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on Collective Decision-Making |
| By: | Martin Gregor (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | The Anglo-American double-member districts employing plurality-at-large are frequently criticized for giving a large majority premium to a winning party, since the large premium may decrease proportionality of the elected assembly relative to single-member districts. We demonstrate that the premium stems from a limited degree of voters' discrimination associated with only two positive votes on the ballot. To enhance voters' ability to discriminate, we consider alternative electoral rules that give voters more positive and negative votes. We identify strict voting equilibria of several alternative rules in a situation where candidates differ in binary ideology and binary quality, voters' ideology-types are binomially distributed, voters are strategic, and a candidate's policy is more salient than candidate's quality. The most generous rules such as approval voting and combined approval-disapproval voting only replicate the electoral outcomes of plurality-at-large. The best performance in a double-member district is achieved by a rule that assigns two positive votes and one negative vote to each voter (2+1 rule). Under a strict and sincere pure-strategy equilibrium of the 2+1 rule, the second largest group frequently wins the second seat and high-quality candidates gain seats more likely than low-quality candidates. The 2+1 rule increases the scope for a voter's discrimination while avoiding the underdog effects and overstating of preferences associated with an unrestricted number of negative votes. |
| Keywords: | electoral rules, strategic voting, negative votes, plurality-at-large |
| JEL: | D7 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2013_06&r=cdm |
| By: | Yukihiro Nishimura (Graduate School of Economics, Osaka University) |
| Abstract: | This paper explores the outcome of non-cooperative decision making by elected politicians under transnational externalities. We re-examine the extent of a voter’s incentives for supporting politicians who are less green than the median voter, a phenomenon called “political race to the bottom.” We provide a setup in which each country is endowed with the fixed amount of endowment available for consumption, and the part of the endowments can be used for improvement of the environment. When the degree of spillovers of public inputs becomes strong enough, there arises the following equilibrium: one of the elected politicians pays no attention to the environment, but the median voter becomes the elected politician in the other country. This equilibrium is different from the model by Buchholz et al. (2005, “International Environmental Agreements and Strategic Voting”, Scandinavian Journal of Economics 107(1), 175-195), in which countries can choose emissions without an upper bound. |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:13-a006&r=cdm |
| By: | Bernd Irlenbusch (University of Cologne); Rainer Michael Rilke (University of Cologne) |
| Abstract: | This paper experimentally investigates into the effects of limited feedback on contributions in a repeated public goods game. We test whether feedback about good examples (i.e., the respective maximum contribution in a period) in contrast to bad examples (i.e., the minimum contributions) induces higher contributions. When the selection of feedback is non-transparent to the subjects, good examples boost cooperation while bad examples hamper them. No significant differences are observed between providing good or bad examples, when the feedback selection rule is transparent. Our results shed new light on how to design feedback provision in public goods settings. |
| Keywords: | Public Goods, Feedback, Imperfect Conditional Cooperation, Experiment |
| JEL: | H41 C92 D82 |
| Date: | 2013–08–07 |
| URL: | http://d.repec.org/n?u=RePEc:cgr:cgsser:04-04&r=cdm |
| By: | Matthias Neuenkirch; Pierre L. Siklos |
| Abstract: | One way of evaluating how well monetary authorities perform is to provide the public with a regular and independent second opinion. The European Central Bank (ECB) and the Bank of England (BoE) are shadowed by professional and academic economists who provide a separate policy rate recommendation in advance of the central bank announcement. In this paper, we systematically evaluate this second opinion and find that, first, the shadow committee of the ECB tends to be relatively less inflation averse than the ECB. In contrast, the shadow committee of the BoE proposes a more hawkish monetary policy stance than the BoE. Second, consensus within a shadow committee is far easier to reach when there is no pressure to change the policy rate. Third, the ECB’s shadow committee is more activist than the ECB’s Governing Council and a larger degree of consensus within the former brings about a greater likelihood that the two committees will agree. |
| Keywords: | Committee Behavior, Monetary Policy Committees, Shadow Councils, Taylor Rules |
| JEL: | E43 E52 E58 E61 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:een:camaaa:2013-46&r=cdm |
| By: | Platteau, Jean-Phillipe (University of Namur); Sekeris, Petros G. (University of Namur) |
