Working Paper: CEPR ID: DP8848
Authors: Alessandra Casella; Thomas R. Palfrey; Sébastien Turban
Abstract: Two groups of voters of known sizes disagree over a single binary decision to be taken by simple majority. Individuals have different, privately observed intensities of preferences and before voting can buy or sell votes among themselves for money. We study the implication of such trading for outcomes and welfare when trades are coordinated by the two group leaders and when they take place anonymously in a competitive market. The theory has strong predictions. In both cases, trading falls short of full efficiency, but for opposite reasons: with group leaders, the minority wins too rarely; with market trades, the minority wins too often. As a result, with group leaders, vote trading improves over no-trade; with market trades, vote trading can be welfare reducing. All predictions are strongly supported by experimental results.
Keywords: bargaining; competitive equilibrium; experiments; votes; market; voting
JEL Codes: C72; C78; C92; D70; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vote trading mediated by party leaders (D72) | minority group wins too rarely (J15) |
| structure of trading (D40) | frequency of minority victories (J15) |
| competitive market for votes (D72) | minority group wins too often (J15) |
| lack of coordination in vote trading (D72) | inefficiencies in vote allocation (D72) |
| trading in competitive market (D41) | reduced overall welfare (D69) |