ORDINAL VERSUS CARDINAL VOTING RULES: A MECHANISM DESIGN APPROACH

Semin Kim
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Semin Kim: Yonsei University

No 2016rwp-94, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: We consider the performance and incentive compatibility of voting rules in a Bayesian environment: agents have independent private values, there are at least three alternatives, and monetary transfers are prohibited. First, we show that in a neutral environment, meaning alternatives are symmetric ex-ante, essentially any ex-post Pareto efficient ordinal rule is incentive compatible. Importantly, however, we can improve upon ordinal rules. We show that we can design an incentive compatible cardinal rule which achieves higher utilitarian social welfare than any ordinal rule. Finally, we provide numerical findings about incentive compatible cardinal rules that maximize utilitarian social welfare.

Keywords: Ordinal rule; Pareto efficiency; Incentive compatibility; Bayesian mechanism design. (search for similar items in EconPapers)
JEL-codes: C72 D01 D02 D72 D82 (search for similar items in EconPapers)
Pages: 40pages
Date: 2016-11
New Economics Papers: this item is included in nep-cmp, nep-gth, nep-mic, nep-pol and nep-upt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:yon:wpaper:2016rwp-94

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