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on Collective Decision-Making |
| By: | Yannick Bury; Lars P. Feld; Ekkehard A. Köhler |
| Abstract: | We test whether the proactive use of instruments of direct democracy by voters can help to explain fiscal sustainability of 25 Swiss cantons. Using data of all cantonal popular votes since 1977, our results show that the fiscal reaction of cantonal governments to an increase in the debt to GDP ratio of a canton is stronger, the more cantonal voters actively made use of their direct democratic rights in the previous year. |
| Keywords: | direct democracy, political process, fiscal policy |
| JEL: | H11 H50 D72 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10759&r=cdm |
| By: | Yann Algan; Nicolò Dalvit; Quoc-Anh Do; Alexis Le Chapelain; Yves Zenou |
| Abstract: | We study how social interaction and friendship shape students' political opinions in a natural experiment at Sciences Po, the cradle of top French politicians. Quasi-random assignments of students into the same short-term integration groups before their scholar curriculum reduce political opinion gap, and increase friendship formation. Using the pairwise indicator of same-group membership as instrumental variable for friendship, we find that friendship causes a reduction of differences in opinions by 40% of the standard deviation of opinion gap. The evidence is consistent with a homophily-enforced mechanism, by which friendship causes initially politically-similar students to join political associations together, which reinforces their political similarity, without exercising an effect on initially politically-dissimilar pairs. Friendship affects opinion gaps by reducing divergence, therefore polarization and extremism, without forcing individuals’ views to converge. Network characteristics also matter to the friendship effect. |
| Keywords: | political opinion, social networks, friendship effect, polarization, homophily, extremism, natural experiment |
| JEL: | C93 D72 Z13 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10753&r=cdm |
| By: | Aaron S. Berman (Economic Science Institute, Chapman University); Laurence R. Iannaccone (Institute for the Study of Religion, Economics and Society, Argyros School of Business and Economics, Chapman University); Mouli Modak (Smith Institute for Political Economy and Philosophy, Chapman University) |
| Abstract: | People belong to many diferent groups, and few belong to the same network of groups. Moreover, people routinely reduce their involvement in dysfunctional groups while increasing involvement in those they fnd more attractive. The net efect can be an increase in overall cooperation and the partial isolation of free-riders, even if free-riders are never punished, excluded, or recognized. We formalize and test this conjecture with an agent-based social simulation and a multi-good extension of the standard repeated public goods game. The experiment places 16 subjects in two four-person groups arranged in a 16-group checkerboard lattice that ensures no two subjects share membership in more than one group. Our initial results from ffteen sessions (fve in each of three diferent treatments) strongly suggest that multi-group settings can indeed raise overall cooperation and reduce the impact of free-riders. We extend our understanding of this setting by imposing greater heterogeneity between groups through interweaving AI players amongst the human subjects; whereby initial sessions of this amplifes the aforementioned efects. |
| Keywords: | cooperation, public goods game, lab experiment, multi-group |
| JEL: | C72 C73 C91 C92 H41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:chu:wpaper:23-12&r=cdm |
| By: | Jevan Cherniwchan; Nouri Najjar |
| Abstract: | We test the hypothesis that governments alter environmental policy in response to trade by studying NAFTA’s effects on the formation of environmental policy in the US House of Representatives between 1990 and 2000. We find that reductions in US tariffs decreased political support for environmental legislation. This decrease appears to be due to: (i) a reduction in support by incumbent Republican legislators in response to trade-induced changes in the policy preferences of their constituents, and (ii) changes in partisan representation in affected districts due to decreased electoral support for pro-NAFTA Democrats following the agreement. |
| Keywords: | NAFTA; trade liberalization; voting; environmental policy |
| JEL: | F18 F64 F68 Q56 Q58 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2023-05&r=cdm |
| By: | Oihane Gallo; Bettina Klaus |
| Abstract: | We consider a set of agents who have claims on an endowment that is not large enough to cover all claims. Agents can form coalitions but a minimal coalition size $\theta$ is required to have positive coalitional funding that is proportional to the sum of the claims of its members. We analyze the structure of stable partitions when coalition members use well-behaved rules to allocate coalitional endowments, e.g., the well-known constrained equal awards rule (CEA) or the constrained equal losses rule (CEL).For continuous, (strictly) resource monotonic, and consistent rules, stable partitions with (mostly) $\theta$-size coalitions emerge. For CEA and CEL we provide algorithms to construct such a stable partition formed by $\theta$-size coalitions. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.03950&r=cdm |
| By: | Li, Xuan (Dept. of Business and Management Science, Norwegian School of Economics) |
| Abstract: | Institutional investors’ proxy voting decisions are influenced by their geographic proximity to portfolio firms. Using a sample of over 50 million votes cast by U.S. and non-U.S. investors globally, I find that investors are more likely to vote with management at domestic firms than at foreign firms, especially when ISS disagrees with management. I further demonstrate that the home bias can be explained by local investors’ information advantage and business ties with domestic firms. These results suggest that home bias is an important determinant of proxy voting behavior, and the existence of home bias is at least partially driven by rationality-based reasons. |
| Keywords: | Home bias; Geographic proximity; Proxy voting; Corporate governance |
| JEL: | C10 D72 G34 |
| Date: | 2023–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2023_021&r=cdm |
| By: | Johnny Cotoc; Alok Johri; Cesar Sosa-Padilla |
| Abstract: | Nations vary widely in how often they are governed by left-wing governments. Using data from 56 nations over 45 years, we find that the propensity of a nation to elect the left is positively correlated with both the average level and volatility of their sovereign spreads. To explain these facts, we build a quantitative sovereign default model in which two policymakers (left and right) alternate in power. Reelection probabilities are increasing in government spending, with the left having a small advantage (as found in the data). We use variation in the responsiveness of reelection probabilities to government spending in order to create economies that elect the left more or less frequently in equilibrium. We call these the left leaning and the right leaning economy. The left leaning economy faces worse borrowing terms due to higher default risk. Moreover, both policymakers have a greater reluctance for fiscal austerity and choose a higher share of government spending as compared to their counterparts in the right leaning economy. These features imply large welfare losses for households. |
| Keywords: | Sovereign default; Interest rate spread; Political turnover; Left-wing; Right-wing; Cyclicality of fiscal policy |
| JEL: | F34 F41 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcm:deptwp:2023-04&r=cdm |