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Ranking alternatives by a fair bidding rule: A theoretical and experimental analysis

Gueth, Werner; Levati, M. Vittoria and Montinari, Natalia LU (2014) In European Journal of Political Economy 34. p.206-221
Abstract
We apply a procedurally fair rule to a situation where people disagree about the value of three alternatives in the way captured by the voting paradox. The rule allows people to select a final collective ranking by submitting a bid vector with six components (the six possible rankings of the three alternatives). We test experimentally the robustness of the rule to subsidies and taxes as well as to tie-breaking assumptions. We have two main results. First, the most frequently chosen ranking is the socially efficient one when ties are broken in favor of the alternative generating the highest social welfare, but not when ties are broken randomly. Second, subsidies slightly enhance overbidding. Furthermore, an analysis of individual bid... (More)
We apply a procedurally fair rule to a situation where people disagree about the value of three alternatives in the way captured by the voting paradox. The rule allows people to select a final collective ranking by submitting a bid vector with six components (the six possible rankings of the three alternatives). We test experimentally the robustness of the rule to subsidies and taxes as well as to tie-breaking assumptions. We have two main results. First, the most frequently chosen ranking is the socially efficient one when ties are broken in favor of the alternative generating the highest social welfare, but not when ties are broken randomly. Second, subsidies slightly enhance overbidding. Furthermore, an analysis of individual bid vectors reveals interesting behavioral regularities that result from selfishness, other-regarding preferences, and indifference. (C) 2014 Elsevier B.V. All rights reserved. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Bidding behavior, Procedural fairness, Voting paradox
in
European Journal of Political Economy
volume
34
pages
206 - 221
publisher
Tranfer Verlag, Regensburg, FRG
external identifiers
  • wos:000336018100013
  • scopus:84894436394
ISSN
0176-2680
DOI
10.1016/j.ejpoleco.2014.01.007
language
English
LU publication?
yes
id
4fd797e3-bab6-4099-b394-17f562b6d4e6 (old id 4469890)
date added to LUP
2014-06-19 09:23:58
date last changed
2017-08-13 03:20:02
@article{4fd797e3-bab6-4099-b394-17f562b6d4e6,
  abstract     = {We apply a procedurally fair rule to a situation where people disagree about the value of three alternatives in the way captured by the voting paradox. The rule allows people to select a final collective ranking by submitting a bid vector with six components (the six possible rankings of the three alternatives). We test experimentally the robustness of the rule to subsidies and taxes as well as to tie-breaking assumptions. We have two main results. First, the most frequently chosen ranking is the socially efficient one when ties are broken in favor of the alternative generating the highest social welfare, but not when ties are broken randomly. Second, subsidies slightly enhance overbidding. Furthermore, an analysis of individual bid vectors reveals interesting behavioral regularities that result from selfishness, other-regarding preferences, and indifference. (C) 2014 Elsevier B.V. All rights reserved.},
  author       = {Gueth, Werner and Levati, M. Vittoria and Montinari, Natalia},
  issn         = {0176-2680},
  keyword      = {Bidding behavior,Procedural fairness,Voting paradox},
  language     = {eng},
  pages        = {206--221},
  publisher    = {Tranfer Verlag, Regensburg, FRG},
  series       = {European Journal of Political Economy},
  title        = {Ranking alternatives by a fair bidding rule: A theoretical and experimental analysis},
  url          = {http://dx.doi.org/10.1016/j.ejpoleco.2014.01.007},
  volume       = {34},
  year         = {2014},
}