Nedregård; Henning Øien
  4. Efficacy of Top down audits and Community Monitoring By Afridi, Farzana; Dhillon, Amrita; Chaudhuri, Arka Roy; Kaur, Dashleen
  5. Democratisation under Diversity: Theory and Evidence from Indonesian Communities By Mitra, Anirban; Pal, Sarmistha
  6. The function of peer reward and punishment in localized society: We can only “Think locally, Act locally” By Hiroki Ozono; Yoshio Kamijo; Kazumi Shimizu
  7. Does Fake News Affect Voting Behaviour? By Michele Cantarella; Nicolò Fraccaroli; Roberto Volpe
  8. Board Diversity and Shareholder Voting By Gow, Ian D.; Larcker, David F.; Watts, Edward M.
  9. Peace over war: Conflict, contest and cooperation in water sharing By Rupayan Pal; Dipti Ranjan Pati
  10. Axiomatizations of Coalition Aggregation Functions By Takaaki Abe

  1. By: Taro Shinoda (Waseda University); Yukihiko Funaki (Waseda University)
    Abstract: In the cooperative game theory, we study only how to distribute payoffs by assuming that the grand coalition is formed. However, in real bargaining situation, the payoff distribution is considered with the coalition formation simultaneously. The players can make not only the grand coalition but also smaller coalitions. Also, they have to reach an agreement on just one payoff distribution. In order to know what happens in this situation, we design and run a laboratory experiment. As experimental results, we find the following things. First, the grand coalition is more likely to be formed when the core is non-empty than empty. Availability of the chat window is also positively correlated with formation of the grand coalition. Second, the payoff distribution the subjects agree with is depending on their power in bargaining. Unlike the others' bargaining experiment, the equal division is not very frequently adopted.
    Keywords: laboratory experiment; cooperative game; coalition formation; payoff distribution; bargaining
    JEL: C71 C92
    Date: 2019–09
  2. By: Yasushi Asako (Faculty of Political Science and Economics, Waseda University)
    Abstract: Political parties and candidates usually prefer making ambiguous promises. This study identiÖes the conditions under which candidates choose ambiguous promises in equilibrium, given convex utility functions of voters. The results show that in a deterministic model, no equilibrium exists when voters have convex utility functions. However, in a probabilistic voting model, candidates make ambiguous promises in equilibrium when, (i) voters have convex utility functions, and (ii) the distribution of votersímost preferred policies is polarized.
    Keywords: elections; political ambiguity; public promise; campaign platform; probabilistic voting; polarization
    JEL: D71 D72
    Date: 2019–05
  3. By: Jon H. Fiva; Oda Nedregård; Henning Øien
    Abstract: We study political polarization in a parliamentary setting dominated by strong parties. In addition to examining polarization along the left-right dimension, we consider political divergence between legislators belonging to the same political bloc. Are politicians’ background characteristics unimportant when parties have powerful tools to discipline their rank-and-file? We investigate this question using legislative speech from the Norwegian Parliament and recently developed techniques for measuring group differences in high-dimensional choices. Across the background characteristics we consider — gender, age, urbanicity, and class background — we document substantial differences in speech, even when comparing legislators from the same party bloc and policy committee. Our results illuminate how individual legislators shape policymaking in party-centered environments.
    Keywords: political polarization, text analysis, penalized logistic regression
    JEL: D72
    Date: 2021
  4. By: Afridi, Farzana; Dhillon, Amrita; Chaudhuri, Arka Roy; Kaur, Dashleen
    Abstract: In this paper we survey the recent literature on top down audits and community monitoring. While in the case of top down audits the efficacy of audits depends on the type of punishment- electoral punishment vs legal punishment, the literature finds that electoral punishment is less effective than legal punishment. Moreover, electoral punishment depends on whether voters are aware of audit reports. The type of service being audited - the opportunity for corruption and the clarity of rules and regulations effect the success of audits. However, even when top down audits succeed in cutting down corruption, they may not always lead to better outcomes. Social audits are effective when collective action problems are less salient e.g. when groups are homogeneous, when the design is such that community participants feel empowered e.g. through elections to the monitoring committee, information is not useful by itself unless accompanied by tools to influence outcomes, and finally there is not a clear map between finding corruption and improving ultimate outcomes. We suggest that a fertile area for future research is the design of optimal audit schemes that take account of the opportunities for corruption and the motivations of both the providers and the auditors.
    Date: 2020–12–25
  5. By: Mitra, Anirban (University of Kent); Pal, Sarmistha (University of Surrey)
    Abstract: We study the effect of ethnic diversity on local public spending following fiscal decentralisation in a setting where local institutions are salient. Specifically, the latter affects coordination costs and thereby cooperative behaviour across the constituent ethnic groups. Our theory highlights the role of the local elite in lobbying for policies which favour them in a decentralised setting. The differences in preferences over public good allocations along with the salience of coordination costs across ethnic groups are relevant in determining the equilibrium lobbying behaviour. This results in ethnic diversity having a detrimental effect on local developmental spending which is aggravated by increased levels of coordination costs. We test these predictions using Indonesian community-level data. Utilising the 1997 and 2007 Indonesian Family Life Survey (IFLS) rounds, we are able to construct various measures of ethnic diversity. We exploit an institutional feature of Indonesian communities - namely, the observance of traditional "Adat" laws to proxy coordination costs across ethnic groups. Overall, we find that ethnic diversity depresses local development spending post-decentralisation at the community level particularly where Adat laws (which promote an ethic of mutual co-operation) are not followed. The opposite obtains for spending on non-developmental items, all of which is consistent with our theory.
