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Two-Class Voting: A Mechanism for Conflict Resolution

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  • Ernst Maug
  • Bilge Yilmaz
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    Abstract

    We discuss two-class voting procedures where voters are divided into classes and a separate majority is required in each class. Examples include Chapter 11 bankruptcy proceedings and some political mechanisms. We investigate how voting mechanisms aggregate information dispersed among voters when voters have conflicts of interests as well as different information regarding a proposal. We find that two-class voting provides a significant improvement over one-class voting in all situations where voters have significant conflicts of interests, and where the voters are relatively evenly divided between interest groups. However, two-class voting is inefficient absent conflicts of interests.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/000282802762024584
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    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 92 (2002)
    Issue (Month): 5 (December)
    Pages: 1448-1471

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    Handle: RePEc:aea:aecrev:v:92:y:2002:i:5:p:1448-1471

    Note: DOI: 10.1257/000282802762024584
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    References

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    1. Klevorick, Alvin K. & Rothschild, Michael & Winship, Christopher, 1984. "Information processing and jury decisionmaking," Journal of Public Economics, Elsevier, vol. 23(3), pages 245-278, April.
    2. Berkovitch, Elazar & Israel, Ronen & Zender, Jaime F., 1997. "Optimal bankruptcy law and firm-specific investments," European Economic Review, Elsevier, vol. 41(3-5), pages 487-497, April.
    3. Feddersen, Timothy J & Pesendorfer, Wolfgang, 1996. "The Swing Voter's Curse," American Economic Review, American Economic Association, vol. 86(3), pages 408-24, June.
    4. Eddie Dekel & Michele Piccione, 1997. "On the Equivalence of Simultaneous and Sequential Binary Elections," Discussion Papers 1206, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Eddie Dekel & Michele Piccione, 2000. "Sequential Voting Procedures in Symmetric Binary Elections," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 34-55, February.
    6. Easterbrook, Frank H & Fischel, Daniel R, 1983. "Voting in Corporate Law," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 395-427, June.
    7. Laffont, Jean-Jacques & Martimort, David, 1998. "Transaction costs, institutional design and the separation of powers," European Economic Review, Elsevier, vol. 42(3-5), pages 673-684, May.
    8. Roger B. Myerson, 1994. "Extended Poisson Games and the Condorcet Jury Theorem," Discussion Papers 1103, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Roger B. Myerson & Daniel Diermeier, 1999. "Bicameralism and Its Consequences for the Internal Organization of Legislatures," American Economic Review, American Economic Association, vol. 89(5), pages 1182-1196, December.
    10. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
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    Cited by:
    1. Ian Ayres & Colin Rowat & Nasser Zakariya, 2004. "Optimal two stage committee voting rules," Game Theory and Information 0412006, EconWPA.
    2. Berliant, Marcus & Tabuchi, Takatoshi, 2011. "Local politics and economic geography," MPRA Paper 35169, University Library of Munich, Germany.
    3. Van Wesep, Edward D., 2014. "The Idealized Electoral College voting mechanism and shareholder power," Journal of Financial Economics, Elsevier, vol. 113(1), pages 90-108.
    4. Ross Hickey, 2013. "Bicameral bargaining and federation formation," Public Choice, Springer, vol. 154(3), pages 217-241, March.
    5. Iaryczower, Matias, 2007. "Strategic voting in sequential committees," Working Papers 1275, California Institute of Technology, Division of the Humanities and Social Sciences.
    6. Maug, Ernst & Rydqvist, Kristian, 2004. "Do Shareholders vote Strategically? Evidence on the Advisory Role of Annual General Meetings," CEPR Discussion Papers 4192, C.E.P.R. Discussion Papers.
    7. Stefano Demichelis & Klaus Ritzberger, 2007. "Corporate Control and the Stock Market," Carlo Alberto Notebooks 60, Collegio Carlo Alberto.
    8. Elisabeth Schulte, 2012. "Communication in committees: who should listen?," Public Choice, Springer, vol. 150(1), pages 97-117, January.
    9. Nicolae STEF, 2013. "Severity of the Voting Rules in Bankruptcy," Working Papers of LaRGE Research Center 2013-07, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg (France).
    10. Stefano Demichelis & Klaus Ritzberger, 2011. "A general equilibrium analysis of corporate control and the stock market," Economic Theory, Springer, vol. 46(2), pages 221-254, February.

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