Monday, April 29, 2013
Ulric B. and Evelyn L. Bray Seminar in Political Economy
Divided Majority and Information Aggregation: Theory and Experiment
Laurent Bouton, Assistant Professor of Economics, Boston University
This paper studies theoretically and experimentally the properties of plurality and approval voting when a majority gets divided by information imperfections. The majority faces two challenges: aggregating information to select the best majority candidate and coordinating to defeat the minority candidate. Under plurality, the majority cannot achieve both goals at once. Under approval voting, it can: welfare is strictly higher because some voters approve of both majority alternatives. In the laboratory, we find (i) strong evidence of strategic voting, and (ii) superiority of approval voting over plurality. Finally, subject behavior suggests the need to study equilibria in asymmetric strategies.