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Group decision-making in the shadow of disagreement

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  • Eliaz, Kfir
  • Ray, Debraj
  • Razin, Ronny

Abstract

A model of group decision-making is studied, in which one of two alternatives must be chosen. While group members differ in their valuations of the alternatives, everybody prefers some alternative to disagreement. Our model is distinguished by three features: private information regarding valuations, varying intensities in the preference for one out-come over the other, and the option to declare neutrality in order to avoid disagreement. We uncover a variant on the “tyranny of the majority": there is always an equilibrium in which the majority is more aggressive in pushing its alternative, thus enforcing their will via both numbers and voice. However, under very general conditions an aggressive minority equilibrium inevitably makes an appearance, provided that the group is large enough. This equilibrium displays a “tyranny of the minority": it is always true that the increased aggression of the minority more than compensates for smaller number, leading to the minority outcome being implemented with larger probability than the majority alternative. In all cases the option to remain neutral ensures that the probability of disagreement is bounded away from one (as group size changes), regardless of the supermajority value needed for agreement, as long as it is not unanimity.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 132 (2007)
Issue (Month): 1 (January)
Pages: 236-273

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Handle: RePEc:eee:jetheo:v:132:y:2007:i:1:p:236-273

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Web page: http://www.elsevier.com/locate/inca/622869

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References

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  1. Matthew O. Jackson & Hugo F. Sonnenschein, 2003. "The Linking of Collective Decisions and Efficiency," Microeconomics 0303007, EconWPA.
  2. Alessandra Casella, 2002. "Storable votes," Discussion Papers 0102-71, Columbia University, Department of Economics.
  3. Philipson, Tomas J & Snyder, James M, Jr, 1996. " Equilibrium and Efficiency in an Organized Vote Market," Public Choice, Springer, vol. 89(3-4), pages 245-65, December.
  4. Ponsati, Clara & Sakovics, Jozsef, 1996. "Multiperson Bargaining over Two Alternatives," Games and Economic Behavior, Elsevier, vol. 12(2), pages 226-244, February.
  5. Kahneman, Daniel & Schkade, David & Sunstein, Cass R, 1998. "Shared Outrage and Erratic Awards: The Psychology of Punitive Damages," Journal of Risk and Uncertainty, Springer, vol. 16(1), pages 49-86, April.
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Cited by:
  1. Hitoshi Matsushima & Koichi Miyazaki & Nobuyuki Yagi, 2010. "Role of Linking Mechanisms in Multitask Agency with Hidden Information," CARF F-Series CARF-F-209, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
  2. Alistair Wilson, 2011. "Costly Communication in Groups: Theory and an Experiment," Working Papers 488, University of Pittsburgh, Department of Economics, revised Jul 2012.
  3. Rafael Hortala-Vallve, 2007. "Inefficiencies on Linking Decisions," Economics Series Working Papers 321, University of Oxford, Department of Economics.
  4. Ekmekci, Mehmet, 2009. "Manipulation through political endorsements," Journal of Economic Theory, Elsevier, vol. 144(3), pages 1227-1248, May.

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