On discounting and voting in a simple growth model
Kirill Borissov (),
Mikhail Pakhnin () and
Clemens Puppe ()
European Economic Review, 2017, vol. 99, issue C, 56-76
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 if agents are heterogeneous only in their discount factors. Nevertheless, at each point in 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 rates receive a majority at each point in time in the proposed intertemporal majority voting procedure. We also provide a characterization of stationary voting equilibria in the case where agents may differ not only in their time preferences, but also in their felicity 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)
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Journal Article: On discounting and voting in a simple growth model (2017)
Working Paper: On Discounting and Voting in a Simple Growth Model (2016)
Working Paper: On discounting and voting in a simple growth model (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:99:y:2017:i:c:p:56-76
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