Minority Voting and Long-Term Decisions

CESifo Working Paper Series No. 2198

CER-ETH - Center of Economic Research at ETH Zurich Working Paper No. 07/70

48 Pages Posted: 20 Jul 2007

See all articles by Theresa Fahrenberger

Theresa Fahrenberger

Heidelberg University - Alfred Weber Institute for Economics

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: January 2008

Abstract

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

Suggested Citation

Fahrenberger, Theresa and Gersbach, Hans, Minority Voting and Long-Term Decisions (January 2008). CESifo Working Paper Series No. 2198; CER-ETH - Center of Economic Research at ETH Zurich Working Paper No. 07/70. Available at SSRN: https://ssrn.com/abstract=1000897

Theresa Fahrenberger (Contact Author)

Heidelberg University - Alfred Weber Institute for Economics ( email )

Grabengasse 14
Heidelberg, D-69117
Germany

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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