| Abstract: | In establishing and consolidating strong centralized states absolute monarchs do not rely on sheer force alone but they also resort to the tactic of seduction whereby they buy the loyalty of potential rivals or dissenters. We argue with special reference to the lands of Islam that seduction is not confined to political or military rivals or enemies but may be extended to religious clerics whose legitimizing helps sheltering the absolute ruler from open opposition and defusing potential rebellion. Our model which features three actors, the ruler, the religious authorities, and the common people allows us to identify the conditions under which the ruler is more or less likely to grant substantial material privileges to the official clerics. By positing (1) that official clerics respond not only to material privileges but also to ideological factors, and (2) that their potential contribution to mass protest or revolutionary movements (in the event that the ruler does not choose to treat them well enough) depends on technological/motivational factors encapsulating the influence of the state of communication technologies or the level of inspiration or emulation gained from successful rebellions in other countries, we are able to make useful predictions and, in particular, to shed new light on the Arab Spring. |
| Keywords: | Mass protests; Ideology; Communication |
| Date: | 2013–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:nepswp:2013_003&r=cdm |
| By: | Charles Manski (Northwestern University); Claudia Neri (University of St.Gallen) |
| Abstract: | We study first- and second-order subjective expectations (beliefs) in strategic decision-making. We propose a method to elicit probabilistically both first- and second-order beliefs and apply the method to a Hide-and-Seek experiment. We study the relationship between choice and beliefs in terms of whether observed choice coincides with the optimal action given elicited beliefs. We study the relationship between first- and second-order beliefs under a coherence criterion. Weak coherence requires that if an event is assigned, according to first-order beliefs, a probability higher/lower/equal to the one assigned to another event, then the same holds according to second-order beliefs. Strong coherence requires the probability assigned according to first- and second-order beliefs to coincide. Evidence of heterogeneity across participants is reported. Verbal comments collected at the end of the experiment shed light on how subjects think and decide in a complex environment that is strategic, dynamic and populated by potentially heterogeneous individuals. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed013:73&r=cdm |
| By: | Gropp, Reint; Gruendl, Christian; Guettler, Andre |
| Abstract: | This paper empirically examines the role of soft information in the competitive interaction between relationship and transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a relationship bank, but not to a transaction bank. We show that borrowers self-select to relationship banks depending on whether their privately observed soft information is positive or negative. Competition affects the investment in learning the private signal from firms by relationship banks and transaction banks asymmetrically. Relationship banks invest more; transaction banks invest less in soft information, exacerbating the selection effect. Finally, we show that firms where soft information was important in the lending decision were no more likely to default compared to firms where only financial information was used. JEL Classification: G21, G28, G32 |
| Keywords: | competition, discretionary lending, relationship lending, soft information |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20131555&r=cdm |
| By: | S. Goyal; A. Vigier |
| Abstract: | Connections between individuals facilitate the exchange of goods, resources and information and create benefits. These connections may be exploited by adversaries to spread their attacks as well. What is the optimal way to design and defend networks in the face of attacks? We develop a model with a Designer and an Adversary. The Designer moves first and chooses a network and an allocation of defense resources across nodes. The Adversary then allocates attack resources on nodes and determines how successful attacks should navigate the network. Our main result is that, in a wide variety of circumstances, a star network with all defense resources allocated to the central hub node is optimal for the Designer. The Adversary targets undefended peripheral nodes; upon capture of these nodes the resources mount a concerted attack on the center. |
| Keywords: | Networks, computer security, Tullock contests, connectivity |
| Date: | 2013–08–15 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1327&r=cdm |
| By: | Meub, Lukas; Proeger, Till; Hüning, Hendrik |
