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- The “invisible hand” of vote markets
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Abstract: Abstract This paper studies electoral competition between two non-ideological parties when voters are free to trade votes for money. We find that allowing for vote trading has significant policy consequences, even if trade does not actually take place in equilibrium. In particular, the parties’ equilibrium platforms are found to converge (hence, there is no reason for vote trading) to the ideal policy of the mid-range voter, instead of converging to the peak of the median voter (as they do when vote trading is forbidden). That is, a market for votes may not change the outcome only by redistributing the political power among voters when the parties’ policy proposals are fixed (e.g., Casella et al. in J Polit Econ 120:593–658, 2012, etc.), but also by acting as an invisible hand—modifying parties’ incentives when platform choice is endogenous.
PubDate: 2023-09-19
- Centralized assignment of prizes and contestants
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Abstract: Abstract We study a contest design problem in which a designer chooses how many Tullock contests to have, how much to award to each contest, and which contestants (of high or low type) should be assigned to which contest. Our main result is that a single grand contest maximizes total effort. We consider three extensions. First, when the designers’ objective changes to maximizing the effort submitted by the winning contestant, we find that the optimal design involves the high-type contestants being assigned to a set of pairwise contests. Second, under multiple participations (a player’s effort is valid in multiple contests, as in several applications), running a contest open to all, along with a parallel contest open only to low types, increases total effort over a single grand contest. Third, tilting the playing field (a player’s effort is multiplied by a tilting factor) in favor of low types increases total effort in a single grand contest, even more than what is possible with multiple participations; thus, in applications, a quota reserved for traditionally disadvantaged categories results in lower total effort than a grand contest that optimally handicaps advantaged categories.
PubDate: 2023-09-13
- The largest Condorcet domain on 8 alternatives
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Abstract: Abstract In this note, we report on a Condorcet domain of record-breaking size for n = 8 alternatives. We show that there exists a Condorcet domain of size 224 and that this is the largest possible size for 8 alternatives. Our search also shows that this domain is unique up to isomorphism. In this note we investigate properties of the new domain and relate them to various open problems and conjectures.
PubDate: 2023-09-05
- Worst-case efficient and budget-balanced mechanism for single-object
allocation with interdependent values-
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Abstract: Abstract We study a model in which a single object is to be allocated among a set of agents whose valuations are interdependent. We define signal-ranking mechanisms and show that if the signal-ranking allocation rule satisfies a combinatorial condition and the valuation functions are additively separable, there exist budget-balanced and ex-post incentive compatible signal-ranking mechanisms. For a restricted setting, we show that the worst-case efficient mechanism of Long et al. (Games Econ Behav 105:9–39, 2017) continues to be worst-case efficient. We also give an example to show that their mechanism is no longer optimal when restrictions are relaxed.
PubDate: 2023-08-30
- Assignment games with population monotonic allocation schemes
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Abstract: Abstract We characterize the assignment games which admit a population monotonic allocation scheme (PMAS) in terms of efficiently verifiable structural properties of the nonnegative matrix that induces the game. We prove that an assignment game is PMAS-admissible if and only if the positive elements of the underlying nonnegative matrix form orthogonal submatrices of three special types. In game theoretic terms it means that an assignment game is PMAS-admissible if and only if it contains either a veto player or a dominant veto mixed pair, or the game is a composition of these two types of special assignment games. We also show that in PMAS-admissible assignment games all core allocations can be extended to a PMAS, and the nucleolus coincides with the tau-value.
PubDate: 2023-08-21
- Approval-based shortlisting
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Abstract: Abstract Shortlisting is the task of reducing a long list of alternatives to a (smaller) set of best or most suitable alternatives. Shortlisting is often used in the nomination process of awards or in recommender systems to display featured objects. In this paper, we analyze shortlisting methods that are based on approval data, a common type of preferences. Furthermore, we assume that the size of the shortlist, i.e., the number of best or most suitable alternatives, is not fixed but determined by the shortlisting method. We axiomatically analyze established and new shortlisting methods and complement this analysis with an experimental evaluation based on synthetic and real-world data. Our results lead to recommendations which shortlisting methods to use, depending on the desired properties.
