Group Decisions: Voting VS Spending

[Xerographica]

In this Nation States forum thread... 4th Grade Nation State... one of the participants, Galloism, has facilitated an experiment to test the relative long-term effectiveness of using spending (coasianism) to make group decisions.   At a local college, a psychology professor is allowing two of his classes to use coasianism to decide whether to have class inside or outside.  A third class is using voting to decide.

With coasianism, the students write down their...

1. Name
2. Preferred option (ie outside)
3. Willingness to pay (WTP)

Once all the students have turned in their valuation forms, the professor does some basic math to determine the most valuable option (MVO).  The students who prefer the MVO have to give their money to the professor.  The students who do not prefer the MVO do not have to spend any money.  Instead, they are proportionally compensated.  The winners have to pay the losers.

Today was the first day of the experiment.  All three classes decided to have class outside.  With the voting class... 16 voted in favor and 1 voted against.  It was a classic example of tyranny of the majority.

Here are the results from the morning coasianism class...



Here are the results from the afternoon coasianism class...



It wasn't tyranny of the majority because the majority fairly compensated the minority.  The majority traded with the minority.

In a different but similar study (One Man, One Bid), which I discussed here, there were two key differences...

1. quadratic voting
2. equal compensation

[SGOS]

What happens if they go outside and it rains?

[Xerographica]

I don't know what happens if they go outside and it rains.  What happens if they get to class and it's already raining?  You'd figure that nobody would really want to have class outside in the rain.  So it would seem logical that everybody would spend their money on the inside option.  Which means that a student could make money by spending their money on the outside option.  But if too many students have the same idea, the outside option becomes the more valuable option and the students end up having class outside in the rain. 

You maximize your benefit if you're the only cheater.  The addition of an additional cheater decreases your benefit.  However, there's a tipping point where one additional cheater tips the balance in favor of having class outside in the rain... which means that the entire class suffers.  Well... the cheaters actually end up compensating the people who didn't cheat.  But it's doubtful that the compensation would cover the cost. 

[SGOS]

Thanks for the clarification.  I actually wrote that with the intention of making a whimsical quip, but it also suggests some practical issues.

[Cavebear]

Too many variables...

[Baruch]

Modeling is just masturbation by math geeks who can't get dates.