On discounting and voting in a simple growth model

Kirill Borissov, Mikhail Pakhnin and Clemens Puppe ()

No 77, Working Paper Series in Economics from Karlsruhe Institute of Technology (KIT), Department of Economics and Management

Abstract: In dynamic resource allocation models, the non-existence of voting equilibria is a generic phenomenon due to the multi-dimensionality of the choice space even with agents heterogeneous only in their discount factors. Nevertheless, at each point of time there may exist a "median voter" whose preferred instantaneous consumption rate is supported by a majority of agents. Based on this observation, we propose an institutional setup ("intertemporal majority voting") in a Ramsey-type growth model with common consumption and heterogeneous agents, and show that it provides a microfoundation of the choice of the optimal consumption stream of the median agent. While the corresponding intertemporal consumption stream is in general not a Condorcet winner among all feasible paths, its induced instantaneous consumption rate receives a majority at each point in time in the proposed intertemporal majority voting procedure. We also provide a characterization of balanced-growth and steady-state voting equilibria in the case in which agents may differ not only in their time preference, but also in their instantaneous utility functions.

Keywords: collective choice; common-pool resource; economic growth; heterogeneous agents; median voter theorem (search for similar items in EconPapers)
JEL-codes: D11 D71 D91 O13 O43 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cdm, nep-dge, nep-gro, nep-mic and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: On discounting and voting in a simple growth model (2017)
Journal Article: On discounting and voting in a simple growth model (2017)
Working Paper: On Discounting and Voting in a Simple Growth Model (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kitwps:77

DOI: 10.5445/IR/1000051311

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