PubDate: 2023-08-11
- Escape poverty trap with trust' An experimental study
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Abstract: Abstract In this study, we introduce an experimental approach to study the causal impact of trust on economic performance. We ask if trust can serve as a coordination device to help poor economies escape a poverty trap and, if so, whether such an impact is universal regardless of their initial levels of development. We follow Lei and Noussair (2002, 2007) and design a decentralized market economy that has the structure of an optimal growth model where output is allocated between consumption and saving over a sequence of periods. As in Lei and Noussair (2007), a threshold externality is introduced to generate two equilibria where the Pareto-inferior equilibrium is considered as a poverty trap. We find that trust matters in that it is more likely for high-trust economies, generated with an endogenous matching procedure, to escape the poverty trap. But we also find that the likelihood to escape depends partially on the initial endowment condition. Trust has a much weaker impact on the economies whose initial capital and output are below the Pareto-inferior equilibrium, suggesting that formal institutions and/or policy measures may be needed to engineer a “big push” for these least developed economies.
PubDate: 2023-08-06
- Ties
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Abstract: Abstract We tackle the question of the role of pivotality in voter turnout decisions by testing for the first time whether the occurrence of a tied election generates information spillovers onto nearby localities’ subsequent elections. First, we develop a model where voters update their beliefs regarding the probability of their vote being decisive upon observing earlier elections’ outcomes. Next, by exploiting Italian mayoral elections ending in close outcomes during the past two decades and the quasi-experimental conditions created by the staggered electoral calendar, we find a substantial impact on voter turnout rates of exposure to spillovers from tied elections.
PubDate: 2023-08-04
- Centrality measures in networks
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Abstract: Abstract We show that prominent centrality measures in network analysis are all based on additively separable and linear treatments of statistics that capture a node’s position in the network. This enables us to provide a taxonomy of centrality measures that distills them to varying on two dimensions: (i) which information they make use of about nodes’ positions, and (ii) how that information is weighted as a function of distance from the node in question. The three sorts of information about nodes’ positions that are usually used—which we refer to as “nodal statistics”—are the paths from a given node to other nodes, the walks from a given node to other nodes, and the geodesics between other nodes that include a given node. Using such statistics on nodes’ positions, we also characterize the types of trees such that centrality measures all agree, and we also discuss the properties that identify some path-based centrality measures.
PubDate: 2023-08-01
- Moral awareness polarizes people’s fairness judgments
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Abstract: Abstract How does moral awareness affect people’s fairness judgments' Using a simple model of identity utility, I predict that if individuals differ in their personal fairness ideals (equality versus efficiency), reflecting over what one thinks is right should not only make people’s choices less selfish but also more polarized. On the other hand, people’s desire for conforming with the behavior of their peers could help mitigate polarization. I test these conjectures in a laboratory experiment, in which participants can pursue different fairness ideals. I exogenously vary (i) whether participants are prompted to state their moral opinions behind the veil of ignorance, and (ii) whether they are informed about the behavior of their peers. I find that moral introspection makes choices more polarized, reflecting even more divergent moral opinions. The increase in polarization coincides largely with a widening of revealed gender differences as introspection makes men’s choices more efficiency-oriented and women’s more egalitarian. Disclosing the descriptive norm of the situation is not capable of mitigating the polarization.
PubDate: 2023-08-01
- Unanimity and local incentive compatibility in sparsely connected domains
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Abstract: Abstract This paper studies the implications of imposing unanimity and local incentive compatibility on a deterministic social choice function. In an environment with strict ordinal preferences over a finite set of alternatives, we find that tops-onlyness and full incentive compatibility necessarily follow from unanimity and local incentive compatibility in sparsely connected domains. Furthermore, we identify a property of preference domains that completely characterizes dictatorial domains within sparsely connected domains.
PubDate: 2023-08-01
- Positional preferences and efficiency in a dynamic economy
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Abstract: Abstract In an endogenous growth model, we characterize the conditions under which positional preferences for consumption and wealth do not cause inefficiency and derive an optimal tax policy response in cases where these conditions are not satisfied. The concerns for relative consumption and relative wealth partly emanate from social comparisons with people in other countries. We distinguish between a (conventional) welfarist government and a non-welfarist government that does not attach any social value to relative concerns. We also compare the outcome of Nash-competition among local/national governments with the resource allocation implied by a global social optimum both under welfarism and non-welfarism.
