DP9242 Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets

Author(s):	Alessandra Casella, Sébastien Turban
Publication Date:	December 2012
Keyword(s):	majority voting, minority, vote buying, vote trading, voting
JEL(s):	C62, C72, D70, D72, P16
Programme Areas:	Public Economics
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=9242

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 demand 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.