Working Paper: NBER ID: w17847
Authors: Alessandra Casella; Thomas 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: No keywords provided
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 Wins Too Rarely (J15) |
| Minority Wins Too Rarely (J15) | Lower Welfare Outcomes (I38) |
| Vote Trading in a Competitive Market (D72) | Minority Wins Too Often (J15) |
| Vote Trading in a Competitive Market (D72) | Welfare-Reducing (D69) |
| Welfare-Reducing (D69) | Majority Losses Exceed Minority Gains (J15) |