nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2022‒03‒14
four papers chosen by
Stan C. Weeber, McNeese State University

  1. On the Probability of the Ostrogorski Paradox By William Gehrlein; Vincent Merlin
  2. The Political Economy of Propaganda: Evidence from US Newspapers By Ottinger, Sebastian; Winkler, Max
  3. Voter conformism and inefficient policies By Aubert, Cécile; Ding, Huihui
  4. Instıtute of oblıgatory consolıdatıon of corporate control: corporate rıghts restrıctıon By Anatoliy Kostruba

  1. By: William Gehrlein; Vincent Merlin (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)
    Abstract: The notion of the existence of a Strict Ostrogorski Paradox presents an interesting phenomenon that could lead to some very unsettling outcomes in group decision-making situations. This phenomenon cannot be observed in two-issue situations, and when three-issue situations are considered, the probability that such an outcome will be observed never reaches a likelihood of as much as two percent for large electorates, regardless of the propensity of voters to align their preferences on issues with the standards of political parties. The probability of observing a Strict Ostrogorski Paradox in four-issue situations is nearly zero when using an assumption that exaggerates the likelihood that such a paradoxical outcome will be observed. We conclude that it is very unlikely that a Strict Ostrogorski Paradox would ever be observed in any real voting situation with a large electorate
    Date: 2021–12–19
  2. By: Ottinger, Sebastian (Northwestern University); Winkler, Max (Harvard University)
    Abstract: We study the impact of the first American party committed to redistribution from rich to poor on anti-Black media content in the 1890s. The Populist Party sought support among poor farmers, regardless of race, providing the segregationist Democratic establishment in the South with an incentive to fan racial outrage to alienate white voters from the Populists. Using text data from local newspapers and a difference-in-differences strategy, we find that stories of sexual assaults by Black men on white women became more prevalent in counties where the Populists threatened the Democratic dominance, and in Democratic newspapers only.
    Keywords: propaganda, divide and rule, political threat, media
    JEL: D72 J15 L82 N91 Z1
    Date: 2022–02
  3. By: Aubert, Cécile; Ding, Huihui
    Abstract: A reelection-seeking politician makes a policy decision that can reveal her private information on whether her political orientation and capabilities will be a good fit to future circumstances. We study how she may choose inappropriate policies to hide her information, even in the absence of specific conflicts of interests, and how voters’ conformism affects her incentives to do so. Conformism is independent from policies and from voters’ perceptions; yet we identify a ‘conformism advantage’ for the incumbent that exists only when there is also an incumbency advantage. Conformism changes the incentives of the incumbent and favors the emergence of an efficient, separating equilibrium. It may even eliminate the pooling equi-librium (that can consist in inefficient persistence). Conformism has a mixed impact on social welfare however: it improves policy choices and the information available to independent vot-ers, but fosters inefficient reelection in the face of a stronger opponent. When the incumbent is ‘altruistic’ and values social welfare even when not in power, she partly internalizes this latter effect. The impact of conformism is then non monotonous.
    JEL: D72 D82
    Date: 2022–02–15
  4. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: Today in many countries around the world the procedure of the compulsory purchase of the shares of minority shareholders (squeeze-out) by majority shareholders is an effective means of protection of rights of large investors and a widely used tactical technique that effectively regulates the process of corporate governance in business organizations, a toolkit to prevent corporate conflicts between members and business paralysis. While emphasizing the relevance of the attempt to limit the ownership rights of minority shareholders in the interest of the majority, the court concluded that the application of a squeeze-out can be justified, and the initiation of this procedure does not indicate abuse of the economic position by the majority shareholder. The interest of the majority shareholder in the free exercise of entrepreneurial activity may be placed above the interests of the minority shareholders, provided that the latter are protected against abuse of the economic forces by the majority shareholder, as well as provided that compensation is paid for the lost shares. Supporters of the opposite point of view argue that the monopolization of large blocks of shares is a threat to the functioning of the Ukrainian economy, its investment climate and the activity of the stock market. Georgia's administration of law is illustrative. The Constitutional Court of Georgia in its decision d/d May 18, 2007 on the constitutionality of article 53-3 of the Business Act found that the squeeze-out of minority shares is not a public need and a legitimate goal, as it provides for certain restrictions (minority ownership rights). The institute of forced termination of ownership is not a new phenomenon for civil law. It is based on the idea of restricting the right to hold, use, and dispose of the property of an individual owner in the interest of the vast majority. Rights equally guarantee the protection of the interests of society as a whole, as well as the interests of individual groups that may be affected in the process of exercising the powers of an authorized person. This objectively requires the correlation of the individual with the collective, and the private with the public. Constitutional and legal guarantees of an individual's private property right cannot override the corresponding guarantees granted to a group of persons acting in the general interest. The conflict between them shall be resolved by establishing the priority of the majority over the interests of the minority. The corresponding termination may not substantially prejudice interests of the minority shareholder because of the organizational and economic disproportionality of the "energy consumption" associated with holding insignificant block of shares, participation in the affairs of the corporation and the amount of the corporate rights issuer's profits in favor of the minority shareholder. The aforesaid demonstrates existing reasonable legal and economic prerequisites for interference with the peaceful ownership of property, which is not only consistent with the economic interests of the group of individuals, but also is proportional to its objectives and fair in view of the obligatory compensatory nature of the existing deprivation in favor of the holder of an insignificant block of shares of a joint stock company.
    Keywords: freeze-out,Squeeze-out,Sell-out,Corporative governance,Corporation,Legal entities of commercial law,Legal entities,Partnership,Kostruba
    Date: 2021–12–21

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