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We present a model of collective decision making in which voting and deliberation are treated simultaneously. Political theorists argue that public discussion can lead individuals to change their preferences.This aspect of democracy is typically ignored in models of social choice that focus exclusively on voting. In our model, individuals debate in a public forum and potentially revise their preferences in light of deliberation. Once this process is exhausted, a voting rule is applied to aggregate post-deliberation preferences into a social choice. Restricting attention to three alternatives, we identify conditions under which * Financial support from the Irish Research Council for the Humanities and Social Sciences, the Spanish Ministry of Science and Innovation through MICINN/FEDER grants ECO2010-21624 and ECO2010-14929, and the NUI Galway Millennium Fund is gratefully acknowledged. We are grateful for comments received at a Choice Group seminar at LSE. In particular, we would like to thank Nick Baigent, Richard Bradley, Franz Dietrich, Wulf Gaertner, Christian List, Marcus Pivato, Kai Spiekermann and Katie Steele for their helpful comments. We owe a large intellectual debt to the work of Christian List. Two of his papers, Dryzek and List (2003) and List (2011), inspired us to work on this problem.† Departamento de Análisis Económico, Universidad de Zaragoza, Gran Vía 2, 50005 Zaragoza, Spain. Email: jperote@unizar.es ‡ J.E. Cairnes School of Business and Economics, National University of Ireland Galway, University Road, Galway, Ireland. Email: ashley.piggins@nuigalway.ie 1 a democracy is truth-revealing in the sense that the deliberation path and the voting rule will always lead to the correct social choice being made, irrespective of the original profile of preferences and size of the electorate (provided the latter is finite). A critical parameter in the model is the persuasion cost. When this is low, a democracy is almost always truth-revealing. When it is high, we have the standard social choice model and truthful revelation is impossible. Moreover, we identify when and only when truthful revelation occurs in an interesting intermediate case.JEL classification: D71, D72.

This paper studies industry evolution driven by non strategic learning by doing and spillovers. We characterize a dynamic process of cost and output changes and its effect on welfare and industry profits. The paper gives conditions for shakeouts to occur and analyzes the key factors affecting these conditions. Since shakeouts could lead to a long-run social loss due to higher market concentration, there is a role for a government to play in limiting unnecessary shakeouts. The most effective way to do so is to enhance spillovers. Copyright Springer-Verlag Berlin/Heidelberg 2004Market evolution, Learning by doing, Spillover, Shakeout,

We study experimentally in the laboratory the situation when individuals have to report their private information about a (dependent) variable to a public authority that then makes inference about the true values given a known (independent) variable using a regression technique. It is assumed that individuals prefer this predicted value to be as close as possible to their true value (single-peaked preferences). Consistent with the theoretical literature, we show that subjects misrepresent their private information more when an ordinary least squares (OLS) regression is implemented than when the so-called resistant line (RL) estimator is employed. The latter extends the median voter theorem to the two-dimensional setting and belongs to the family of robust estimation techniques. In fact, we find that OLS involves serious biases but the RL estimation is empirically unbiased. Furthermore, subjects never earn less when the RL is applied.

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