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DOI: 10.5445/IR/1000051311

On discounting and voting in a simple growth model

Borissov, Kirill; Pakhnin, Mikhail; Puppe, Clemens

In dynamic resource allocation models, the non-existence of voting equilibria is a generic phenomenon due to the multi-dimensionality of the choice space even with agents heterogeneous only in their discount factors. Nevertheless, at each point of time there may exist a “median voter” whose preferred instantaneous consumption rate is supported by a majority of agents. Based on this observation, we propose an institutional setup (“intertemporal majority voting”) in a Ramsey-type growth model with common consumption and heterogeneous agents, and show that it provides a microfoundation of the choice of the optimal consumption stream of the median agent. While the corresponding intertemporal consumption stream is in general not a Condorcet winner among all feasible paths, its induced instantaneous consumption rate receives a majority at each point in time in the proposed intertemporal majority voting procedure. We also provide a characterization of balanced-growth and steadystate voting equilibria in the case in which agents may differ not only in their time preference, but also in their instantaneous utility functions.

Zugehörige Institution(en) am KIT Institut für Volkswirtschaftslehre (ECON)
Publikationstyp Forschungsbericht
Jahr 2015
Sprache Englisch
Identifikator ISSN: 2190-9806
URN: urn:nbn:de:swb:90-513113
KITopen ID: 1000051311
Verlag KIT, Karlsruhe
Umfang 34 S.
Serie Working paper series in economics ; 77
Schlagworte collective choice, common-pool resource, economic growth, heterogeneous agents, median voter theorem
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