Steven P. Lalley
Department of Statistics, University of Chicago
E. Glen Weyl
Microsoft Research New England; University of Chicago
February 26, 2015
We argue that quadratic pricing of votes on collective decisions is analogous to linear pricing of private goods and thus solves the tyranny of majority created by the one-person-one-vote rule. To do so we propose a solution concept for costly voting models where individuals take the price of influence in units of votes as given. Under this concept, quadratic pricing of votes is the only rule that is always efficient. We then show that all type-symmetric Bayes-Nash equilibria of an independent private values Quadratic Voting game converge to this efficient price-taking outcome as the population size grows large, with inefficiency generically decaying as 1=N. We discuss the robustness of these conclusions and their implications for market and mechanism design.
Number of Pages in PDF File: 45
Keywords: social choice, public goods, large markets, costly voting, vote trading
JEL Classification: D47, D61, D71, C72, D82, H41, P16
Date posted: February 13, 2012 ; Last revised: February 27, 2015
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