nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2023‒08‒21
eight papers chosen by
Stan C. Weeber, McNeese State University

  1. Proxy Selection in Transitive Proxy Voting By Jacqueline Harding
  2. Voters, Bailouts, and the Size of the Firm By Schilling, Linda
  3. Much ado about nothing: voting in the sixteenth-century Republic of Genoa By Maria Cristina Molinari
  4. Green technology policies versus carbon pricing: An intergenerational perspective By Rausch, Sebastian; Yonezawa, Hidemichi
  5. Electoral College and Election Fraud By Georgy Egorov; Konstantin Sonin
  6. The Electric Telegraph, News Coverage and Political Participation By Tianyi Wang
  7. Keep your Enemies Closer: Strategic Platform Adjustments during U.S. and French Elections By Rafael Di Tella; Randy Kotti; Caroline Le Pennec; Vincent Pons
  8. On Defaults, Framing, and Local Tax Policy: Quasi-Experimental Evidence from Portugal By Christian Bruns; Mariana Lopes da Fonseca

  1. By: Jacqueline Harding
    Abstract: Transitive proxy voting (or "liquid democracy") is a novel form of collective decision making, often framed as an attractive hybrid of direct and representative democracy. Although the ideas behind liquid democracy have garnered widespread support, there have been relatively few attempts to model it formally. This paper makes three main contributions. First, it proposes a new social choice-theoretic model of liquid democracy, which is distinguished by taking a richer formal perspective on the process by which a voter chooses a proxy. Second, it examines the model from an axiomatic perspective, proving (a) a proxy vote analogue of May's Theorem and (b) an impossibility result concerning monotonicity properties in a proxy vote setting. Third, it explores the topic of manipulation in transitive proxy votes. Two forms of manipulation specific to the proxy vote setting are defined, and it is shown that manipulation occurs in strictly more cases in proxy votes than in classical votes.
    Date: 2023–07
  2. By: Schilling, Linda
    Abstract: I present a political economic theory, explaining bailouts for failing firms in the presence of non-voters (foreigners). The governing politician uses the bailout as a tool to sway voters for maximizing re-election chances. Bailouts partially leak to foreigners at the firm and are also financed by tax-paying foreigners outside the firm. I show, larger failing firms are granted larger bailouts even if the additional size is due to having more foreign stakeholders (``too-big-to-fail- lookalike''). Yet, among equally sized firms, the firm with more voting-stakeholders receives the larger bailout, contradicting social optimality. Besides firm size, also voting rights cause bailouts.
    Keywords: political finance, bailouts, economic voting, probabilistic voting, vote-share maximization, too-big-to-fail, socially optimal bailouts, partial suffrage
    JEL: D72 G3 G32 G33 G35 G38 P16
    Date: 2023–07–12
  3. By: Maria Cristina Molinari (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: When the constitution of the Republic of Genoa was rewritten in 1528, the traditional distinction between nobili and popolari was abolished and the now unified ruling class was organised into 28 groups called alberghi, which were granted equal political representation by an elaborate and bizarre voting mechanism. Using data on the composition of the Genoese nobility in 1528, we simulate the rounds of voting, nominations, and sortition of the electoral protocol to reveal how they determined the allocation of power. Our analysis shows that the constitutional reform could not succeed in bringing concord to the nobility, as the system was heavily biased towards the popolari (later renamed nobili nuovi), who could gain control over all key magistracies. We also show that the use of the alberghi for office allocation made the system less favourable to the nobili nuovi, but only marginally so. These results help explain the persistence of political instability in Genoa after the 1528 reform, and they shed light on the voting system reforms that followed.
    Keywords: Early modern elections, factionalism, Genoese alberghi, voting protocols
    JEL: D72 N43 C63
    Date: 2023
  4. By: Rausch, Sebastian; Yonezawa, Hidemichi
    Abstract: Technology policy is the most widespread form of climate policy and is often preferred over seemingly efficient carbon pricing. We propose a new explanation for this observation: gains that predominantly accrue to households with large capital assets and that influence majority decisions in favor of technology policy. We study climate policy choices in an overlapping generations model with heterogeneous energy technologies and distortionary income taxation. Compared to carbon pricing, green technology policy leads to a pronounced capital subsidy effect that benefits most of the current generations but burdens future generations. Based on majority voting which disregards future generations, green technology policies are favored over a carbon tax. Smart 'polluter-pays' financing of green technology policies enables obtaining the support of current generations while realizing efficiency gains for future generations.
    JEL: Q54 Q48 Q58 D58 H23