PubDate: 2023-08-01
- Forward induction and market entry with an endogenous outside option
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Abstract: Abstract We consider a two-player sequential game in which players first choose whether to engage in a productive (market game) or unproductive activity (contest game) and then, if both players have chosen to enter the market, they compete in prices. Both economic activities are linked because the rents in the contest game are a fraction of the market profits. Subgame perfection predicts competitive pricing and a battle-of-the-sexes reduced-form game with two asymmetric Nash equilibrium, where only one firm enters. Our experimental results reject the prediction based on backward induction but are easily explained by forward induction arguments. The payoffs from the rent-seeking activity (outside option) influence pricing behaviour and prices do not converge to marginal costs. When the size of the rent seeking activities is large, firms coordinate better on economic activities and, in the event of market competition, prices converge to full collusion.
PubDate: 2023-08-01
- Vote swapping in irresolute two-tier voting procedures
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Abstract: Abstract We investigate a specific type of group manipulation in two-tier elections, which involves pairs of voters agreeing to exchange their votes. Two-tier elections are modeled as a two-stage choice procedure. In the first stage, voters are distributed into districts, and district preferences result from aggregating voters’ preferences district-wise through some aggregation rule. Final outcomes are obtained in the second stage by applying a social choice function that outputs one or several alternatives from the profile of district preferences. Combining an aggregation rule and a social choice function defines a constitution. Voter preferences, defined as linear orders, are extended to complete binary relations by means of some extension rule. A constitution is swap-proof w.r.t. a given extension rule if one cannot find pairs of voters who, by exchanging their preferences get better off (w.r.t. their extended preference over sets). We consider four specific extension rules: Nehring, Kelly, Fishburn, and Gärdenfors. We establish sufficient conditions for the swap-proofness of a constitution w.r.t. each extension rule. Special attention is paid to majority constitutions, where both the aggregation rule and the social choice function are based on simple majority voting. We show that swap-proofness for majority constitutions pertains to a specific weakening of group strategy-proofness. Moreover, we characterize swap-proof majority constitutions w.r.t. each extension rule. Finally, we show that no constitution based on scoring methods is swap-proof.
PubDate: 2023-08-01
- Taxonomy of powerful voters and manipulation in the framework of social
choice functions-
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Abstract: Abstract In this work we pursue the study of manipulability of social choice functions through “liftings”, that is, mappings which extend orderings over points to orderings over subsets of points. We discover a very weak notion of monotony which is closely related to independence of irrelevant alternatives. This allows us to establish an interesting and general theorem on manipulability. We show that this theorem is indeed equivalent to Arrow-Sen Theorem in the class of nonmanipulable social choice functions. As a consequence of this general theorem we obtain a manipulation theorem for linear profiles in the style of Gibbard-Satterthwaite Theorem but for social choice functions instead of voting schemes. We introduce the notion of nominator, which is a natural generalization of the notion of pairwise nominator introduced by Kelly. Then, we establish that, in the presence of rational properties over liftings, a social choice function is either manipulable, or it admits a nominator. In addition, we do a comparative study on different types of powerful voters (dictators, nominators, pairwise nominators and weak-dictators) present in the literature. Although, in general, they are non-equivalent notions, we show that under some natural conditions, modulo nonmanipulability, the last three are equivalent or even all the notions are equivalent.
PubDate: 2023-08-01
- Mechanism design with model specification
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Abstract: Abstract We consider a setting in which additional parameters that determine preference characteristics are unknown. The mechanism designer specifies a model for possible type distributions and utility functions. We consider mechanisms that are uniformly incentive compatible with respect to a domain of possible utility functions. We identify conditions on the utility domain in which mechanisms always prescribe the same distribution over outcomes. These conditions have implications for optimal mechanism design with max-min objectives, and may be interpreted as capturing different forms of preference heterogeneity.
