Inefficiency and Self-Determination: Simulation-Based Evidence from Meiji Japan

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in August 2015Abstract Does the exercise of the right of self-determination lead to inefficiency? This paper considers a set of centrally planned municipal mergers during the Meiji period, with data from Gifu prefecture. The observed merger pattern can be explained as a social optimum based on a very simple individual utility function. If individual villages had been allowed to choose their merger partners, counterfactual simulations show that the core is always non-empty, but core partitions contain about 80% more (postmerger) municipalities than the social optimum. Simulations are possible because core partitions can be calculated using repeated application of a mixed integer program.Does exercise of the right to self-determination result in an efficient arrangement of political boundaries? There is substantial theoretical interest in this issue both inside and outside of economics, and recent world events, such as the Russian annexation of the (apparently consenting) Crimean peninsula, suggest policy relevance. 1Empirical results regarding the efficiency of jurisdiction formation, however, are very limited. This paper considers a historical set of municipal mergers in Gifu, Japan, that were decided by a central planner in the late 19th century. We show that the observed pattern of * Portions of this paper were originally presented as "An Errors-in-Variables Model for Graph Outcome Data" at the Econometric Society Far East meeting. In addition, some ideas were present in the job market paper version of Weese [2015], but were removed during the publication process. We thank seminar participants at various seminars. In addition, the paper has benefitted greatly from discussion with Steve Berry, Jeremy Fox, Hide Ichimura, Yuichi Kitamura, Tsunetoshi Mizoguchi, Kei Okunuki, and Larry Samuelson. Julien Clancy provided excellent research assistance with an earlier version of the model. Portions of this research were conducted at

Fractional Hedonic Games

“…Indeed, recent advances in SAT and ILP solvers mean that many NP-complete problems of moderate size are now easily solvable in practice; this is not the case for Σ p 2 -complete problems. However, Weese et al [2017] present a heuristic algorithm that attempts to find a core stable partition by repeatedly searching for a blocking coalition using an ILP solver and implementing this deviation. They find that this approach is reasonably efficient for real-world examples with up to 1,000 players.…”

“…Of course, the examples given are specifically constructed so as to not admit a core stable outcome, and it is plausible that "most" FHGs do admit one. Indeed, Weese et al [2017] randomly sampled 10 million symmetric FHGs similar to the one shown in Figure 2b, and all of them had a non-empty core.…”

“…They also show that it is NP-hard to decide whether the grand coalition is core stable in a given simple symmetric fractional hedonic game, and present and evaluate some heuristics for this question. Weese et al [2017] use fractional hedonic games as a model of the formation of jurisdictions, noting that the arrangement of political boundaries involves a tradeoff between efficiencies of scale and of geographic heterogeneity. In examining the core of their weighted symmetric FHGs, they randomly sampled such games and found that all their samples admit a non-empty core, suggesting that the problem of non-existence of stable outcomes is not a problem in practice.…”