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Competitive Equilibrium in Markets for Votes

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  • Alessandra Casella
  • Aniol Llorente-Saguer
  • Thomas R. Palfrey

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, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. 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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16315.

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Date of creation: Aug 2010
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Publication status: published as Alessandra Casella & Aniol Llorente-Saguer & Thomas R. Palfrey, 2012. "Competitive Equilibrium in Markets for Votes," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 593 - 658.
Handle: RePEc:nbr:nberwo:16315

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Citations

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Cited by:
  1. Alessandra Casella & Thomas Palfrey & Sébastien Turban, 2012. "Vote Trading With and Without Party Leaders," NBER Working Papers 17847, National Bureau of Economic Research, Inc.
  2. Matias Iaryczower & Santiago Oliveros, 2013. "Power Brokers: Middlemen in Legislative Bargaining," Economics Discussion Papers, University of Essex, Department of Economics 731, University of Essex, Department of Economics.
  3. Alessandra Casella & Sébastien Turban, 2012. "Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets," NBER Working Papers 18573, National Bureau of Economic Research, Inc.
  4. Scott Duke Kominers & E. Glen Weyl, 2012. "Holdout in the Assembly of Complements: A Problem for Market Design," American Economic Review, American Economic Association, American Economic Association, vol. 102(3), pages 360-65, May.
  5. 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.

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