nep-cdm New Economics Papers
on Collective Decision-Making
Issue of 2010‒08‒28
six papers chosen by
Roland Kirstein
Otto von Guericke University Magdeburg

  1. Competitive Equilibrium in Markets for Votes By Alessandra Casella; Aniol Llorente-Saguer; Thomas R. Palfrey
  2. Direkte Demokratie By Gebhard Kirchgässner
  3. Characterization of the Shapley-Shubik Power Index Without the Efficiency Axiom By Ezra Einy; Ori Haimanko
  4. Endogenous Voter Turnout and Income Redistribution By Go Kotera
  5. Inequality, Social Respectability, Political Power and Environmental Devastation By Jon D. Wisman
  6. Bugs in the proofs of revelation principle By Wu, Haoyang

  1. By: Alessandra Casella (Columbia University - Department of Economics); Aniol Llorente-Saguer (California Institute of Technology); Thomas R. Palfrey (California Institute of Technology)
    Abstract: 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 define 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.
    Date: 2010
  2. By: Gebhard Kirchgässner
    Abstract: First, the institutions of direct democracy, referendum and initiative, are described. One of the main arguments against direct political rights is that citizens are often, or even generally, not enough informed or even incompetent to decide on important political issues. Therefore, the problem of acquiring and processing information is discussed, comparing direct with purely representative democratic systems. The political outcome has to show whether direct political rights serve the interests of the citizens. Thus, the results of empirical studies investigating the effects of direct democracy are reported. These studies mainly consider Switzerland and the United States, and they concentrate on the economic outcomes which are on average favourable. Nevertheless, there are (or at least can be) problems by conceding these rights which should not be overlooked. The paper concludes with a critical discussion of some popular arguments (raised in particular in Germany) against direct democracy as well as the possibilities resulting from the new electronic media
    Keywords: Democracy, Information, Human Rights, Political Reforms, Switzerland, United States
    JEL: H11
    Date: 2010–08
  3. By: Ezra Einy (Department of Economics, Ben-Gurion University of the Negev, Israel); Ori Haimanko (Department of Economics, Ben-Gurion University of the Negev, Israel)
    Abstract: We show that the Shapley-Shubik power index on the domain of simple (voting) games can be uniquely characterized without the e¢ ciency axiom. In our axiomatization, the efficiency is replaced by the following weaker require- ment that we term the gain-loss axiom: any gain in power by a player implies a loss for someone else (the axiom does not specify the extent of the loss). The rest of our axioms are standard: transfer (which is the version of additivity adapted for simple games), symmetry or equal treatment, and dummy
    Keywords: Simple Games, Shapley-Shubik Power Index, Effciency Axiom
    JEL: C71 D72
    Date: 2010
  4. By: Go Kotera (Graduate School of Economics, Kyoto University)
    Abstract: In this paper, a simple model is proposed to endogenize voting behavior that incorporates a sense of duty to vote. We assume that a sense of duty to vote is an increasing function of a person’s human capital and the public faith in politics, and those with a higher sense of duty often vote. Then, we examine the relationship between income redistribution policy and human capital accumulation. From our assumption, the voter turnout is expected to gradually increase as human capital accumulates. However, we show that, in some cases, the positive relationship between voter turnout and human capital accumulation is not necessarily hold. In addition, the effect of growing inequality on the redistribution policy is investigated.
    Keywords: Voter turnout, Human capital, Income distribution, Redistribution
    JEL: D31 D72
    Date: 2010–08
  5. By: Jon D. Wisman
    Abstract: Although healthy societies may require a degree of material inequality, higher levels of inequality have been linked to negative social consequences ranging from poorer health to lessened democracy. However, the greatest contemporary threat of excessive inequality might be its contribution to increased environmental degradation. Indeed, avoiding devastation of our habitat may be the greatest challenge ever faced by humanity. This article explores the manner in which inequality encourages consumption, by drawing upon Thorstein Veblen’s theory of consumer behavior, whereby in societies in which fluid social mobility is believed possible, inequality encourages households to seek social certification and social status through consumption. Rising inequality strengthens the intensity with which households struggle to maintain social respectability through increased consumption. The ideology, institutions, and behavior generated by this focus on consumption reduce the potential for people to achieve certification of value through more environmentally friendly domains such as work and community. This article also addresses the manner in which inequality impedes responses aimed at reducing environmental damage by augmenting the political power of those whose interests would be harmed by environmental measures. Indeed, the wealthy benefit threefold from pollution: Their disproportionate consumption is made less expensive, their assets yield higher profits, and they are better able to shield themselves from the negative consequences of environmental destruction.
    Keywords: Conspicuous consumption, political power, ideology, work quality, community
    Date: 2010–07
  6. By: Wu, Haoyang
    Abstract: In the field of mechanism design, the revelation principle has been known for decades. Myerson, Mas-Colell, Whinston and Green gave formal proofs of the revelation principle. However, in this paper, we argue that there are serious bugs hidden in their proofs.
    Keywords: Revelation principle; Mechanism design; Implementation theory.
    JEL: D71 C72
    Date: 2010–08–19

This nep-cdm issue is ©2010 by Roland Kirstein. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.