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Competitive Equilibrium in Markets for Votes

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  • Alessandra Casella

    ()
    (Columbia University, NBER and CEPR)

  • Aniol Llorente-Saguer

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

  • Thomas R. Palfrey

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

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 equilibriumwe 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 not very skewed. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction.

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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 2012_03.

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Date of creation: Feb 2012
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Handle: RePEc:mpg:wpaper:2012_03

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Keywords: Experiments; voting; Markets; Vote Trading; Competitive Equilibrium;

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Citations

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Cited by:
  1. Alessandra Casella & Sébastien Turban, 2012. "Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets," NBER Working Papers 18573, National Bureau of Economic Research, Inc.
  2. Matias Iaryczower & Santiago Oliveros, 2013. "Power Brokers: Middlemen in Legislative Bargaining," Economics Discussion Papers 731, University of Essex, Department of Economics.
  3. 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.
  4. 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.
  5. 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.

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