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Competitive Equilibrium in Markets for Votes

Author

Listed:
  • 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 and show by construction that an equilibrium exists. The equilibrium we 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 is not very skewed. We test the theoretical implications in the laboratory using a continuous open-book multiunit double auction.

Suggested Citation

  • 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:ucp:jpolec:doi:10.1086/667988
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    Citations

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    Cited by:

    1. 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.
    2. Casella, Alessandra & Turban, Sébastien, 2014. "Democracy undone. Systematic minority advantage in competitive vote markets," Games and Economic Behavior, Elsevier, vol. 88(C), pages 47-70.
    3. repec:esx:essedp:731 is not listed on IDEAS
    4. Dimitrios Xefteris & Nicholas Ziros, 2017. "Strategic vote trading under complete information," University of Cyprus Working Papers in Economics 03-2017, University of Cyprus Department of Economics.
    5. Dimitrios Xefteris & Nicholas Ziros, 2017. "Strategic Vote Trading in Power Sharing Systems," American Economic Journal: Microeconomics, American Economic Association, vol. 9(2), pages 76-94, May.
    6. Goeree, Jacob K. & Zhang, Jingjing, 2017. "One man, one bid," Games and Economic Behavior, Elsevier, vol. 101(C), pages 151-171.
    7. Iaryczower, Matias & Oliveros, Santiago, 2016. "Power brokers: Middlemen in legislative bargaining," Journal of Economic Theory, Elsevier, vol. 162(C), pages 209-236.
    8. Casella, Alessandra & Palfrey, Thomas & Turban, Sébastien, 2014. "Vote trading with and without party leaders," Journal of Public Economics, Elsevier, pages 115-128.
    9. Azar, José & Schmalz, Martin & Tecu, Isabel, 2017. "Anti-Competitive Effects of Common Ownership," IESE Research Papers D/1169, IESE Business School.
    10. 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 360-365, May.
    11. Kwiek, Maksymilian & Marreiros, Helia & Vlassopoulos, Michael, 2016. "An experimental study of voting with costly delay," Economics Letters, Elsevier, vol. 140(C), pages 23-26.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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