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Competitive Equilibrium in Markets for Votes

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  • Alessandra Casella
  • Aniol Llorente-Saguer
  • Thomas R. Palfrey

Abstract

We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define the concept of ex ante vote-trading equilibrium and show by construction that an equilibrium exists. The equilibrium we characterize always results in dictatorship if there is any trade, and the market for votes generates welfare losses, relative to simple majority voting, if the committee is large enough or the distribution of values is not very skewed. We test the theoretical implications in the laboratory using a continuous open-book multiunit double auction.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 120 (2012)
Issue (Month): 4 ()
Pages: 593 - 658

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Handle: RePEc:ucp:jpolec:doi:10.1086/667988

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References

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  1. Klaus Kultti & Hannu Salonen, 2005. "Market for Votes," Homo Oeconomicus, Institute of SocioEconomics, vol. 23, pages 323-332.
  2. Alessandra Casella, 2002. "Storable votes," Discussion Papers 0102-71, Columbia University, Department of Economics.
  3. Dekel, Eddie & Jackson, Matthew O. & Wolinsky, Asher, 2009. "Vote Buying: Legislatures and Lobbying," International Quarterly Journal of Political Science, now publishers, vol. 4(2), pages 103-128, July.
  4. Alessandra Casella & Thomas Palfrey & Raymond Riezman, 2005. "Minorities and Storable Votes," NBER Working Papers 11674, National Bureau of Economic Research, Inc.
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Cited by:
  1. Scott Duke Kominers & E. Glen Weyl, 2012. "Holdout in the Assembly of Complements: A Problem for Market Design," American Economic Review, American Economic Association, vol. 102(3), pages 360-65, May.
  2. Casella, Alessandra & Turban, Sébastien, 2012. "Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets," CEPR Discussion Papers 9242, C.E.P.R. Discussion Papers.
  3. Casella, Alessandra & Palfrey, Thomas R & Turban, Sébastien, 2012. "Vote Trading With and Without Party Leaders," CEPR Discussion Papers 8848, C.E.P.R. Discussion Papers.
  4. Matias Iaryczower & Santiago Oliveros, 2013. "Power Brokers: Middlemen in Legislative Bargaining," Economics Discussion Papers 731, University of Essex, Department of Economics.
  5. Drexl, Moritz & Kleiner, Andreas, 2013. "Preference Intensities in Repeated Collective Decision-Making," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79832, Verein für Socialpolitik / German Economic Association.

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