    Date: 2023
  5. By: Georgy Egorov; Konstantin Sonin
    Abstract: One frequently overlooked aspect of the U.S.-style electoral college system is that it discourages election fraud. In a presidential election based on the popular vote, competing political parties are motivated to manipulate votes in areas where they hold the most significant influence, such as states where they control local executive offices, legislatures, and the judiciary. However, with the electoral college system in place, the incentives for fraud shift to swing states where the local government is politically divided, and fraud is therefore more difficult and costly. Our theoretical model elucidates why the electoral college system provides more effective protection against election fraud compared to the popular vote system. While polarization makes fraud more likely, it does not affect the superiority of the electoral college system.
    JEL: D73 D78 H83 P16
    Date: 2023–07
  6. By: Tianyi Wang
    Abstract: Using newly digitized data on the growth of the telegraph network in America during 1840-1852, the paper studies the impacts of the electric telegraph on national elections. I use proximity to daily newspapers with telegraphic connections to Washington to generate plausibly exogenous variation in access to telegraphed news from Washington. I find that access to Washington news with less delay had a robust positive effect on voter turnout in national elections. For mechanisms, I provide evidence that newspapers facilitated the dissemination of national news to local areas. In addition, text analysis on more than a hundred small-town weekly newspapers from the 1840s shows that the improved access to news from Washington led newspapers to cover more national political news, including coverage of Congress, the presidency, and sectional divisions involving slavery. The results suggest that the telegraph made newspapers less parochial, facilitated a national conversation and increased political participation. I find little evidence that access to telegraphed news from Washington affected party vote shares or Congressmen's roll call votes.
    JEL: D72 L82 L96 N41 N71 O3
    Date: 2023–07
  7. By: Rafael Di Tella; Randy Kotti; Caroline Le Pennec; Vincent Pons
    Abstract: A key tenet of representative democracy is that politicians' discourse and policies should follow voters' preferences. In the median voter theorem, this outcome emerges as candidates strategically adjust their platform to get closer to their opponent. Despite its importance in political economy, we lack direct tests of this mechanism. In this paper, we show that candidates converge to each other both in ideology and rhetorical complexity. We build a novel dataset including the content of 9, 000 primary and general election websites of candidates for the U.S. House of Representatives, 2002-2016, as well as 57, 000 campaign manifestos issued by candidates running in the first and second round of French parliamentary and local elections, 1958-2022. We first show that candidates tend to converge to the center of the ideology and complexity scales and to diversify the set of topics they cover, between the first and second round, reflecting the broadening of their electorate. Second, we exploit cases in which the identity of candidates qualified for the second round is quasi-random, by focusing on elections in which they narrowly win their primary (in the U.S.) or narrowly qualify for the runoff (in France). Using a regression discontinuity design, we find that second-round candidates converge to the platform of their actual opponent, as compared to the platform of the runner-up who did not qualify for the last round. We conclude that politicians behave strategically and that the convergence mechanism underlying the median voter theorem is powerful.
    JEL: D72 P0
    Date: 2023–07
  8. By: Christian Bruns; Mariana Lopes da Fonseca
    Abstract: We find that policy decisions made by elected politicians in Portuguese municipalities violate the predictions of standard microeconomic theory. Municipalities can choose a withholding rate between zero and five percent of the income tax revenue collected within their boundaries by the national tax authority. A reform altered the withholding rate applicable if a municipality fails to communicate its chosen rate to the national tax authority, reducing it from five to zero percent. According to standard microeconomic theory, this reform leaves a municipality’s decision problem unchanged. In municipalities with strong electoral competition, however, right-leaning mayors choose significantly lower rates than their left-leaning counterparts after the reform. Adopting a behavioral perspective, we argue that the reform influenced perceptions and resulted in increased electoral accountability, especially in municipalities with intense electoral competition. Politicians in these municipalities responded by adjusting withholding rates to better align with their constituents’ (ideological) preferences.
    Keywords: perception, income taxation, local taxation, ideology, accountability
    JEL: D72 D91 H71
    Date: 2023

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