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Minority vs. majority: An experimental study of standardized bids

  • Pintér, Ágnes
  • Veszteg, Róbert F.

Due to its simplicity, the plurality voting system is frequently used to choose a common representative or project. Nevertheless, it may fail to provide a socially efficient decision as the majority can outvote any minority, even if the majority's gain does not compensate the loss suffered by the minority. In this paper, we propose and study a voting mechanism that allows voters to reveal more information about their preferences than the plurality voting system. In the standardized bids mechanism voters report a bid for all available projects that are standardized before being aggregated to choose the winning project. The standardization of bids ensures the existence of an equilibrium, and delivers incentives to overcome the problem of positive and negative exaggeration. Our experimental results show that the standardized bids mechanism performs well in the laboratory as it chooses the efficient project in almost 70% of the cases, and induces truthful reports of project rankings in approximately 90% of the cases. It also reduces the tension between the majority and the minority.

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Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 26 (2010)
Issue (Month): 1 (March)
Pages: 36-50

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Handle: RePEc:eee:poleco:v:26:y:2010:i:1:p:36-50
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544

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  1. Alessandra Casella, 2002. "Storable Votes," NBER Working Papers 9189, National Bureau of Economic Research, Inc.
  2. Jackson, Matthew O. & Mathevet, Laurent & Mattes, Kyle, . "Nomination processes and policy outcomes," Working Papers 1250, California Institute of Technology, Division of the Humanities and Social Sciences.
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  8. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R, 2003. "An Experimental Study of Storable Votes," CEPR Discussion Papers 4081, C.E.P.R. Discussion Papers.
  9. Glenn W. Harrison & Tanga McDaniel, 2008. "Voting games and computational complexity," Oxford Economic Papers, Oxford University Press, vol. 60(3), pages 546-565, July.
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  11. Perez-Castrillo, David & Veszteg, Robert F., 2007. "Choosing a common project: Experimental evidence on the multibidding mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 394-411, July.
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  13. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  14. Róbert Veszteg, 2005. "Linking Decisions with Moments," Faculty Working Papers 10/05, School of Economics and Business Administration, University of Navarra.
  15. Polome, Philippe, 2003. "Experimental evidence on deliberate misrepresentation in referendum contingent valuation," Journal of Economic Behavior & Organization, Elsevier, vol. 52(3), pages 387-401, November.
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  17. Róbert Veszteg, 2010. "Multibidding game under uncertainty," Review of Economic Design, Springer, vol. 14(3), pages 311-329, September.
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