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Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets

  • Casella, Alessandra
  • Turban, Sébastien

We study the competitive equilibrium of a market for votes where voters can trade votes for a numeraire before making a decision via majority rule. The choice is binary and the number of supporters of either alternative is known. We identify a sufficient condition guaranteeing the existence of an ex ante equilibrium. In equilibrium, only the most intense voter on each side demands votes and each demand enough votes to alone control a majority. The probability of a minority victory is independent of the size of the minority and converges to one half, for any minority size, when the electorate is arbitrarily large. In a large electorate, the numerical advantage of the majority becomes irrelevant: democracy is undone by the market.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9242.

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Date of creation: Dec 2012
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Handle: RePEc:cpr:ceprdp:9242
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  1. Bernholz, Peter, 1974. "Logrolling, Arrow-Paradox and Decision Rules-A Generalization," Kyklos, Wiley Blackwell, vol. 27(1), pages 49-62.
  2. Jackson, Matthew O. & Dekel, Eddie & Wolinsky, Asher, 2005. "Vote buying," Working Papers 1215, California Institute of Technology, Division of the Humanities and Social Sciences.
    • Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2005. "Vote Buying," Others 0503006, EconWPA.
    • Eddie Dekel & Matthew O. Jackson & Asher Wolinsky, 2004. "Vote Buying," Discussion Papers 1386, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  3. Tullock, Gordon, 1970. "A Simple Algebraic Logrolling Model," American Economic Review, American Economic Association, vol. 60(3), pages 419-26, June.
  4. 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.
  5. Haefele, Edwin T, 1971. "A Utility Theory of Representative Government," American Economic Review, American Economic Association, vol. 61(3), pages 350-67, June.
  6. Beth Allen & James S. Jordan, 1998. "The existence of rational expectations equilibrium: a retrospective," Staff Report 252, Federal Reserve Bank of Minneapolis.
  7. Klaus Kultti & Hannu Salonen, 2005. "Market for Votes," Homo Oeconomicus, Institute of SocioEconomics, vol. 23, pages 323-332.
  8. Tobin, James, 1970. "On Limiting the Domain of Inequality," Journal of Law and Economics, University of Chicago Press, vol. 13(2), pages 263-77, October.
  9. Dirk Engelmann & Veronika Grimm, 2012. "Mechanisms for Efficient Voting with Private Information about Preferences," Economic Journal, Royal Economic Society, vol. 122(563), pages 1010-1041, 09.
  10. Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 905-930, October.
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