Informative Voting and the Samuelson Rule

Bierbrauer, Felix and Sahm, Marco (July 2006): Informative Voting and the Samuelson Rule. SFB/TR 15 Discussion Paper No. 159

Abstract

We study the classical free-rider problem in public goods provision in a large economy with uncertainty about the average valuation of the public good. Individual preferences over public goods are shaped by a skill and a taste parameter. We use a mechanism design approach to solve for the optimal utilitarian provision rule. The relevant incentive constraints for information aggregation ensure that individuals behave as if they were engaging in informative voting over the level of public good provision. It is shown that the use of information by an optimal provision rule is inversely related to the polarization of preferences which results from the properties of the skill distribution.

• Item Type: Paper (Discussion Paper)
• Keywords: information aggregation, informative voting, public goods, two-dimensional heterogeneity
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B3 - Unternehmenskontrolle, Unternehmensfinanzierung und Effizienz
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: H41, D71, D72, D82
• Language: English