Mean versus median voting in multi-dimensional budget allocation problems. A laboratory experiment

Abstract

We experimentally compare two natural mechanisms for the collective choice of an allocation of a fixed budget to a number of divisible public projects: the mean rule that implements the average of all individual proposals, and a suitably normalized median rule. Theoretical results predict extreme voting behavior in equilibrium under the mean rule and frequently sincere voting under the normalized median rule. Our findings confirm equilibrium behavior under the mean rule in situations in which the equilibrium strategies are easily identifiable. The empirical results for the normalized median rule are multifaceted. While we also find that many individuals play best responses, remarkably these are rarely sincere. Nevertheless, we find that the normalized median rule enjoys significantly better welfare properties than the mean rule.