| Abstract: | This paper experimentally investigates social learning in a two-agent prediction game with both exogenous and endogenous ordering of decisions and a continuous action space. Given that individuals regularly fail to apply rational timing, we refrain from implementing optimal timing of decisions conditional on signal strength. This always renders it optimal to outwait the other player regardless of private signals and induces a gamble on the optimal timing and action. In this setting, we compare exogenous and endogenous ordering in terms of informational efficiency, strategic delay and social welfare. We find that more efficient observational learning leads to more accurate predictions in the endogenous treatments and increases informational efficiency compared to the benchmark exogenous treatment. Overall, subjects act sensitively to waiting costs, with higher costs fostering earlier decisions that reduce informational efficiency. For a simple implementation of waiting costs, subjects more successfully internalize information externalities by adjusting their timing according to signal strength. Simultaneous decisions in endogenous ordering avoid observational learning and compensate the higher degree of rational decisions. Overall, endogenous timing has no net effect on social welfare, as gains in accuracy are fully compensated by waiting costs. Our results hold relevance for social learning environments characterized by a continuous action space and the endogenous timing of decisions. -- |
| Keywords: | Endogenous Timing,Information Externalities,Laboratory Experiment,Social Learning,Strategic Delay |
| JEL: | C91 D82 D83 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:167&r=cdm |
| By: | James Tremewan; Chloé Le Coq; Alexander D. Wagner |
| Abstract: | Using a group identity manipulation we examine the role of social preferences in an experimental one-shot centipede game. Contrary to what social preference theory would predict, we fnd that players continue longer when playing with outgroup members. The explanation we provide for this result rests on two observations: (i) players should only stop if they are suffciently conident that their partner will stop at the next node, given the exponentially-increasing payoffs in the game, and (ii) players are more likely to have this degree of certainty if they are matched with someone from the same group, whom they view as similar to themselves and thus predictable. We find strong statistical support for this argument. We conclude that group identity not only impacts a player's utility function, as identifed in earlier research, but also affects her reasoning about her partner's behavior. |
| JEL: | C72 C91 C92 D83 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:vie:viennp:1305&r=cdm |
| By: | Tsuda, Miwa |
| Abstract: | Immediately after the announcement of the re-election of President Kibaki on the evening of 30 December 2007, Kenya was thrust into the worst civil unrest experienced by the country since independence – a development that became known as the "Post-Election Violence" (PEV). However, after a subsequent process of reconciliation, the PEV came to an end within a relatively short period. The present-day politics of Kenya are being conducted within the framework of a provisional Constitution that took shape through peaceful mediation. How did Kenya manage to put a lid on a period of turmoil that placed the country in unprecedented danger? This paper traces the sequence of events that led to mediation, explains the emergency measures that were needed to maintain law and order, and indicates the remaining problems that still need to be solved. |
| Keywords: | Kenya, Internal conflicts, Ethnicity, Internal politics, Violence, 2007 election: power sharing, Constitutional reform |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper381&r=cdm |
| By: | Musso, Fabio; Francioni, Barbara |
| Abstract: | The purpose of this paper was to analyze the internationalization of small and medium-sized enterprises (SMEs) in relation to international market selection (IMS). To accomplish this, an investigation of the primary factors influencing SMEs’ choice when selecting international market in a systematic way was conducted. In addition we sought to understand whether there was a relationship between the systematic approach in IMS and the characteristics of SMEs. Results revealed that the majority of SMEs adopt a non-systematic IMS. However, in the case of SMEs following a systematic approach to IMS, the study pointed out that SMEs are influenced by firm-specific and host country factors, but not by entry barriers like geographic and cultural distance. In addition, results illustrated the existence of a relationship between systematic IMS and firm size. |
| Keywords: | International market selection, Small and medium-sized enterprises, International strategy, Systematic and non-systematic approaches |
| JEL: | D92 M16 M21 M31 |
| Date: | 2012–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49117&r=cdm |
| By: | Pilon, André Francisco |
