Agendas and strategic voting.

• Author: Holt, Charles A.
• Position: Teaching Economics with Classroom Experiments: A Symposium

1. Introduction

   In traditional economics classes, students learn that the independent actions of consumers and producers can lead to efficient market outcomes.(1) In a democracy, however, decisions are often made collectively, and the political process can result in a set of programs with costs that far exceed benefits. Conversely, projects with very high benefits to a minority of voters can go unfunded in the absence of logrolling. Outcomes can vary widely, depending on the institution in place. With majority rule, for example, voters can strategically manipulate the agenda to favor certain outcomes.

   This paper provides the setup for a classroom experiment in which several proposals are considered in sequence and coalitions can approve a set of policies with a net loss to society. Pairwise votes between alternatives can result in cycling, in which case the order of votes determines the final outcome. As voters become aware of this, attempts to control the agenda can occur. This exercise stimulates discussions of political institutions, strategic voting, and the size of government. The exercise can be used to supplement chapters on the role of government or public choice in introductory or intermediate microeconomics classes. It can also be used in more specialized topics courses, such as public economics or law and economics.

   Table 1. Voters' Card Allocations V1 V2 V3 V4 V5 V6 V7 Heart Heart Heart Heart Club Club Club Spade Spade Club Club Spade Spade Spade Highway Highway Highway Highway School School School School School 2. Procedures

   The exercise can be done with as few as seven students and will take from 30 to 45 minutes. You will need one deck of cards for as many as 14 people and two decks for as many as 35 people. Cards are distributed to voters in the manner described below, and the suit of a card determines the voter's preferences. A voter who receives a Heart has a preference for the "highway" project, and a voter who receives a Spade has a preference for the "school" project. A Club card has no effect on preferences. Each voter receives two cards, and therefore some might prefer to see both projects funded; however, no one benefits twice from one project. For each group of seven voters labeled VI to V7, the cards should be distributed as shown in Table 1. Note that the Club cards are neutral. Voters can be added in multiples of seven by replicating the above allocations. When the number of students in a class is not an exact multiple of seven, let some students sit together in pairs and act as a single voter. The numbers on the cards do not matter, and therefore you can combine two decks to get 26 Spades, which will accommodate five replications of the seven-voter profile. Finally, it speeds things up to sort the cards in advance and put them into envelopes.

   The instructions in the appendix explain how payoffs are determined. Each voter pays a tax of $200 for each project that is funded. The benefit of a school is $300 for a voter with a Spade, and the benefit of a highway is $300 for a voter with a Heart. For example, if both projects are funded, voters VI and V2 earn $600 in benefits minus $400 in taxes, and all other voters earn $300 in benefits minus $400 in taxes. Notice that five voters favor the school, so its aggregate benefit, 5 x 300 = $1,500, exceeds the cost of 7 x 200 = $1,400. The highway, on the other hand, has an aggregate benefit of 4 x 300 = $1,200, which is less than the aggregate cost of $1,400. Finally, the aggregate benefits of the highway/school package, $2,700, are less than the aggregate costs of the package: $1,400 x 2 = $2,800.

   These payoffs make it possible to observe a voting cycle in which one option beats a second, which beats a third, which in turn beats the first one. In a choice between neither project and the highway by itself, the highway wins with the support of voters V1 to V4. In a choice between the highway by itself and both projects, the two-project package wins. This is because voters V1 and V2 benefit from both projects, and voters V5, V6, and V7 prefer the -$100 from the two-project package to the -$200 from the highway only. To complete the cycle, note that funding neither receives more votes than funding both. (The only voters who prefer both to neither are those who receive both a Heart and a Spade.)

   Agenda 1 in the appendix is designed to lead students through a cycle. This agenda also shows how each project can be funded when considered one at a time in sequence, although most prefer to fund neither rather than both. The results of agenda 1 can be recorded by writing the vote totals on the blackboard: Highway XX versus No Highway XX; School XX versus No School XX, Funded Projects XX versus Neither XX. Agenda 2 leads the students back through [TABULAR DATA FOR TABLE 2 OMITTED] the cycle in pairwise comparisons of possible options. Agenda 3 is a commonly used setup where voters choose between two challengers in the first stage (primary) and then between the winner and a third option, the status...