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Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets

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  • Casella, Alessandra
  • Turban, Sébastien

Abstract

We study the competitive equilibrium of a market for votes where voters can trade votes for a numeraire before making a decision via majority rule. The choice is binary and the number of supporters of either alternative is known. We identify a sufficient condition guaranteeing the existence of an ex ante equilibrium. In equilibrium, only the most intense voter on each side demands votes and each demand enough votes to alone control a majority. The probability of a minority victory is independent of the size of the minority and converges to one half, for any minority size, when the electorate is arbitrarily large. In a large electorate, the numerical advantage of the majority becomes irrelevant: democracy is undone by the market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9242.

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Date of creation: Dec 2012
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Handle: RePEc:cpr:ceprdp:9242

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Keywords: majority voting; minority; vote buying; vote trading; voting;

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  1. Alessandra Casella & Aniol Llorente-Saguer & Thomas R. Palfrey, 2010. "Competitive Equilibrium in Markets for Votes," Levine's Working Paper Archive 661465000000000143, David K. Levine.
  2. Beth Allen & James S. Jordan, 1998. "The existence of rational expectations equilibrium: a retrospective," Staff Report 252, Federal Reserve Bank of Minneapolis.
  3. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-77, October.
  4. Bernholz, Peter, 1974. "Logrolling, Arrow-Paradox and Decision Rules-A Generalization," Kyklos, Wiley Blackwell, vol. 27(1), pages 49-62.
  5. Engelmann, Dirk & Grimm, Veronika, 2008. "Mechanisms for efficient voting with private information about preferences," IWQW Discussion Paper Series 03/2008, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  6. Klaus Kultti & Hannu Salonen, 2005. "Market for Votes," Homo Oeconomicus, Institute of SocioEconomics, vol. 23, pages 323-332.
  7. Tullock, Gordon, 1970. "A Simple Algebraic Logrolling Model," American Economic Review, American Economic Association, vol. 60(3), pages 419-26, June.
  8. Haefele, Edwin T, 1971. "A Utility Theory of Representative Government," American Economic Review, American Economic Association, vol. 61(3), pages 350-67, June.
  9. Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 905-930, October.
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