Vote trading with and without party leaders

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. All predictions are strongly supported by experimental results.

Competitive Equilibrium in Markets for Votes

“…There are still many open questions about vote markets, and in our experiment we explore only the simplest environment. In a related paper (Casella et al 2012), we study the robustness of the results derived here to different information assumptions and to asymmetries between the supporters of each alternative. A key direction of future research is to extend the model to multiple issues.…”

“…If asymmetries between the supporters of the two alternatives were introduced, the result might change, but the equilibrium of the vote market would need to be rederived. Casella et al (2012) present an example in which the groups supporting either alternative have known and different sizes. The superiority of majority voting is confirmed, both theoretically and experimentally.…”

“…Generally both the equilibrium price and the equilibrium strategies will be more complicated when the direction of preference is common knowledge. See Casella, Palfrey, and Turban (2012) for further discussion and examples.…”

Strategic Vote Trading in Power Sharing Systems

“…Given the signi…cant extent to which power-sharing procedures are used, we believe that it is imperative to study how vote trading operates under such conditions. In addition, given the debate about the ideal governance system, 5 where both types of democracy (power-sharing and majoritarian) have been contested in terms of their applicability and performance, our paper adds a new aspect (the e¢ ciency of vote trading) into the discussion.…”

“…In fact, followingIaryczower and Mattozzi (2013), the implemented policy may be simply interpreted as the result of a probabilistic compromise between the competing alternatives, with the probability of implementation of each policy alternative being equal to its vote share 5. A debate that started with the seminal work ofLijphart (1968), who is the primary advocate of the superiority of power-sharing regimes over majoritarian ones 6.…”