Unit 8: Trade and influence in voting Flashcards
2 issues with majoritarian voting?
Can be both inefficient and lead to externalities
What does the Coase Theorem imply?
That to avoid inefficiency, externalities should be internalised by agents and then a costless voluntary trade process will lead to an EFFICIENT OUTCOME
How would the Coase Theorem work in voting practice?
A vote market to buy and sell people’s votes, which has complete information
(Note: illegal; one vote per person allowed)
What would happen if there were legal vote buying markets in an economy?
Vote blocks would form within the population - is likely large corporations etc. would just run society! Tf would likely be a heavy bias against tax and tf public spending
What is trade in votes?
While vote-selling is illegal, politicians often make promises to supporters and tf ‘pay’ them post-election with policies/public spending in favour of their needs
This is allowed!
What is the idea behind voting coalitions?
‘I vote your proposal and you vote mine’ (vote trading agreement)
What is logrolling?
When coalitions are formed on the basis of vote-trading
Explain a problem with that arises due to ‘vote-trading’ idea (logrolling)?
It has the potential to lead to inefficiency! (ITO a CBA)
When logrolling is done with efficient public-spending proposals, what are the 2 main outcomes? Use an example to illustrate this point?
Outcomes:
Good - logrolling -> selection of most efficient project
Bad - creates a common-pool problem!
See notes for the example!
When logrolling is done with inefficient public-spending proposals, what are the 2 main outcomes? Use an example to illustrate this point?
Outcomes:
Logrolling does not prevent inefficient proposals being selected
CPP also present here (social injustice)
What is meant by ‘inefficient’ and ‘efficient’ public spending proposals?
Using CBA, whether the benefits to those in favour outweigh the costs to those against; ie. if the net benefit of any proposal is greater than 0
In a group of 3 politicians with public spending proposals, and 3 possible coalitions, when will there be no coalition? If there are several feasible coalitions, which one will be selected?
No coalition if net benefit of the coalition is less than 0 for 2/3 of the politicians for all 3 possible coalitions
If several possible ones, then will probably be the highest total net benefit one that is selected but is also (I think) possible in some situations that a different one may be selected! Is possible for a negative net benefit proposal to be selected if 2/3 politicians have positive individual net benefits from the coalition
What is a consitutional restraint?
One of the forms of protection of a (persistent) minority from a (persistent) majority is to limit the scope of the decisions that a government can make: this is a constitutional restraint
Explain how a constitutional restraint may help to solve a common-pool problem?
In the prisoners dilemma game, using a constitutional restraint that prohibits asymmetric outcomes (ie, 4,1 and 1,4) means that fair, symmetric outcomes can only be selected, tf avoiding the CPP (ie. have restricted voting to symmetric outcomes only)
Explain another way the CPP is often solved?
“checks and balances” provided by independent judiciary system, split between different political authorities and legislative bodies, etc (read into this a bit further)