    Keywords: decentralisation, ethnic diversity, lobbying, local development, political economy
    JEL: D72 D74 H40
    Date: 2021–01
  6. By: Hiroki Ozono (Faculty of Law, Economics and Humanities, Kagoshima University); Yoshio Kamijo (School of Economics and Management, Kochi University of Technology); Kazumi Shimizu (School of Political Science and Economics, Waseda University)
    Abstract: Many studies suggest that peer reward and punishment can sustain cooperation in social dilemmas because cooperators are effectively rewarded and non-cooperators are effectively punished within the group. However, as group size becomes larger, we inevitably face localization, in which a global group is divided into several localized groups. While benefits from cooperation are distributed to the global group, members can reward and punish only other members within the same localized group. In this situation, the global group and the local group are not always equal in terms of welfare; situation can arise in which cooperation is beneficial for the global group but not for the local group. We predict that in such a locally inefficient situation, peer reward and punishment cannot function to sustain global cooperation, and high cooperation cannot be achieved. We conducted an experiment in which 16 group members played a public goods game with peer reward and punishment. We manipulated the range of peer reward and punishment (only local members/all members) and payoff structure (locally efficient/locally inefficient). We found that high cooperation was not achieved and that peer reward and punishment did not function when, and only when, the group was divided into localized groups and the payoff structure was locally inefficient. This finding suggests that the function of peer reward and punishment is limited to relatively small societies, and we humans can only “think locally, act locally.”
    Keywords: Public goods; Reward; Punishment; Localization; Cooperation
    Date: 2019–07
  7. By: Michele Cantarella (University of Modena and Reggio Emilia and University of Helsinki); Nicolò Fraccaroli (Università di Roma "Tor Vergata"); Roberto Volpe (LUISS Guido Carli)
    Abstract: We study the impact of fake news on votes for populist parties in the Italian elections of 2018. Our empirical strategy exploits the presence of Italian- and German-speaking voters in the Italian region of Trentino Alto-Adige/Südtirol as an exogenous source of assignment to fake news exposure. Using municipal data, we compare the effect of exposure to fake news on the vote for populist parties in the 2013 and 2018 elections. To do so, we introduce a novel indicator of populism using text mining on the Facebook posts of Italian parties before the elections. We find that exposure to fake news is positively correlated with vote for populist parties, but that less than half of this correlation is causal. Our findings support the view that exposure to fake news (i) favours populist parties, but also that (ii) it is positively correlated with prior support for populist parties, suggesting a self-selection mechanism.
    Keywords: Fake News, Political Economy, Electoral Outcomes, Populism
    JEL: C26 D72 P16
    Date: 2020–06–17
  8. By: Gow, Ian D. (U of Melbourne and Melbourne Centre for Corporate Governance and Regulation); Larcker, David F. (Stanford U and Rock Center for Corporate Governance); Watts, Edward M. (Yale U)
    Abstract: The lack of board diversity is one of the most controversial topics in corporate board governance. We investigate one important influence on diversity by studying whether shareholders value diversity on corporate boards in director elections. Using a broad sample of director elections from 2003 through 2018, we provide robust evidence that shareholders value diversity. However, the magnitude of these effects is heavily dependent on the type of diversity. Our findings suggest that while both the race or ethnicity and gender of candidates are important factors in the shareholder voting process, shareholders have historically been more likely to support gender diverse candidates than racially or ethnically diverse candidates. We also provide evidence that shareholders place significantly more value on boards' overall diversity rather than the diversity of individual candidates. Finally, the magnitude of the additional voting support for diverse candidates and boards has grown significantly over time, and there is considerable heterogeneity in voting behavior across shareholders along several important dimensions (e.g., the Big Three asset managers).
    JEL: G23 G30 G34 M14
    Date: 2020–11
  9. By: Rupayan Pal (Indira Gandhi Institute of Development Research); Dipti Ranjan Pati (Indira Gandhi Institute of Development Research)
    Abstract: Even as a huge body of empirical evidence points to the cooperation-inducing character of shared water, popular narrative seems to get carried away in its visions of water wars and outright conflict. Theoretical literature largely focuses on bargaining and treaty negotiations as efficient solutions to intractable water conflicts. This paper attempts to explore the possibility of an efficient solution without explicit bargaining, even as players are locked in a contest over shared water. The paper locates water conflict within the scope of contest theory and obtains a cooperative outcome in a non-cooperative game using a linear Contest Success Function (CSF). This is true even when the conflict technology is not `sufficiently ineffective'. A range of outcomes over a spectrum of cooperation, partial conflict and outright conflict is obtained when production and contest abilities are expressed in generalised forms.
    Keywords: Contest success function; Cooperation; Endogenous claims; Water conflicts; Property rights
    JEL: Q34 D74 D23 C70 Q25
    Date: 2021–01
  10. By: Takaaki Abe (School of Political Science and Economics, Waseda University)
    Abstract: We axiomatize Hart and Kurz's (1983) two coalition aggregation functions known as the γfunction and the δ-function. A coalition aggregation function is a mapping that assigns a partition to each coalition profile, where a coalition profile is a vector of coalitions selected by all players. Through our axiomatization results, we observe that neither the γ-function nor the δ-function satisfies monotonicity. We propose a monotonic function and axiomatically characterize it. An impossibility result on monotonicity is also provided.
    Keywords: axiomatization; coalition formation; coalition structure; monotonicity
    JEL: C71
    Date: 2019–04

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