Competitive Equilibrium in Markets for Votes

Alessandra Casella, Aniol Llorente-Saguer and Thomas Palfrey

No 2012_03, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

Abstract: We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define the concept of ex ante vote-trading equilibrium, and show by construction that an equilibrium exists. The equilibriumwe characterize always results in dictatorship if there is any trade, and the market for votes generates welfare losses, relative to simple majority voting, if the committee is large enough or the distribution of values not very skewed. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction.

Keywords: Experiments; voting; Markets; Vote Trading; Competitive Equilibrium (search for similar items in EconPapers)
JEL-codes: C72 C92 D70 P16 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-cdm, nep-exp, nep-mic and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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Related works:
Working Paper: Competitive Equilibrium in Markets for Votes (2010)
Working Paper: Competitive equilibrium in Markets for Votes (2010)
Working Paper: Competitive Equilibrium in Markets for Votes (2010)
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