Time-Consistent Majority Rules and Heterogenous Preferences in Group Decision-Making
28 Pages Posted: 14 Oct 2010
Date Written: May 13, 2010
This paper studies a collective decision problem in which a group of individuals with interdependent preferences vote whether or not to implement a public project of unknown value. A utilitarian social planner aggregates these votes according to a majority rule; but, unlike what is commonly assumed in the literature, the planner is unable to commit to the rule before votes are cast. Characterizing the time-consistent majority rules, we find that the ex ante optimal majority rule is time-consistent; but for groups whose members have sufficiently homogenous preferences, there is an ex ante suboptimal rule that is also time-consistent. Thus, in the absence of an ex ante commitment, the social planner prefers a relatively heterogeneous group in which strategic voting incentives are weak. This finding is in sharp contrast with the observation that under an exogenously given majority rule, the social planner prefers the most homogenous group. Applications to trial jury and advisory committee formations as well as academic hiring decisions are discussed.
Keywords: time-consistency, majority rule, heterogeneity, group decision-making
JEL Classification: C7, D7
Suggested Citation: Suggested Citation