Steve_Rayhawk comments on Arrow's Theorem is a Lie - Less Wrong
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This system is a reinvention of range voting.
Like taw says, for causally rational voters this procedure collapses into approval voting. (Though Warren D. Smith of the Center for Range Voting argues that range voting is still better. In computer simulations (technical report), under many conditions, voters who (causally irrationally) choose non-extreme scores collectively reduce aggregated Bayesian regret. Non-extreme scores may help voters simulate non-causal rationality by a "nursery effect".)
I've thought about another voting system that might not collapse. In this system, each voter has the same power as in approval voting. Each voter can choose their approvals themselves, if they have the resources to choose tactically good votes themselves. The system also has a "public voting tactician", which is to voting what a public defender is to legal defense. Voters can give their preferences to the public voting tactician in the form of a utility function, and the tactician finds an equilibrium approval voting strategy for all the voters given their preferences.
(The real reason I am interested in this system is that it might get around problems of incommensurability and scaling of utility functions while still using full utility information.)
The tactician should be chosen to minimize the advantage which voters or groups of voters can get by using any other procedure to choose their votes, or by reporting their preferences non-honestly.
Parts of this system which that description doesn't define are:
I wrote a blog post a while back about equilibrium strategies in elections. I defined a "cabal equilibrium" as one in which, not only does no single player wish to change strategies, but no group of players wishes to change strategies together.
For example, (D,D) is not a cabal equilibrium in PD, because both players would prefer to change strategies together to (C,C). But (C,C) is not a cabal equilibrium either, because either player would prefer to change to D. PD has no cabal equilibria.
Elections have cabal equilibria iff there's a Condorcet winner, and a cabal equilibrium elects the Condorcet winner.
It sounds like you rediscovered the "Core".
Related: "Strategic approval voting in a large electorate" by Jean-François Laslier. Smith's report also considers tactical voting, and is unrefereed but more thorough.