Informative Voting and the Samuelson Rule

Felix Bierbrauer and Marco Sahm

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals behave as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.

Keywords: information aggregation; informative voting; public goods; two-dimensional heterogeneity (search for similar items in EconPapers)
JEL-codes: D71 D72 D82 H41 (search for similar items in EconPapers)
Date: 2006-07
New Economics Papers: this item is included in nep-cdm, nep-mic, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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