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Discussion Paper Details

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Title: Competitive equilibrium in Markets for Votes

Author(s): Alessandra Casella, Aniol Llorente-Saguer and Thomas R Palfrey

Publication Date: September 2010

Keyword(s): Competitive Equilibrium, Experiments, Markets, Vote Trading and Voting

Programme Area(s): Public Economics

Abstract: We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We define the concept of Ex Ante Vote-Trading Equilibrium, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction.

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Bibliographic Reference

Casella, A, Llorente-Saguer, A and Palfrey, T. 2010. 'Competitive equilibrium in Markets for Votes'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7992