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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. 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.
    4. 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.
    5. 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.
    6. Caplin, Andrew S & Nalebuff, Barry J, 1988. "On 64%-Majority Rule," Econometrica, Econometric Society, vol. 56(4), pages 787-814, July.
    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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