Working Paper: CEPR ID: DP5958
Authors: Patrick W. Schmitz; Thomas Tröger
Abstract: Majority rules are frequently used to decide whether or not a public good should be provided, but will typically fail to achieve an efficient provision. We provide a worst-case analysis of the majority rule with an optimally chosen majority threshold, assuming that voters have independent private valuations and are ex-ante symmetric (provision cost shares are included in the valuations). We show that if the population is large it can happen that the optimal majority rule is essentially no better than a random provision of the public good. But the optimal majority rule is worst-case asymptotically efficient in the large-population limit if (i) the voters' expected valuation is bounded away from 0, and (ii) an absolute bound for valuations is known.
Keywords: majority rule; public goods
JEL Codes: D72; D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| majority threshold (D79) | efficiency of public good provision (H42) |
| population size (J11) | efficiency of majority rule (D72) |
| expected valuation of voters (D79) | efficiency of majority rule (D72) |
| expected valuation of voters (bounded away from zero) (D79) | inefficiency of majority rules (D72) |
| support restriction on valuations (L42) | performance of majority rule (D79) |
| (expected valuation bounded away from zero AND absolute bound for valuations known) (D46) | asymptotic efficiency of optimal majority rule (D79) |