Minority Voting and Long-Term Decisions
CER-ETH - Center of Economic Research at ETH Zurich Working Paper No. 07/70
48 Pages Posted: 20 Jul 2007
Date Written: January 2008
In this paper we propose minority voting as a scheme that can partially protect individuals from the risk of repeated exploitation. We consider a committee that meets twice to decide about projects where the first-period project may have a long-lasting impact. In the first period a simple open majority voting scheme takes place. Voting splits the committee into three groups: voting winners, voting losers, and absentees. Under minority voting only voting losers keep the voting right in the second period. We show that as soon as absolute risk aversion exceeds a threshold value minority voting is superior to repeated application of the simple majority rule.
Keywords: voting, minority, durable decision, risk aversion, tyranny of majority rules
JEL Classification: D7
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