Competitive Equilibrium in Markets for Votes

We develop a competitive equilibrium theory of a market for votes. Before voting on a binary issue, individuals may buy and sell their votes with each other. We definne ex ante vote-trading equilibrium, identify weak sufficient conditions for existence, and construct one such equilibrium. We show that this equilibrium must always result in dictatorship and the market generates welfare losses, relative to simple majority voting, if the committee is large enough. We test the theoretical implications by implementing a competitive vote market in the laboratory using a continuous open-book multi-unit double auction

Laboratory Experiments in Political Economy

Most of the laboratory research in political science follows the style that was pioneered in experimental economics a half-century ago by Vernon Smith. The connection between this style of political science experimentation and economics experimentation parallels the connection between economic theory and formal political theory.

The effect of candidate quality on electoral equilibrium: An experimental study

When two candidates of different quality compete in a one-dimensional policy space, the equilibrium outcomes are asymmetric and do not correspond to the median. There are three main effects. First, the better candidate adopts more centrist policies than the worse candidate. Second, the equilibrium is statistical, in the sense that it predicts a probability distribution of outcomes rather than a single degenerate outcome. Third, the equilibrium varies systematically with the level of uncertainty about the location of the median voter. We test these three predictions using laboratory experiments and find strong support for all three. We also observe some biases and show that they can be explained by quantal response equilibrium

The Dynamics of Distributive Politics

We study dynamic committee bargaining over an infinite horizon with discounting. In each period a committee proposal is generated by a random recognition rule, the committee chooses between the proposal and a status quo by majority rule, and the voting outcome in period t becomes the status quo in period t+1. We study symmetric Markov equilibria of the resulting game and conduct an experiment to test hypotheses generated by the theory for pure distributional (divide-the-dollar) environments. In particular, we investigate the effects of concavity in the utility functions, the existence of a Condorcet winning alternative, and the discount factor (committee "impatience"). We report several new findings. Voting behavior is selfish and myopic. Status quo outcomes have great inertia. There are strong treatment effects, that are in the direction predicted by the Markov equilibrium. We find significant evidence of concave utility functions.Dynamic bargaining, voting, experiments, divide-the-dollar,committees

"Spatial Competition Between Two Candidates of Different Quality: The Effects of Candidate Ideology and Private Information"

This paper examines competition in a spatial model of two-candidate elections, where one candidate enjoys a quality advantage over the other candidate. The candidates care about winning and also have policy preferences. There is two-dimensional private information. Candidate ideal points as well as their tradeoffs between policy preferences and winning are private information. The distribution of this two-dimensional type is common knowledge. The location of the median voter's ideal point is uncertain, with a distribution that is commonly known by both candidates. Pure strategy equilibria always exist in this model. We characterize the effects of increased uncertainty about the median voter, the effect of candidate policy preferences, and the effects of changes in the distribution of private information. We prove that the distribution of candidate policies approaches the mixed equilibrium of Aragones and Palfrey (2002a), when both candidates' weights on policy preferences go to zero.candidate quality, spatial competition, purification

Ratifiable Mechanisms: Learning from Disagreement

In a mechanism design problem, participation constraints require that all types prefer the proposed mechanism to some status quo. If equilibrium play in the status quo mechanism depends on the players' beliefs, then the inference drawn if someone objects to the proposed mechanism may alter the participation constraints. We investigate this issue by modeling the mechanism design problem as a two-stage process, consisting of a ratification stage followed by the actual play of the chosen game. We develop and illustrate a new concept, ratifiability, that takes account of inferences from a veto in a consistent way.Sequential Games; Mechanism Design; Private Information

Information Aggregation and Strategic Abstention in Large Laboratory Elections

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Efficiency, Equity, and Timing in Voting Mechanisms

We compare the behavior of voters, depending on whether they operate under sequential and simultaneous voting rules, when voting is costly and information is incomplete. In many real political institutions, ranging from small committees to mass elections, voting is sequential, which allows some voters to know the choices of earlier voters. For a styl- ized model, we characterize the equilibria for this rule, and compare it to simultaneous voting, and show how these equilibria vary for di¤erent voting costs. This generates a variety of predictions about the relative e¢ ciency and equity of these two systems, which we test using controlled laboratory experiments. Most of the qualitative predictions are supported by the data, but there are signi?cant departures from the predicted equilib- rium strategies, in both the sequential and sumultanous voting games. We ?nd a tradeo¤ between information aggregation, e¢ ciency, and equity in sequential voting: a sequential voting rule aggregates information better, and produces more e¢ cient outcomes on aver- age, compared to simultaneous voting, but sequential voting leads to signi?cant inequities, with later voters ben?tting at the expense of early voters.