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On Discounting and Voting in a Simple Growth Model

Kirill Borissov (), Mikhail Pakhnin () and Clemens Puppe ()

No CE3S-02/16, CEEES Paper Series from European University at St. Petersburg, Department of Economics

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 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)
Pages: 32 pages
Date: 2016-11-02
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pol
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Related works:
Journal Article: On discounting and voting in a simple growth model (2017) Downloads
Journal Article: On discounting and voting in a simple growth model (2017) Downloads
Working Paper: On discounting and voting in a simple growth model (2015) Downloads
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