Working Paper: NBER ID: w27743
Authors: Alessandra Casella; Antonin Mac
Abstract: Voters have strong incentives to increase their influence by trading votes, a practice indeed believed to be common. But is vote trading welfare-improving or welfare-decreasing? We review the theoretical literature and, when available, its related experimental tests. We begin with the analysis of logrolling – the exchange of votes for votes, considering both explicit vote exchanges and implicit vote trades engineered by bundling issues in a single bill. We then focus on vote markets, where votes can be traded against a numeraire. We cover competitive markets, strategic market games, decentralized bargaining, and more centralized mechanisms, such as quadratic voting, where votes can be bought at a quadratic cost. We conclude with procedures allowing voters to shift votes across decisions – to trade votes with oneself only – such as storable votes or a modified form of quadratic voting. We find that vote trading and vote markets are typically inefficient; more encouraging results are obtained by allowing voters to allocate votes across decisions.
Keywords: No keywords provided
JEL Codes: D6; D7; D71; D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| vote trading (D72) | overall welfare decline (I30) |
| vote trading (D72) | negative externalities affecting non-trading voters (D62) |
| vote trading (D72) | Pareto inferior outcomes (D63) |
| allowing voters to allocate votes across decisions (D72) | improved welfare (I30) |
| reallocating voting power (D72) | enhanced overall efficiency (D61) |
| specific trading mechanisms (D47) | utilitarian efficiency (D61) |