| Abstract: | Problems of difficult settlement or solution in the world cannot be solved by segmented academic formats, market-place interests or mass-media headlines; instead of dealing with taken for granted issues (the apparent “bubbles” in the surface), public policies, research and teaching programmes should detect the issues and deal with them deep inside the boiling pot. Policy discussions and policy making require new paradigms of growth, power, wealth, work and freedom embedded into the cultural, social, political and economical institutions (more critical than individual motives and morals). Urban planning cannot be subordinated to the interests of business corporations, cities cannot remain as privileged centers for profit and capital accumulation, transforming citizens in mere users and consumers, but must preserve and develop mankind heritage, encompassing history, values, architecture, landscapes, the arts, the letters. Being-in-the-world is more than living on it, it demands an ecosystemic approach, the construction of a new social fabric, as new structures emerge in the socio-cultural learning niches and develop critical capacities to operate changes in the system. Problem solving implies dynamic and complex configurations intertwining four dimensions of being-in-the-world, as they combine, as donors and recipients, to induce the events (deficits and assets), cope with consequences (desired or undesired) and contribute for change (diagnosis and prognosis): intimate (subject’s cognitive and affective processes), interactive (groups’ mutual support and values), social (political, economical and cultural systems) and biophysical (biological endowment, natural and man-made environments). An integrated ecosystemic approach to education, culture, environment, health, politics, economics and quality of life should develop the connections and seal the ruptures between the different dimensions of being-in-the-world, in view of their mutual support and dynamic equilibrium. |
| Keywords: | culture, politics, economics, environment, ecosystems, education |
| JEL: | I00 Q28 Q51 Q56 Q58 Z1 Z13 |
| Date: | 2013–03–21 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:49101&r=cdm |
| By: | Mortensen, Jørgen |
| Abstract: | This paper first takes a step backwards with an attempt to situate the recent adoption of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union in the context of discussions on the Stability and Growth Pact (SGP) and the ‘Maastricht criteria’, as fixed in the Maastricht Treaty for membership in the Economic and Monetary Union (EMU) in a longer perspective of the sharing of competences for macroeconomic policy-making within the EU. It then presents the main features of the new so-called ‘Fiscal Compact’ and its relationship to the SGP and draws some conclusions as regards the importance and relevance of this new step in the process of economic policy coordination. It concludes that the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union does not seem to offer a definitive solution to the problem of finding the appropriate budgetary-monetary policy mix in EMU, which was already well identified in the Delors report in 1989 and regularly emphasised ever since and is now seriously aggravated due to the crisis in the eurozone. Furthermore, implementation of this Treaty may under certain circumstances contribute to an increase in the uncertainties as regards the distribution of the competences between the European Parliament and national parliaments and between the former and the Commission and the Council. |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:eps:cepswp:8310&r=cdm |
| By: | Ruben Durante; Louis Putterman; Joël van der Weele |
| Abstract: | We conduct a laboratory experiment to study how demand for redistribution of income depends on self-interest, insurance motives, and social concerns relating to inequality and efficiency. Our choice environments feature large groups of subjects and real world framing, and differ with respect to the source of inequality (earned or arbitrary), the cost of taxation to the decision maker, the dead-weight loss of taxation, uncertainty about own pre-tax income, and whether the decisionmaker is affected by redistribution. We estimate utility weights for the different sources of demand for redistribution, with the potential to inform modeling in macroeconomics and political economy. |
| Keywords: | income distribution, political economy, redistribution, social preferences. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bro:econwp:2013-7&r=cdm |
| By: | Spermann, Alexander (Randstad) |
| Abstract: | Sector-specific surcharge collective labor agreements between the bargaining partners in the staffing industry allow for a reduction of wage gaps between agency workers and permanent staff in case of long-term job assignments to user companies. Surcharges up to 50% after a surcharge-free period between four and six weeks close the wage gap in nine industries for the temporary work agencies. The paper summarizes the development that lead to these collective labor agreements and analyzes repercussions on potential upward mobility of previously unemployed who start their career as agency workers in the low-wage sector. Furthermore, it highlights the interaction with the basic income scheme, documents new evidence on sustainable employment and draws conclusions for the precarious work discussion. It turns out that these new surcharges allow agency workers to leave the low-wage sector in case of longer job assignment in the core user company industries such as the metal and electrical industry. |
| Keywords: | temporary agency work, staffing industry, collective labor agreement, low-wage sector, precarious work |
| JEL: | I2 J2 J4 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp67&r=cdm |