Steven P. Lalley
Department of Statistics, University of Chicago
E. Glen Weyl
Microsoft Research New England; University of Chicago
December 29, 2014
While the one-person-one-vote rule often leads to the tyranny of the majority, alternatives proposed by economists have been complex and fragile. By contrast, we argue that a simple mechanism, Quadratic Voting (QV), is robustly very efficient. Voters making a binary decision purchase votes from a clearinghouse paying the square of the number of votes purchased. If individuals take the chance of a marginal vote being pivotal as given, like a market price, QV is the unique pricing rule that is always efficient. In an independent private values environment, any type-symmetric Bayes-Nash equilibrium converges towards this efficient limiting outcome as the population grows large, with inefficiency decaying as 1/N. We use approximate calculations, which match our theorems in this case, to illustrate the robustness of QV, in contrast to existing mechanisms. We discuss applications in both (near-term) commercial and (long-term) social contexts.
Number of Pages in PDF File: 103
Keywords: social choice, public goods, large markets, costly voting, vote trading
JEL Classification: D47, D61, D71, C72, D82, H41, P16working papers series
Date posted: February 13, 2012 ; Last revised: December 29, 2014
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