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Risk Aversion, Over-Confidence and Private Information as Determinants of Majority Thresholds

  • Giuseppe Attanasi, Luca Corazzini, Nikolaos Georgantzis, Francesco Passarelli.

We present and experimentally test a theoretical model of majority threshold determination as a function of voters' risk preferences. The experimental results confirm the theoretical prediction of a positive correlation between a voter's risk aversion and the corresponding preferred majority threshold. Furthermore, the experimental results show that a voter's optimal majority threshold negatively relates to the voter's confidence about how others will vote. Moreover, in a treatment in which individuals receive a private signal about others' voting behavior, the private signal tends to replace confidence.

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File URL: ftp://ftp.unibocconi.it/pub/RePEc/slp/papers/islawp34.pdf
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Paper provided by ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy in its series ISLA Working Papers with number 34.

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Length: 31 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:slp:islawp:islawp34
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Web page: http://www.isla.unibocconi.it/

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  1. Giuseppe Attanasi, Luca Corazzini, Francesco Passarelli, 2007. "Voting as a Lottery," ISLA Working Papers 28, ISLA, Centre for research on Latin American Studies and Transition Economies, Universita' Bocconi, Milano, Italy.
  2. Alessandra Casella & Thomas Palfrey & Raymond Riezman, 2005. "Minorities and Storable Votes," NBER Working Papers 11674, National Bureau of Economic Research, Inc.
  3. Uriel Procaccia & Uzi Segal, 2002. "Super Majoritarianism and the Endowment Effect," Discussion Paper Series dp277, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  4. Buchanan, James M & Faith, Roger L, 1980. "Subjective Elements in Rawlsian Contractual Agreement on Distributional Rules," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 23-38, January.
  5. Thomas Zorn & Dolores Martin, 1986. "Optimism and pessimism in political and market institutions," Public Choice, Springer, vol. 49(2), pages 165-178, January.
  6. Buchanan, James M & Faith, Roger L, 1981. "Entrepreneurship and the Internalization of Externalities," Journal of Law and Economics, University of Chicago Press, vol. 24(1), pages 95-111, April.
  7. Daniel Dorn & Gur Huberman, 2005. "Talk and Action: What Individual Investors Say and What They Do," Review of Finance, Springer, vol. 9(4), pages 437-481, December.
  8. Enriqueta Aragonés & Andrew Postlewaite, 1999. "Ambiguity in election games," Economics Working Papers 364, Department of Economics and Business, Universitat Pompeu Fabra.
  9. Casella, Alessandra & Gelman, Andrew & Palfrey, Thomas R, 2003. "An Experimental Study of Storable Votes," CEPR Discussion Papers 4081, C.E.P.R. Discussion Papers.
  10. Harrington, Joseph E, Jr, 1990. " The Role of Risk Preferences in Bargaining When Acceptance of a Proposal Requires Less than Unanimous Approval," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 135-54, June.
  11. Rafael Hortala-Vallve, 2012. "Qualitative voting," Journal of Theoretical Politics, , vol. 24(4), pages 526-554, October.
  12. Forsythe, R. & Myerson, R. & Rietz, T. & Weber, R., 1991. "An Experimental Study of Voting Rules and Polls in Three- Way Elections," Working Papers 91-04, University of Iowa, Department of Economics.
  13. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
  14. Olof Johansson-Stenman & Fredrik Carlsson & Dinky Daruvala, 2002. "Measuring Future Grandparents" Preferences for Equality and Relative Standing," Economic Journal, Royal Economic Society, vol. 112(479), pages 362-383, April.
  15. Menkhoff, Lukas & Schmidt, Ulrich & Brozynski, Torsten, 2006. "The impact of experience on risk taking, overconfidence, and herding of fund managers: Complementary survey evidence," European Economic Review, Elsevier, vol. 50(7), pages 1753-1766, October.
  16. André Blais & Marc André Bodet, 2006. "How Do Voters Form Expectations about the Parties' Chances of Winning the Election?," Social Science Quarterly, Southwestern Social Science Association, vol. 87(3), pages 477-493.
  17. Charles A. Holt & Susan K. Laury, 2002. "Risk Aversion and Incentive Effects," American Economic Review, American Economic Association, vol. 92(5), pages 1644-1655, December.
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