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Why Voting? A Welfare Analysis

Author

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  • Moritz Drexl
  • Andreas Kleiner

Abstract

This article studies costly signaling. The signaling effort is chosen in multiple periods and observed with noise. The signaler benefits from the belief of the market, not directly from the effort or the signal. Optimal signaling behavior in time-varying environments trades off effort-smoothing and influencing belief exactly when it yields a return. If the return to signaling first increases over time and then decreases, then the optimal effort rises slowly, reaches its maximum before the return does, and declines quickly. Advertising data displays this pattern.

Suggested Citation

  • Moritz Drexl & Andreas Kleiner, 2018. "Why Voting? A Welfare Analysis," American Economic Journal: Microeconomics, American Economic Association, vol. 10(3), pages 253-271, August.
    • Handle: RePEc:aea:aejmic:v:10:y:2018:i:3:p:253-71
    Note: DOI: 10.1257/mic.20160337
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    Citations

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    Cited by:

    1. Tobias Rachidi, 2020. "Optimal Voting Mechanisms on Generalized Single-Peaked Domains," CRC TR 224 Discussion Paper Series crctr224_2020_214, University of Bonn and University of Mannheim, Germany.
    2. Kwiek, Maksymilian, 2014. "Efficient voting with penalties," Discussion Paper Series In Economics And Econometrics 1419, Economics Division, School of Social Sciences, University of Southampton.
    3. Alex Gershkov & Benny Moldovanu & Xianwen Shi, 2013. "Optimal Mechanism Design without Money," Working Papers tecipa-481, University of Toronto, Department of Economics.
    4. Mackenzie, Andrew & Trudeau, Christian, 0. "On Groves mechanisms for costly inclusion," Theoretical Economics, Econometric Society.
    5. Bierbrauer, Felix & Winkelmann, Justus, 2020. "All or nothing: State capacity and optimal public goods provision," Journal of Economic Theory, Elsevier, vol. 185(C).
    6. Kwiek, Maksymilian, 2017. "Efficient voting with penalties," Games and Economic Behavior, Elsevier, vol. 104(C), pages 468-485.
    7. Alex Gershkov & Benny Moldovanu & Xianwen Shi, 2017. "Optimal Voting Rules," Review of Economic Studies, Oxford University Press, vol. 84(2), pages 688-717.
    8. Hagen, Martin & Hernando-Veciana, Ángel, 2021. "Multidimensional bargaining and posted prices," Journal of Economic Theory, Elsevier, vol. 196(C).

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    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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