Why Votes have a Value

Dittmann, Ingolf ; Kübler, Dorothea ; Maug, Ernst ; Mechtenberg, Lydia

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URL: https://ub-madoc.bib.uni-mannheim.de/31595
Additional URL: http://ssrn.com/abstract=1074803
URN: urn:nbn:de:bsz:180-madoc-315956
Document Type: Working paper
Year of publication: 2010
Place of publication: Rochester, NY
Publication language: English
Institution: Business School > ABWL u. Corporate Finance (Maug 2006-)
Subject: 330 Economics
Classification: JEL: C92 , D72 , G32,
Keywords (English): Voting , dual-class shares , paradox of voting , experimental economics , instrumental voting , expressive voting
Abstract: We perform an experiment where subjects bid for the right to participate in a vote and where the theoretical value of the voting right is zero if subjects are fully rational. We find that experimental subjects are willing to pay for the right to vote and that they do so for instrumental reasons. A model of instrumental voting behavior is consistent with our results if individuals are overconfident, overestimate the errors of other players, and also overestimate how often they themselves are pivotal for the outcome. Eliciting beliefs about pivotality shows that individuals value the right to vote more, the more they overestimate their probability of being pivotal. Eliciting beliefs about pivotality reduces the willingness to pay for the right to vote.

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