Voting Over Efficient Decision Rules in Budget Balanced Organizations

Brent Hueth () and Tigran A. Melkonian
Authors registered in the RePEc Author Service: Tigran Melkonyan ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: We examine the choice of efficient decision rules in a budget-balanced organization. The organization awards a scarce ``project'' to the organization member who values it most, and redistributes some surplus from the project among all remaining members. An auction-based allocation rule tends to generate majority support when the number of members in the organization is large, and when the ex ante distribution of member types is relatively symmetric. A decrease in the value of the project, or an increase in the the amount that is redistributed under the ``managerial allocation'' rule, increases support for this rule when the probability of intermediate types winning the auction is small relative to 1/n.

Date: 2003-01-01
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Published in Journal of Economic Behavior and Organization 2003, vol. 51, pp. 279-301

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:5164

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