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Can Co-Owners Agree to Disagree? A Theoretical Examination of Voting Rules in Co-Ownerships

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  • Danny Ben-Shahar
  • Eyal Sulganik

Abstract

Does there exist a voting rule to be, for example, inserted into the constitution of a newly constructed apartment building, which is likely to attract the greatest number of consumers? We analyze this and other questions within a framework in which co-owners resolve future debates by voting. We examine the conditions under which a co-owner optimally opts for unanimous, special majority, simple majority, and minority voting rules. The main innovation of the analysis is that co-owners with distinct characteristics may yet unanimously agree on the optimal voting rule. Among the other results are that the optimal level of the voting rule is non-decreasing (non-increasing) in one’s level of disutility from opposing (favoring) an accepted (a rejected) proposal. Also, while our results are generally in line with the predictions of Ellickson ( 1982 ) and the evidence of Barzel and Sass ( 1990 ), according to which heterogeneous (homogeneous) voters require (less than) a super majority voting rule, we show a possible exception to this generalization: heterogeneity, in some circumstances, may optimally lead to a minority voting rule. The results are applicable for groups such as general assemblies in apartment buildings, neighborhood councils, and others. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Danny Ben-Shahar & Eyal Sulganik, 2005. "Can Co-Owners Agree to Disagree? A Theoretical Examination of Voting Rules in Co-Ownerships," The Journal of Real Estate Finance and Economics, Springer, vol. 31(2), pages 207-223, September.
    • Handle: RePEc:kap:jrefec:v:31:y:2005:i:2:p:207-223
    DOI: 10.1007/s11146-005-1372-y
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    References listed on IDEAS

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    1. Herbert Kiesling, 1968. "Potential costs of alternative decision-making rules," Public Choice, Springer, vol. 4(1), pages 49-58, March.
    2. Salvador Barbera & Matthew O. Jackson, 2002. "Choosing How to Choose: Self Stable Majority Rules," Microeconomics 0211003, University Library of Munich, Germany.
    3. Caplin, Andrew S & Nalebuff, Barry J, 1988. "On 64%-Majority Rule," Econometrica, Econometric Society, vol. 56(4), pages 787-814, July.
    4. de Geest, Gerrit, 1992. "The provision of public goods in apartment buildings," International Review of Law and Economics, Elsevier, vol. 12(3), pages 299-315, September.
    5. Yoram Barzel & Tim R. Sass, 1990. "The Allocation of Resources by Voting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 745-771.
    6. Salvador Barbera & Matthew O. Jackson, 2004. "Choosing How to Choose: Self-Stable Majority Rules and Constitutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 1011-1048.
    7. Harris, Milton & Raviv, Artur, 1988. "Corporate governance : Voting rights and majority rules," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 203-235, January.
    8. Danilo Coelho, 2005. "Maximin choice of voting rules for committees," Economics of Governance, Springer, vol. 6(2), pages 159-175, July.
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    Cited by:

    1. Alfonso Valero, 2024. "Diversification strategies for indirect real estate. Intersection of business, economics, and society in shanghai mixed-use developments," SN Business & Economics, Springer, vol. 4(10), pages 1-26, October.

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