Informative Voting and the Samuelson Rule

35 Pages Posted: 1 Oct 2006

See all articles by Felix J. Bierbrauer

Felix J. Bierbrauer

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Marco Sahm

University of Munich

Date Written: 07/2006

Abstract

We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals behave as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.

Keywords: information aggregation, informative voting, public goods, two-dimensional heterogeneity

JEL Classification: H41, D71, D72, D82

Suggested Citation

Bierbrauer, Felix J. and Sahm, Marco, Informative Voting and the Samuelson Rule (07/2006). MPI Collective Goods Preprint No. 2006/18. Available at SSRN: https://ssrn.com/abstract=933600 or http://dx.doi.org/10.2139/ssrn.933600

Felix J. Bierbrauer (Contact Author)

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Marco Sahm

University of Munich ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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