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Voting over efficient decision rules in budget-balanced organizations

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  • Hueth, Brent
  • Melkonyan, Tigran

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.
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  • Hueth, Brent & Melkonyan, Tigran, 2003. "Voting over efficient decision rules in budget-balanced organizations," Journal of Economic Behavior & Organization, Elsevier, vol. 51(2), pages 279-301, June.
    • Handle: RePEc:eee:jeborg:v:51:y:2003:i:2:p:279-301
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