nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2021‒10‒25
seven papers chosen by
Stan C. Weeber, McNeese State University

  1. Protecting Natural and Social Resources: A political economy approach By Donatella Gatti
  2. Coalition Formation in Games with Externalities By Maria Montero
  3. A Paradox of Coalition Building in Public Good Provision By Wolfgang Buchholz; Keisuke Hattori
  4. Round-Robin Political Tournaments: Abstention, Truthful Equilibria, and Effective Power By Roland Pongou; Bertrand Tchantcho
  5. Scaling Blockchains: Can Elected Committees Help? By Alon Benhaim; Brett Hemenway Falk; Gerry Tsoukalas
  6. Refugees and local power dynamics: The case of the Gambella Region of Ethiopia By Hagos, Samuel Zewdie
  7. How Alliances Form and Conflict Ensues By Lu Dong; Lingbo Huang; Jaimie W. Lien; Jie Zheng

  1. By: Donatella Gatti (Université Sorbonne Paris Nord)
    Abstract: This paper studies the set-up (following a voting process) of institutional arrangements related to the protection of natural and social resources in a context of inequalities and environmental challenges. To analyze how institutional and legislative protection arises, three socioeconomic groups are considered: the educated bourgeoisie, the working classes and the fiÂ…nancial elite. Groups are differentiated according to the following divides. Individuals belonging to the fiÂ…nancial elite only rely on capital incomes: they invest on Â…firms running either polluting or non-polluting activities. Individuals belonging to the first two groups are differentiated on the following levels: the demand for redistribution (from the working class) and the claims for environment-friendly legislation in relation with clean transport means (by the educated bourgeoisie). We study the institutional framework chosen by individuals under different assumptions concerning the political vote: disjoint majority versus coalition voting. The main result is that -in reaction to the Â…financial elite being the unique winner of the disjoint majority vote- a peopleÂ’s green coalition can emerge, whose redistributive and green choices run against the preferences of the Â…financial elite. This leads to the “greening” of the fiÂ…nancial elite, which in turn isolates the working classes in the political arena.
    Keywords: Institutions, political choice, redistribution, green legislation
    JEL: A1
    Date: 2021
  2. By: Maria Montero (University of Nottingham)
    Abstract: This paper studies an extensive form game of coalition formation with random proposers in games with externalities. It is shown that an agreement will be reached without delay if any set of coalitions profits from merging. Even under this strong condition, the equilibrium coalition structure is not necessarily efficient. There may be multiple equilibria even in the absence of externalities, and symmetric players are not necessarily treated symmetrically in equilibrium. If the grand coalition forms without delay in equilibrium, expected payoffs must be in the core of the characteristic function game that assigns to each coalition its equilibrium payoff. Compared with the rule of order process of Ray and Vohra (1999), the bargaining procedure with random proposers tends to give a large advantage to the proposer, whereas the bargaining procedure with a rule of order tends to favor the responders. The equilibria of the two procedures cannot be ranked in general in terms of efficiency.
    Keywords: coalition formation, externalities, partition function, random proposers, core, multiple equilibria
    Date: 2021–05
  3. By: Wolfgang Buchholz; Keisuke Hattori
    Abstract: This paper considers endogenous coalition formations and endogenous technology choices in a model of private provision of global public goods. We show that the possibility of future interstate (partial) coordination may hinder the current adoption of better technology by a country outside the cooperation, which may exacerbate an existing underprovision problem. In particular, in the subgame perfect equilibrium of a three-stage game, we find two paradoxical results: prohibition of the formation of future partial coalitions encourages the country outside the cooperation to adopt better technology, which could lead to an increase in the total public good supply and an improvement of global welfare. The results have an important policy implication: in the context of the Paris Agreement, for example, a large country announces lower nationally determined contributions by a strategic incentive to adopt lower technology to motivate coalition building by other nations, which in the end may lead to lower aggregate public-good supply and global welfare.
    Keywords: coalition formation, public goods, endogenous technology, environmental agreements
    JEL: H41 F53 Q54 Q55
    Date: 2021
  4. By: Roland Pongou (Department of Economics, University of Ottawa, Ottawa, ON); Bertrand Tchantcho (Department of Mathematics, École Normale Supérieure, University of Yaoundé I, Cameroon; Université de Cergy Pontoise)
