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Competitive equilibrium in Markets for Votes

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

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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7992.

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Date of creation: Sep 2010
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Handle: RePEc:cpr:ceprdp:7992
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  14. Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2004. "Vote Buying," Discussion Papers 1386, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  15. Rafael Hortala-Vallve, 2007. "Qualitative Voting," Economics Series Working Papers 320, University of Oxford, Department of Economics.
  16. Casella, Alessandra, 2005. "Storable votes," Games and Economic Behavior, Elsevier, vol. 51(2), pages 391-419, May.
  17. Bevia, Carmen & Quinzii, Martine & Silva, Jose A., 1999. "Buying several indivisible goods," Mathematical Social Sciences, Elsevier, vol. 37(1), pages 1-23, January.
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  20. Cox, James C & Smith, Vernon L & Walker, James M, 1988. " Theory and Individual Behavior of First-Price Auctions," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 61-99, March.
  21. Hortala-Vallve, Rafael & Llorente-Saguer, Aniol, 2010. "A simple mechanism for resolving conflict," Games and Economic Behavior, Elsevier, vol. 70(2), pages 375-391, November.
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  23. Dekel, Eddie & Jackson, Matthew O. & Wolinsky, Asher, 2009. "Vote Buying: Legislatures and Lobbying," Quarterly Journal of Political Science, now publishers, vol. 4(2), pages 103-128, July.
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