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Informative Voting and the Samuelson Rule

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  • Felix Bierbrauer

    ()
    (Max Planck Institute for Research on Collective Goods, Bonn)

  • Marco Sahm

    ()
    (Lehrstuhl fuer Finanzwissenschaft, Munich, Germany.)

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    Abstract

    We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals be-have as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.

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    Bibliographic Info

    Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2006_18.

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    Length: 35 pages
    Date of creation: Aug 2006
    Date of revision:
    Handle: RePEc:mpg:wpaper:2006_18

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    Related research

    Keywords: information aggregation; informative voting; public goods; two-dimensional heterogeneity;

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    References

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    1. Piketty, Thomas, 1999. "The information-aggregation approach to political institutions," European Economic Review, Elsevier, vol. 43(4-6), pages 791-800, April.
    2. Dirk Bergemann & Stephen Morris, 2005. "Robust Mechanism Design," Econometrica, Econometric Society, vol. 73(6), pages 1771-1813, November.
    3. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
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    6. Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections With Private Information," Levine's Working Paper Archive 1560, David K. Levine.
    7. Ehud Kalai, 2002. "Large Robust Games," Discussion Papers 1350, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    8. R. J. Gary-Bobo & T. Jaaidane, 1996. "Polling mechanisms and the demand revelation problem," THEMA Working Papers 96-31, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    9. Gersbach, Hans, 2005. "Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs," CEPR Discussion Papers 5013, C.E.P.R. Discussion Papers.
    10. Weymark, John A., 1986. "A reduced-form optimal nonlinear income tax problem," Journal of Public Economics, Elsevier, vol. 30(2), pages 199-217, July.
    11. Feldman, Mark & Gilles, Christian, 1985. "An expository note on individual risk without aggregate uncertainty," Journal of Economic Theory, Elsevier, vol. 35(1), pages 26-32, February.
    12. Felix Bierbrauer, 2005. "Optimal Income Taxation and Public Good Provision in a Two-Class Economy," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2005_25, Max Planck Institute for Research on Collective Goods.
    13. Al-Najjar, Nabil I., 2004. "Aggregation and the law of large numbers in large economies," Games and Economic Behavior, Elsevier, vol. 47(1), pages 1-35, April.
    14. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
    15. Martin F. Hellwig, 2003. "Public-Good Provision with Many Participants," Review of Economic Studies, Oxford University Press, vol. 70(3), pages 589-614.
    16. Meirowitz, Adam, 2005. "Polling games and information revelation in the Downsian framework," Games and Economic Behavior, Elsevier, vol. 51(2), pages 464-489, May.
    17. : Christian Schultz, . "Polarization and Inefficient Policies," Discussion Papers 93-16, University of Copenhagen. Department of Economics.
    18. Judd, Kenneth L., 1985. "The law of large numbers with a continuum of IID random variables," Journal of Economic Theory, Elsevier, vol. 35(1), pages 19-25, February.
    19. Weymark, John A, 1987. "Comparative Static Properties of Optimal Nonlinear Income Taxes," Econometrica, Econometric Society, vol. 55(5), pages 1165-85, September.
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    Cited by:
    1. Felix Bierbrauer, 2006. "Collectively Incentive Compatible Tax Systems," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_24, Max Planck Institute for Research on Collective Goods.

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