Group Decisions: Voting VS Spending

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