ref Tideman and Tullock, 1976, A New and Superior Process ..., JPE 84 (Dec).
T&T were not the first to develope demand revelation (DR). Vickrey and especially Edward Clarke developed it previously, but T&T brought it to academic attentinon. Clarke dealt with the optimal amount of a single good. T&T deal with a choice between two options. Each voter offers Sa the amount he would pay to have A instead of B and Sb what he would pay to have B instead of A. Whichever sum of offers is greater determines the choice. The actor who changes the outcome must pay abs(Sa-Sb, not including his offer). But this T&T process does not say how A or B will be paid. It is therefore incomple, unless the good is free, and the only cost is that of not obtaining one's favored outcome. If both goods are free, then it is not irrational to obtain either good. T&T discuss Clarke's article of 1971 (Public Choice 11, Fall), "Multipart Pricing ...", there is a public good with some cost per unit. Note T&T, p. 1152: "The first stage is Clarke's process is to assign to each voter his share of the total cost." The excess payments "must be wasted or given to nonvoters to keep all the incentives correct." (p., 1154). In a footnote, T&T suggest that waste could be avoided if "pairs of communities" "agree to exchange their collections of these excess revenues." This is in accord with my proposition that demand revelation does NOT imply the need to waste the resources. T&T note that demand revelation is not perfect. For example coalitions can distort the results. The coalition benefit would vary with the square of the number of members. But majority voting also suffers from a large numbers problem. There is thus a case in either method for keeping the number of participants relatively small. T&T end by stating that demand revelation avoids the Arrow impossibility problem by avoiding its assumptions. So "the real problem raised by Arrow is solved by this process." Fred Foldvary ===== [EMAIL PROTECTED]
