Scribd
Upload
7 views2 pages

Tutorial 3

The document outlines a tutorial on information aggregation in elections, focusing on three voters choosing between two alternatives based on independent signals about an unknown state of the world. It includes computations of posterior beliefs, expected utilities, and conditions for sincere voting to be informative or an equilibrium under different voting rules. The tutorial also explores the implications of voters sharing their signals and the dynamics of truthful voting in a setting where unanimity is required for decision-making.

Uploaded by

gonzalobarallobre
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
7 views2 pages

Tutorial 3

The document outlines a tutorial on information aggregation in elections, focusing on three voters choosing between two alternatives based on independent signals about an unknown state of the world. It includes computations of posterior beliefs, expected utilities, and conditions for sincere voting to be informative or an equilibrium under different voting rules. The tutorial also explores the implications of voters sharing their signals and the dynamics of truthful voting in a setting where unanimity is required for decision-making.

Uploaded by

gonzalobarallobre
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

Tutorial 3: Information aggregation in elections

ECNM10118 Political Economy∗

Three voters (i ∈ {1, 2, 3}) must choose between two alternatives: x ∈ {0, 1}. The choice of
one of the two alternatives is made by majority rule. The impact of the society’s policy choice on
voters’ payoff depends on an unknown state of the world θ ∈ {−1, 1}. Each state is equally likely.
All voters have the same utility function:

Ui (x) = −(x − θ)2 (1)

Before voting, each voter receives a signal si of the state of the world. Signals are independent
(after conditioning on the state of the world) and symmetric. The probability that voter i receives
signal z ∈ {−1, 1} is: P r(si = z|θ = z) = q > 1/2.

(a) Compute a voter’s posterior belief that the state is θ = −1 after receiving signal s = 1 and
after s = −1 (i.e. one posterior for each signal).

(b) Compute a voter’s expected utilities when x = 1 and x = 0 is chosen after signal s = 1 and
after s = −1 (i.e. four expected utilities overall).

(c) Find q such that sincere voting is informative if and only if q ≥ q. Explain why q > 1/2.
[Hint: Check when based only on her individual signal the voter follows her signal: i.e. votes for 0
after signal −1 and votes for 1 after signal 1.]

(d) Show that informative sincere voting is also an equilibrium under q ≥ q (i.e. sincere voting is
rational under pivotal considerations).

∗
Questions? Email: [email protected]

1
(e) Suppose again that q > q. Since x = 0 is a safer option than x = 1, we now assume that the
three voters pick x = 1 if and only if they all vote for it (i.e., by unanimity rule with x = 0 the
status quo). Show that informative sincere voting is no longer an equilibrium.

(f ) Still assuming q > q and unanimity rule, suppose that before casting their votes the voters
come together and share their private information with each other (but no one can check if each
reveals her signal truthfully or lies). That is, the game becomes as follows in terms of timimg:
1. Each voter observes her signal and decides whether to share it with others truthfully or lie.
2. Each voter observes what everyone shared and casts her vote.
In this setup, we want to support an equilibrium where voters reveal their signals truthfully and
vote according to all the information that is available to them. For this, follow the steps below:

(i) Compute a voter’s posterior belief that the state is θ = −1 after observing three signals
s = 1; two signals s = 1 and one s = −1; one signal s = 1 and two s = −1; and three signals s = −1.

(ii) Assume all voters cast sincere vote given the knowledge of the three signals. How should
each voter vote? Convince yourself that such strategies form an equilibrium.

(iii)1 Given that all voters vote according to the strategies found in part (ii), consider the first
stage now. Assume that the other two voters reveal their signals truthfully in the first stage, and
explain why the remaining voter then prefers to reveal her signal truthfully as well. [Hint: Think
when the voter’s private signal is pivotal for others’ voting decision. Does she want to cause others
vote in a suboptimal way?]

(iv) What do we learn from confirming such truthful equilibrium existence?

1
This part is on a more advanced side, if considered formally. However, you should be able to grasp the intuition
of why the result is true.

You might also like