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Why Votes Have a Value

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Author Info

  • Ingolf Dittmann
  • Dorothea Kübler
  • Ernst Maug
  • Lydia Mechtenberg

Abstract

We perform an experiment where subjects pay for the right to participate in a shareholder vote. We find that experimental subjects are willing to pay a significant premium for the voting right even though there should be no such premium in our setup under full rationality. Private benefits from controlling the firm are absent from our setup and overconfidence cannot explain the size of the observed voting premium. The premium disappears in treatments where voting has no material consequences for the subjects. We conclude that individuals enjoy being part of a group that exercises power and are therefore willing to pay for the right to vote even when the impact of their own vote on their payoffs is negligible.

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Bibliographic Info

Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2007-068.

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Length: 50 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:hum:wpaper:sfb649dp2007-068

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Related research

Keywords: Smoking; Voting; dual-class shares; paradox of voting; experimental economics;

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Cited by:
  1. Dominiak, Adam & Schnedler, Wendelin, 2010. "Attitudes towards Uncertainty and Randomization: An Experimental Study," Working Papers 0494, University of Heidelberg, Department of Economics.
  2. Schnellenbach, Jan & Schubert, Christian, 2014. "Behavioral public choice: A survey," Freiburg Discussion Papers on Constitutional Economics 14/03, Walter Eucken Institut e.V..

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