Vote Trading With and Without Party Leaders

Working papers:

Title:: Vote Trading With and Without Party Leaders
Author(s):: Casella, Alessandra
Palfrey, Thomas
Turban, Sebastien
Date:: 2012
Type:: Working papers
Department:: Economics
Permanent URL:: http://hdl.handle.net/10022/AC:P:15387
Series:: Department of Economics Discussion Papers
Part Number:: 1213-01
Publisher:: Department of Economics, Columbia University
Publisher Location:: New York
Abstract:: Two groups of voters of known sizes disagree over a single binary decision to be taken by simple majority. Individuals have different, privately observed intensities of preferences and before voting can buy or sell votes among themselves for money. We study the implication of such trading for outcomes and welfare when trades are coordinated by the two group leaders and when they take place anonymously in a competitive market. The theory has strong predictions. In both cases, trading falls short of full efficiency, but for opposite reasons: with group leaders, the minority wins too rarely; with market trades, the minority wins too often. As a result, with group leaders, vote trading improves over no-trade; with market trades, vote trading can be welfare reducing. Although the experimental data show evidence of overpricing,these predictions are satisfied by all experimental sessions.
Subject(s):: Economics