Trading and Voting

Rodney L. White Fin. Research Working Paper No. 22-00

15 Pages Posted: 12 Mar 2001  

David K. Musto

University of Pennsylvania - Finance Department

Bilge Yilmaz

University of Pennsylvania - Finance Department

Multiple version iconThere are 2 versions of this paper

Date Written: January 16, 2001

Abstract

The political choice between candidates with different redistribution policies plays out very differently in a complete financial market. When voters have the opportunity to trade election-contingent securities, we find that 1) wealth considerations have no effect on voting, so the interaction between candidates' redistribution policies and the distribution of wealth has no effect on who wins, 2) an election in which a candidate promises wealth redistribution results in redistribution of wealth, and the redistribution is the same regardless of who wins, and 3) if one candidate prefers some amount of redistribution and the other does not, the candidate who prefers redistribution will propose more redistribution than the amount he prefers.

Suggested Citation

Musto, David K. and Yilmaz, Bilge, Trading and Voting (January 16, 2001). Rodney L. White Fin. Research Working Paper No. 22-00. Available at SSRN: https://ssrn.com/abstract=263041 or http://dx.doi.org/10.2139/ssrn.263041

David K. Musto (Contact Author)

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

Bilge Yilmaz

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-1163 (Phone)
215-898-6200 (Fax)

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