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Minority vs. majority: An experimental study of standardized bids

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  • Pintér, Ágnes
  • Veszteg, Róbert F.

Abstract

Due to its simplicity, the plurality voting system is frequently used to choose a common representative or project. Nevertheless, it may fail to provide a socially efficient decision as the majority can outvote any minority, even if the majority's gain does not compensate the loss suffered by the minority. In this paper, we propose and study a voting mechanism that allows voters to reveal more information about their preferences than the plurality voting system. In the standardized bids mechanism voters report a bid for all available projects that are standardized before being aggregated to choose the winning project. The standardization of bids ensures the existence of an equilibrium, and delivers incentives to overcome the problem of positive and negative exaggeration. Our experimental results show that the standardized bids mechanism performs well in the laboratory as it chooses the efficient project in almost 70% of the cases, and induces truthful reports of project rankings in approximately 90% of the cases. It also reduces the tension between the majority and the minority.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 26 (2010)
Issue (Month): 1 (March)
Pages: 36-50

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Handle: RePEc:eee:poleco:v:26:y:2010:i:1:p:36-50

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Web page: http://www.elsevier.com/locate/inca/505544

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Keywords: Efficiency Experiments Mechanism design Uncertainty Voting rules;

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