    Abstract: A round-robin political tournament is an election format where multiple candidates contest in pairs, and votes are aggregated using a general rule to form a social ranking. We formalize this tournament as a strategic form game and provide a necessary and sufficient condition under which truthful voting is a Nash equilibrium. Building on this analysis, we study the concept of effective power, defined as a voter's ability to bring about a social ranking that maximizes his preferences. We show that the classical theories of political power do not translate into effective power in general. We then provide a full characterization of the classes of political tournaments and utility metrics for which these theories capture effective power. We offer both structural and behavioral interpretations of the findings, and derive practical implications for the design of political tournaments that are compatible with truth-telling.
    Keywords: Round-robin Political Tournaments; Ranked Voting; Hyper-preferences; Truthful Equilibria; Effective Power; Psychology; Political Design.
    Date: 2021
  5. By: Alon Benhaim; Brett Hemenway Falk; Gerry Tsoukalas
    Abstract: In the high-stakes race to develop more scalable blockchains, some platforms (Cosmos, EOS, TRON, etc.) have adopted committee-based consensus protocols, whereby the blockchain's record-keeping rights are entrusted to a committee of elected block producers. In theory, the smaller the committee, the faster the blockchain can reach consensus and the more it can scale. What's less clear, is whether this mechanism ensures that honest committees can be consistently elected, given voters typically have limited information. Using EOS' Delegated Proof of Stake (DPoS) protocol as a backdrop, we show that identifying the optimal voting strategy is complex and practically out of reach. We empirically characterize some simpler (suboptimal) voting strategies that token holders resort to in practice and show that these nonetheless converge to optimality, exponentially quickly. This yields efficiency gains over other PoS protocols that rely on randomized block producer selection. Our results suggest that (elected) committee-based consensus, as implemented in DPoS, can be robust and efficient, despite its complexity.
    Date: 2021–10
  6. By: Hagos, Samuel Zewdie
    Abstract: The Gambella Region is one of the marginalised and most conflict-ridden regions in Ethiopia. Recently, violent clashes between the two largest ethnic groups in the region - the host communities, the Anywaa, and the South Sudanese Nuer refugees - have reignited the debate on refugee integration in the region. In fact, the roots of the Anywaa-Nuer conflict can be traced back to the imperial regime of Ethiopia at the end of the 19th century. In the early 1960s however, the arrival and spontaneous integration of Nuer refugees was peaceful and relations between both ethnic groups were harmonious. During this time, refugee management was organised locally. Against this background, the focus of the present paper is to understand the nature, context and evolution of the long-standing conflict between the Anywaa and refugees from the Nuer ethnic group in the Gambella Region. Beyond that, the paper explores the Anywaa-Nuer conflict within the context of the political power dynamics of the last two decades. Thereby, the paper reveals that the disputes between the Anywaa and the Nuer have taken on a new dimension since the early 1990s.
    Date: 2021
  7. By: Lu Dong (Nanjing Audit University); Lingbo Huang (Nanjing Audit University); Jaimie W. Lien (Chinese University of Hong Kong); Jie Zheng (Tsinghua University)
    Abstract: In a social network in which friendly and rival bilateral links can be formed, how do alliances between decision-makers form, and what determines whether a conflict will arise? We study a network formation game between ex-ante symmetric players in the laboratory to examine the dynamics of alliance formation and conflict evolution. A peaceful equilibrium yields the greatest social welfare, while a successful bullying attack transfers the victimized player’s resources evenly to the attackers at a cost. Consistently with the theoretical model predictions, peaceful and bullying outcomes are prevalent among the randomly re-matched experimental groups, based on the cost of attack. We further examine the dynamics leading to the final network and find that groups tend to coordinate quickly on a first target for attack, while the first attacker entails a non-negligible risk of successful counter-attack by initiating the coordination. These findings provide insights for understanding social dynamics in group coordination.
    Keywords: network formation, conflict, alliance, bully, peace
    Date: 2021–04

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