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A Solution Concept for Majority Rule in Dynamic Settings

  • B. Douglas Bernheim

    ()

    (Stanford University)

  • Sita Nataraj Slavov

    ()

    (Occidental College)

We define and explore the notion of a Dynamic Condorcet Winner (DCW), which extends the notion of a Condorcet winner to dynamic settings. We show that, for every DCW, every member of a large class of dynamic majoritarian games has an equivalent equilibrium, and that other equilibria are not similarly portable across this class of games. Existence of DCWs is guaranteed when members of the community are sufficiently patient. We characterize sustainable and unsustainable outcomes, study the effects of changes in the discount factor, investigate efficiency properties, and explore the potential for achieving renegotiation-proof outcomes. We apply this solution concept to a standard one-dimensional choice problem wherein agents have single-peaked preferences, as well as to one involving the division of a fixed aggregate payoff.

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Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 07-029.

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Date of creation: May 2007
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Handle: RePEc:sip:dpaper:07-029
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  12. Rubinstein, Ariel, 1979. "A Note about the "Nowhere Denseness" of Societies Having an Equilibrium under Majority Rule," Econometrica, Econometric Society, vol. 47(2), pages 511-14, March.
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  17. Slavov Sita Nataraj, 2006. "Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-37, October.
  18. B. Douglas Bernheim & Antonio Rangel & Luis Rayo, 2006. "The Power of the Last Word in Legislative Policy Making," Econometrica, Econometric Society, vol. 74(5), pages 1161-1190, 09.
  19. Baron, David P & Ferejohn, John, 1987. "Bargaining and Agenda Formation in Legislatures," American Economic Review, American Economic Association, vol. 77(2), pages 303-09, May.
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