Deliberative Democracy or Market Democracy: Designing Institutions to Aggregate Preferences and Information
I consider the design of policy making institutions to aggregate preferences and information. The mechanism design approach makes it possible to consider a large set of institutions or game forms in which participants take observable actions prior to voting. A pervasive incentive problem is found; participants that expect to have the minority preference type will have an incentive to misrepresent their information. Consequentially, if some policy relevant information is observed by fewer than three individual participants and ideological types are not highly correlated no institution can fully aggregate the information and preferences without distributing transfers. Contrary to conventional wisdom, diversity may hurt deliberation as the incentives for information transmission are worse in groups with heterogenous sources of information or low levels of ideological correlation. Institutions that distribute transfers conditional on either the validity of agent reports of facts (like information markets), or the frequency of each type of report (like clubs) can truthfully implement the full information majority rule core policy. Overall, expectations of full information and preference aggregation with strategic participants require either strong correlation of preferences, the presence of external interests to structure incentives or information structures in which each piece of information is observed by several participants.
|Date of creation:||Mar 2005|
|Date of revision:|
|Contact details of provider:|| Web page: http://weblamp.princeton.edu/rppe/papers/papers.php|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Timothy Feddersen & Wolfgang Pesendorfer, 1997.
"Voting Behavior and Information Aggregation in Elections With Private Information,"
Levine's Working Paper Archive
1560, David K. Levine.
- Timothy Feddersen & Wolfgang Pesendorfer, 1997. "Voting Behavior and Information Aggregation in Elections with Private Information," Econometrica, Econometric Society, vol. 65(5), pages 1029-1058, September.
- Timothy Feddersen & Wolfgang Pesendorfer, 1994. "Voting Behavior and Information Aggregation in Elections with Private Information," Discussion Papers 1117, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Matthew O. Jackson & James Peck, 1997.
"Asymmetric Information in a Competitive Market Game: Reexamining the Implications of Rational Expectations,"
- James Peck & Matthew O. Jackson, 1999. "Asymmetric information in a competitive market game: Reexamining the implications of rational expectations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(3), pages 603-628.
- Partha Dasgupta & Peter Hammond & Eric Maskin, 1979. "The Implementation of Social Choice Rules: Some General Results on Incentive Compatibility," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 185-216.
- Shapley, Lloyd S & Shubik, Martin, 1977. "Trade Using One Commodity as a Means of Payment," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 937-68, October.
- Palfrey, Thomas R & Srivastava, Sanjay, 1989. "Mechanism Design with Incomplete Information: A Solution to the Implementation Problem," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 668-91, June.
- John Duggan & Cesar Martinelli, 1998.
"A Bayesian Model of Voting in Juries,"
Wallis Working Papers
WP14, University of Rochester - Wallis Institute of Political Economy.
- repec:reg:rpubli:259 is not listed on IDEAS
- Lipman Barton L. & Seppi Duane J., 1995. "Robust Inference in Communication Games with Partial Provability," Journal of Economic Theory, Elsevier, vol. 66(2), pages 370-405, August.
- Timothy Feddersen & Wolfgang Pesendorfer, 1996. "Convicting the Innocent: The Inferiority of Unanimous Jury Verdicts," Discussion Papers 1170, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Dino Gerardi & Leeat Yariv, 2003. "Putting Your Ballot Where Your Mouth Is: An Analysis of Collective Choice with Communication," UCLA Economics Working Papers 827, UCLA Department of Economics.
- Justin Wolfers & Eric Zitzewitz, 2004.
Journal of Economic Perspectives,
American Economic Association, vol. 18(2), pages 107-126, Spring.
- Wolfers, Justin & Zitzewitz, Eric, 2004. "Prediction Markets," Research Papers 1854, Stanford University, Graduate School of Business.
- Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Discussion Papers 03-025, Stanford Institute for Economic Policy Research.
- Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," NBER Working Papers 10504, National Bureau of Economic Research, Inc.
- Postlewaite, Andrew & Schmeidler, David, 1986. "Implementation in differential information economies," Journal of Economic Theory, Elsevier, vol. 39(1), pages 14-33, June.
- Dino Gerardi & Leeat Yariv, 2003. "Putting Your Ballot Where you Mouth Is: An Analysis of Collective Choice," Levine's Working Paper Archive 506439000000000280, David K. Levine.
- Pradeep Dubey & John Geanakoplos & Martin Shubik, 1982. "Revelation of Information in Strategic Market Games: A Critique of Rational Expectations," Cowles Foundation Discussion Papers 634R, Cowles Foundation for Research in Economics, Yale University, revised Nov 1985.
- Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
- Thomas R. Palfrey & Sanjay Srivastava, 1987. "On Bayesian Implementable Allocations," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 193-208.
- Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-38, March.
- Roger B. Myerson, 1977.
"Incentive Compatability and the Bargaining Problem,"
284, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
When requesting a correction, please mention this item's handle: RePEc:ecl:prirpe:03-28-2005. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.