4-MayerMedianVoter

4-MayerMedianVoter - Polit ical Economy of I nst it ut ions...

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Click to edit Master subtitle style 2/22/10 Lecture 4: Direct Democracy Mayer and the Median Voter Political Economy of Institutions: Trade
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2/22/10 Domestic Institutions We now have a good theory of the effect of trade and trade policy on income distribution But preferences alone don’t determine policy preferences must be transformed into policy via political institutions Elections Legislatures
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2/22/10 Direct Democracy Simplest model of an election Large numbers of individual voters Proposal that wins the most votes wins. If voting over policy the winning policy is implemented not voting for a representative, or a legislature.
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2/22/10 Median Voter Theorem An Illustration three individuals: Al, Bob and Charlie must choose a restaurant to eat lunch at. Preferences Al prefers a restaurant where lunch can be had for $5.00, Bob favors a bit better fare at a restaurant serving $10.00 lunches, and Charlie wants a gourmet restaurant where lunch will cost around $20.00.
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Majority Decisions Options Pattern of Votes Result $10 vs $20 A: 10 B:10 C: 20 10 $5 vs $20 A: 5 B: 5 C: 20 5 $5 vs $10 A: 5 B:10 C: 10 10 B is the median voter his preferences lie “between” the other two is ideal restaurant lies between the other two. The election always yields B’s preferred outcome
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4-MayerMedianVoter - Polit ical Economy of I nst it ut ions...

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