Competitive Equilibrium in Markets for Votes

42 Pages Posted: 30 Aug 2010 Last revised: 30 Jan 2022

See all articles by Alessandra Casella

Alessandra Casella

Columbia University - Graduate School of Arts and Sciences, Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Aniol Llorente-Saguer

Queen Mary University of London

Thomas R. Palfrey

California Institute of Technology - Division of the Humanities and Social Sciences

Multiple version iconThere are 4 versions of this paper

Date Written: August 2010

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.

Suggested Citation

Casella, Alessandra and Llorente-Saguer, Aniol and Palfrey, Thomas R., Competitive Equilibrium in Markets for Votes (August 2010). NBER Working Paper No. w16315, Available at SSRN: https://ssrn.com/abstract=1667346

Alessandra Casella (Contact Author)

Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Aniol Llorente-Saguer

Queen Mary University of London ( email )

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Thomas R. Palfrey

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

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