Working Paper: CEPR ID: DP10408
Authors: Laurent Bouton; Aniol Llorente-Saguer; Frédéric Malherbe
Abstract: Consider a group of agents whose goal is to reform the status quo if and only if this is Pareto improving. Agents have private information and may have common or private objectives, which creates a tension between information aggregation and minority protection. We propose a simple voting system -majority rule with veto power- that essentially resolves this tension, for it combines the advantageous properties of both majority and unanimity rules. We argue that our results shed new light on the evolution of voting rules in EU institutions and could guide policy reforms in cases such as juries in the US.
Keywords: Constructive Abstention; Information Aggregation; Pareto Criterion; Unanimity Rule; Veto Power
JEL Codes: D70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| veto system (D72) | efficiency of decision-making (D79) |
| veto system (D72) | protects even the smallest minorities (J15) |
| veto system (D72) | aggregates information at least as well as majority rule (D79) |
| veto system dominates (D72) | majority rule (D72) |
| veto system dominates (D72) | unanimity (D70) |
| adoption of veto system (D72) | improved outcomes for agents (L85) |
| transition to veto system (P30) | Pareto improvement (D61) |