PubDate: 2023-08-01
- Two impossibility results for social choice under individual indifference
intransitivity-
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Abstract: Abstract Due to the imperfect ability of individuals to discriminate between sufficiently similar alternatives, individual indifferences may fail to be transitive. I prove two impossibility theorems for social choice under indifference intransitivity, using axioms that are strictly weaker than Strong Pareto and that have been endorsed (sometimes jointly) in prior work on social choice under indifference intransitivity. The key axiom is Consistency, which states that if bundles are held constant for all but one individual, then society’s preferences must align with those of that individual. Theorem 1 combines Consistency with Indifference Agglomeration, which states that society must be indifferent to combined changes in the bundles of two individuals if it is indifferent to the same changes happening to each individual separately. Theorem 2 combines Consistency with Weak Majority Preference, which states that society must prefer whatever the majority prefers if no one has a preference to the contrary. Given that indifference intransitivity is a necessary condition for the just-noticeable difference (JND) approach to interpersonal utility comparisons, a key implication of the theorems is that any attempt use the JND approach to derive societal preferences must violate at least one of these three axioms.
PubDate: 2023-07-28
- Tailored recommendations on a matching platform
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Abstract: Abstract Matching platforms not only mediate matches but also work as information gatekeepers. When users with private tastes use such a platform to find a partner, the platform asks them to provide match-relevant information; subsequently, it aggregates and distributes the collected data back to each user to facilitate the effective coordination of matches. This study aims to examine how such a platform can design its information flow to make users form matches in a way that is desirable for the platform. I characterize a form of two-way communication that employs both verifiable and non-verifiable messages; then, I delineate the conditions under which a platform can (cannot) achieve its ex-post optimal matching outcome. On a platform that achieves such an outcome, users would fully reveal their private tastes, but the platform would return personalized and only filtered information back to each user in the form of a “recommendation.” I identify three key factors that enable such communication, namely (1) the distance between the distribution of tastes of each side; (2) the uncertainty measure of each distribution; and (3) the population size. As applications, I first study the markets with costly verifiable information and propose a sufficient condition that achieves the optimal matching outcome. Then, I study a two-way communication protocol with non-verifiable messages and demonstrate that communication strictly improves efficiency under any circumstances.
PubDate: 2023-07-25
- On measuring axiom violations due to each tax instrument applied in a
real-world personal income tax-
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Abstract: Abstract In their seminal paper, Kakwani and Lambert (Eur J Polit Econ 14:369–380, 1998) state three Axioms an equitable tax system should respect. By proposing a measurement system based on re-ranking indexes of taxes, tax rates and post-tax incomes, they show how to evaluate the negative influences that Axiom violations exert on the redistributive effect of a tax. By considering each element of a real-world personal income tax, i.e. deductions and tax credits as well as statutory tax rates, in this study we take a theoretical step further by decomposing the magnitude of the three Axiom violations produced by all these tax elements. We propose two complementary strategies. The first one is a ‘stepwise’ decomposition computing the effect of each element of the tax on the redistributive effect when they are sequentially applied; the second strategy is an ‘overall and simultaneous’ decomposition always evaluating the effect of small changes in deductions, tax rates and tax credits with respect to the pre-tax income distribution, once all the three tax instruments have been simultaneously applied. These strategies can be more suitable and effective in measuring the loss of the redistributive effect produced by each tax element because of axiom violations. We also show that they can give different information on the existing inequities of the tax. We finally emphasize the goodness of our approach by applying it to a real world personal income tax.
PubDate: 2023-07-19
- Independent, neutral, and monotonic collective choice: the role of
Suzumura consistency-
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Abstract: Abstract We examine the impact of Suzumura’s (Economica 43:381–390, 1976) consistency property when applied in the context of collective choice rules that are independent of irrelevant alternatives, neutral, and monotonic. An earlier contribution by Blau and Deb (Econometrica 45:871–879, 1977) establishes the existence of a vetoer if the collective relation is required to be complete and acyclical. The purpose of this paper is to explore the possibilities that result if completeness and acyclicity are dropped and Suzumura consistency is imposed instead. A conceptually similar but logically independent version of the combined axiom that requires the collective decision mechanism to be independent, neutral, and monotonic is employed. In the case of a finite population, we obtain an alternative impossibility theorem if a collective choice rule is assumed to be non-degenerate and a modified no veto requirement is imposed instead of Blau and Deb’s (1977) condition. If the population is countably infinite, the impossibility can be avoided but it resurfaces if our new no veto property is extended to a coalitional variant.
PubDate: 2023-07-15
DOI: 10.1007/s00355-023-01472-4
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