Approval Voting ion Dichotomous Preferences

The aim of this paper is to find normative foundations of Approval Voting. In order to show that Approval Voting is the only social choice function that satisfies anonymity, neutrality, strategy-proofness and strict monotonicity we rely on an intermediate result which relates strategy-proofness of a social choice function to the properties of Independence of Irrelevant Alternatives and monotonicity of the corresponding social welfare function. Afterwards we characterize Approval Voting by means of strict symmetry, neutrality and strict monotonicity and relate this result to May's Theorem. Finally, we show that it is possible to substitute the property of strict monotonicity by the one efficiency of in the second characterization.Approval Voting, Dichotomous Preferences, Social Choice Function, Social Welfare Function

Aggregation and dissemination of information in experimental asset markets in the presence of a manipulator

We study with the help of a laboratory experiment the conditions under which an uninformed manipulator - a robot trader that unconditionally buys several shares of a common value asset in the beginning of a trading period and unwinds this position later on - is able to induce higher asset prices. We find that the average contract price is significantly higher in the presence of the manipulator if, and only if, the asset takes the lowest possible value and insiders have perfect information about the true value of the asset. It is also evidenced that the robot trader makes trading gains; i.e., independently on whether the informed traders have perfect or partial information, it earns always more than the average trader. Finally, not only uninformed subjects suffer from the presence of the robot trader, but also some of the imperfectly informed insiders have lower payoffs once the robot trader is added as a market participant

The effect of short-selling of the aggregation of information in an experimental asset market

We show by means of a laboratory experiment that the relaxation of short--selling constraints causes the price of both an overvalued and an undervalued asset to decrease. Hence, the aggregation of information by the market price becomes better in case the asset is overvalued but worse if the asset is undervalued. With respect to payoffs, we find that not only uninformed but also some of the imperfectly informed traders suffer from the weakening of short--selling constraints

The effect of short-selling of the aggregation of information in an experimental asset market

We show by means of a laboratory experiment that the relaxation of short--selling constraints causes the price of both an overvalued and an undervalued asset to decrease. Hence, the aggregation of information by the market price becomes better in case the asset is overvalued but worse if the asset is undervalued. With respect to payoffs, we find that not only uninformed but also some of the imperfectly informed traders suffer from the weakening of short--selling constraints.Asset market, Rational expectations, Experiment, Short Sales

Price Manipulation in an Experimental Asset Market

We analyze in the laboratory whether an uninformed trader is able to manipulate the price of a financial asset. To do so, we compare the results of two different experimental treatments. In the Benchmark Treatment, twelve subjects trade a common value asset that takes either a high or a low value. Information is distributed asymmetrically, only three outof twelve subjects know the actual value of the asset. The Manipulation Treatment is identical to the Benchmark Treatment apart from the fact that we introduce a computer program as an additional trader. This manipulation program buys a fixed number of shares in the beginning of a trading period and sells them afterwards again. Our results show that the last contract price is significantly higher in the Manipulation Treatment if the asset takes a low value and that there are no price differences between the two treatments if the value of the asset is high. Moreover, this simple manipulation program is, at least in some instances, profitable.financial economics and financial management ;

Immaterial rewards and sanctions in a voluntary contribution experiment

In this paper, we compare the cause and effect of immaterial rewards and sanctions oncooperation in a voluntary contributions experiment. We find that both rewards andsanctions increase contributions only when subjects interact repeatedly, though rewardsseem to be more effective than sanctions. Moreover, in contrast to sanctions, rewards dohave an impact on future contributions. Although the direct effect is negative, there is apositive indirect effect that applies to subjects who contribute above (below) the groupaverage in a partner (stranger) matching. From this we conclude that sanctions andrewards are mainly used as a communication channel to coordinate on a more efficientoutcome. Nevertheless, subjects also seem to experience additional utility from receivingapproval, whereas they are insensitive to disapprovals.public economics ;

Aggregation and dissemination of information in experimental asset markets in the presence of a manipulator

We study with the help of a laboratory experiment the conditions under which an uninformed manipulator - a robot trader that unconditionally buys several shares of a common value asset in the beginning of a trading period and unwinds this position later on - is able to induce higher asset prices. We find that the average contract price is significantly higher in the presence of the manipulator if, and only if, the asset takes the lowest possible value and insiders have perfect information about the true value of the asset. It is also evidenced that the robot trader makes trading gains; i.e., independently on whether the informed traders have perfect or partial information, it earns always more than the average trader. Finally, not only uninformed subjects suffer from the presence of the robot trader, but also some of the imperfectly informed insiders have lower payoffs once the robot trader is added as a market participant.Asset market, Experiment, Price manipulation, Rational expectations

Weighted Approval Voting

To allow society to treat unequal alternatives distinctly we propose a natural extension of Approval Voting [7] by relaxing the assumption of neutrality. According to this extension, every alternative receives ex-ante a non-negative and finite weight. These weights may differ across alternatives. Given the voting decisions of every individual (individuals are allowed to vote for, or approve of, as many alternatives as they wish to), society elects all alternatives for which the product of total number of votes times exogenous weight is maximal. Our main result is an axiomatic characterization of this voting procedure.microeconomics ;

Enjoy the Silence: An Experiment on Truth-Telling

We analyze experimentally two sender-receiver games with conflictive preferences. In the first game, the sender can choose to tell the truth, to lie, or to remain silent. The latter strategy is costly and similar to an outside option. If sent, the receiver can either trust or distrust the sender’s message. In the second game, the receiver must decide additionally whether or not to costly punish the sender after having observed the history of the game. We investigate the existence of two kinds of social preferences: Lie-aversion and preference for truth-telling. In the first game, senders tell the truth more often than predicted by the sequential equilibrium concept, they remain silent frequently, and there exists a positive correlation between the probability of being truthful and the probability of remaining silent. Our main experimental result for the extended game shows that those subjects who punish the sender with a high probability after being deceived are precisely those who send fewer but more truthful messages. We then explore two formal models of the baseline game that can account for our experimental results. First, we fit the data to the logit agent quantal response equilibrium; secondly, we solve for the Perfect Bayesian Nash equilibria of a stylized version of the baseline game with two types of senders. The equilibrium predictions obtained in both cases are consistent with both preferences for truth-telling and lie-aversion although the latter seems to be more pronounced.Experiment, Lie-Aversion, Social Preferences, Strategic Information Transmission, Truth-Telling.

An Experimental Study of Truth-Telling in a Sender-Receiver Game

A recent experimental study of Cai and Wang (2003) on strategic information transmission games reveals that subjects tend to transmit more information than predicted by the standard equilibrium analysis. To evidence that this overcommunication phenomenon can be explained in some situations in terms of a tension between normative social behavior and incentives for lying, we show that in a simple sender-receiver game subjects incurring in costs to punish liars tell the truth more often than predicted by the equilibrium analysis whereas subjects that do not punish liars after receiving a deceptive message play equilibrium strategies. Thus, we can partition the subject pool into two groups, one group of subjects with preferences for truth-telling and another group taking into account only economic incentives.Experiment, Sender-Receiver Game, Strategic Informa- tion Transmission, Truth-Telling.