On discounting and voting in a simple growth model

Arbeitspapier

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 steady-state voting equilibria in the case in which agents may differ not only in their time preference, but also in their instantaneous utility functions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: KIT Working Paper Series in Economics ; No. 77

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Social Choice; Clubs; Committees; Associations ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products ; Institutions and Growth
• Subject: collective choice ; common-pool resource ; economic growth ; heterogeneous agents ; median voter theorem

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Borissov, Kirill ; Pakhnin, Mikhail ; Puppe, Clemens
• Event: Veröffentlichung
• (who): Karlsruher Institut für Technologie (KIT), Institut für Volkswirtschaftslehre (ECON)
• (where): Karlsruhe
• (when): 2015

Further information

• DOI: doi:10.5445/IR/1000051311
• Handle: http://hdl.handle.net/10419/125074
• URN: urn:nbn:de:swb:90-513113
• Last update: 10.03.2025, 11:44 AM CET