Democracy Undone - Systematic Minority Advantage in Competitive Vote Markets
74 Pages Posted: 1 Feb 2013
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Democracy Undone. Systematic Minority Advantage in Competitive Vote Markets
Date Written: December 2012
Abstract
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.
Keywords: majority voting, minority, vote buying, vote trading, voting
JEL Classification: C62, C72, D70, D72, P16
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