Working Paper: NBER ID: w18573
Authors: Alessandra Casella; Sébastien Turban
Abstract: We study the competitive equilibrium of a market for votes where voters can trade votes for a numeraire before making a decision via majority rule. The choice is binary and the number of supporters of either alternative is known. We identify a sufficient condition guaranteeing the existence of an ex ante equilibrium. In equilibrium, only the most intense voter on each side demands votes and each demands enough votes to alone control a majority. The probability of a minority victory is independent of the size of the minority and converges to one half, for any minority size, when the electorate is arbitrarily large. In a large electorate, the numerical advantage of the majority becomes irrelevant: democracy is undone by the market.
Keywords: Vote Markets; Minority Advantage; Competitive Equilibrium; Political Economy
JEL Codes: C62; D70; D72; P16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| size of the minority (J15) | probability of minority victories (J15) |
| vote trading (D72) | decision power allocation (D70) |
| distribution of voters' preferences (D79) | existence of ex ante equilibrium (C62) |
| intensity of voter preferences (D79) | existence of equilibrium (C62) |
| size of the minority (J15) | probability of minority victory (J15) |
| vote market (D72) | traditional majority rule (D72) |