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Minority vs. Majority: An Experimental Study of Standardized Bids

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  • Agnes Pinter
  • Robert F. Veszteg

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 a 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 simple mechanism that allows voters to reveal more information about their preferences over the candidates. According to the standardized bids mechanism voters report a bid for all the available projects. Standardization ensures the existence of equilibrium, and delivers incentives to overcome the problem of positive and negative exaggeration. Our experimental results show that the standardized bids mechanism performed well in the laboratory as it chose the efficient project in almost three quarters of the cases, and induced truthful reports of project rankings in approximately 90% of the cases. For a reference, we also present experimental results for the plurality voting scheme.

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Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0708.

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Date of creation: Mar 2008
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Handle: RePEc:dpr:wpaper:0708

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  1. Mullin, Charles H. & Reiley, David H., 2006. "Recombinant estimation for normal-form games, with applications to auctions and bargaining," Games and Economic Behavior, Elsevier, vol. 54(1), pages 159-182, January.
  2. Rafael Hortala-Vallve, 2007. "Qualitative Voting," Economics Series Working Papers 320, University of Oxford, Department of Economics.
  3. Alessandra Casella, 2002. "Storable Votes," NBER Working Papers 9189, National Bureau of Economic Research, Inc.
  4. Casella, Alessandra & Palfrey, Thomas & Riezman, Raymond, 2008. "Minorities and Storable Votes," International Quarterly Journal of Political Science, now publishers, vol. 3(2), pages 165-200, July.
  5. Matthew O Jackson & Hugo F Sonnenschein, 2007. "Overcoming Incentive Constraints by Linking Decisions -super-1," Econometrica, Econometric Society, vol. 75(1), pages 241-257, 01.
  6. Polome, Philippe, 2003. "Experimental evidence on deliberate misrepresentation in referendum contingent valuation," Journal of Economic Behavior & Organization, Elsevier, vol. 52(3), pages 387-401, November.
  7. Jackson, Matthew O. & Mathevet, Laurent & Mattes, Kyle, 2007. "Nomination Processes and Policy Outcomes," International Quarterly Journal of Political Science, now publishers, vol. 2(1), pages 67-92, March.
  8. Mueller,Dennis C., 2003. "Public Choice III," Cambridge Books, Cambridge University Press, number 9780521894753.
  9. Róbert Veszteg, 2005. "Linking Decisions with Moments," Faculty Working Papers 10/05, School of Economics and Business Administration, University of Navarra.
  10. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R., 2003. "An Experimental Study of Storable Votes," Working Papers 1173, California Institute of Technology, Division of the Humanities and Social Sciences.
  11. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
  12. Róbert F. Veszteg, 2004. "Multibidding Game under Uncertainty," Faculty Working Papers 14/04, School of Economics and Business Administration, University of Navarra.
  13. Glenn W. Harrison & Tanga McDaniel, 2008. "Voting games and computational complexity," Oxford Economic Papers, Oxford University Press, vol. 60(3), pages 546-565, July.
  14. Ariel Rubinstein, 2006. "Instinctive and Cognitive Reasoning: A Study of Response Times," Discussion Papers 1424, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Perez-Castrillo, David & Veszteg, Robert F., 2007. "Choosing a common project: Experimental evidence on the multibidding mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 394-411, July.
  16. David P�rez-Castrillo & David Wettstein, 2002. "Choosing Wisely: A Multibidding Approach," American Economic Review, American Economic Association, vol. 92(5), pages 1577-1587, December.
  17. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
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