Can Co-Owners Agree to Disagree? A Theoretical Examination of Voting Rules in Co-Ownerships

Danny Ben-Shahar () and Eyal Sulganik ()

The Journal of Real Estate Finance and Economics, 2005, vol. 31, issue 2, 207-223

Abstract: Does there exist a voting rule to be, for example, inserted into the constitution of a newly constructed apartment building, which is likely to attract the greatest number of consumers? We analyze this and other questions within a framework in which co-owners resolve future debates by voting. We examine the conditions under which a co-owner optimally opts for unanimous, special majority, simple majority, and minority voting rules. The main innovation of the analysis is that co-owners with distinct characteristics may yet unanimously agree on the optimal voting rule. Among the other results are that the optimal level of the voting rule is non-decreasing (non-increasing) in one’s level of disutility from opposing (favoring) an accepted (a rejected) proposal. Also, while our results are generally in line with the predictions of Ellickson ( 1982 ) and the evidence of Barzel and Sass ( 1990 ), according to which heterogeneous (homogeneous) voters require (less than) a super majority voting rule, we show a possible exception to this generalization: heterogeneity, in some circumstances, may optimally lead to a minority voting rule. The results are applicable for groups such as general assemblies in apartment buildings, neighborhood councils, and others. Copyright Springer Science + Business Media, Inc. 2005

Keywords: voting rule; majority; collective choice; constitution; corporate governance (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11146-005-1372-y

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