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The effect of democratic decision-making on investment in reputation

Author

Listed:
  • Ruth Ben-Yashar

    (Bar Ilan University)

  • Miriam Krausz

    (Ashkelon Academic College)

  • Shmuel Nitzan

    (Bar Ilan University
    Hitotsubashi University)

Abstract

Students wish to increase the probability of being admitted to a prestigious school. Job candidates are interested in the probability of getting desirable employment. Defendants are concerned about the probability of being acquitted. In all such binary settings, the probability of the desirable outcome to individuals can be affected by their reputations. Applying the classical Condorcet Jury Theorem framework in which decision makers are assumed to be non-strategic, we focus on how the nature of the applied decision-making rule affects the individuals’ incentives to invest in improvement of their reputations. Our main results establish that, within the family of democratic majority voting rules, simple majority rule (a rule of unanimous consent) ensures that the marginal productivity of reputation is largest (smallest) and that it increases (decreases) with the size of the decision-making committee.

Suggested Citation

  • Ruth Ben-Yashar & Miriam Krausz & Shmuel Nitzan, 2018. "The effect of democratic decision-making on investment in reputation," Public Choice, Springer, vol. 177(1), pages 155-164, October.
    • Handle: RePEc:kap:pubcho:v:177:y:2018:i:1:d:10.1007_s11127-018-0595-4
    DOI: 10.1007/s11127-018-0595-4
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    References listed on IDEAS

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    1. Ruth Ben-Yashar & Miriam Krausz & Shmuel Nitzan, 2018. "Government loan guarantees and the credit decision-making structure," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 607-625, May.
    2. Ruth Ben-Yashar & Leif Danziger, 2015. "When is voting optimal?," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(2), pages 341-356, October.
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    12. Ben-Yashar, Ruth & Danziger, Leif, 2016. "The unanimity rule and extremely asymmetric committees," Journal of Mathematical Economics, Elsevier, vol. 64(C), pages 107-112.
    13. Ruth Ben-Yashar & Leif Danziger, 2014. "On the optimal composition of committees," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(4), pages 973-980, December.
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    15. Ben-Yashar, Ruth C & Nitzan, Shmuel I, 1997. "The Optimal Decision Rule for Fixed-Size Committees in Dichotomous Choice Situations: The General Result," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 175-186, February.
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    17. Ruth Ben-Yashar & Shmuel Nitzan, 2014. "On the significance of the prior of a correct decision in committees," Theory and Decision, Springer, vol. 76(3), pages 317-327, March.
    18. Ruth Ben-Yashar & Shmuel Nitzan, 2001. "The robustness of optimal organizational architectures: A note on hierarchies and polyarchies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 18(1), pages 155-163.
    19. Midjord, Rune & Rodríguez Barraquer, Tomás & Valasek, Justin, 2017. "Voting in large committees with disesteem payoffs: A ‘state of the art’ model," Games and Economic Behavior, Elsevier, vol. 104(C), pages 430-443.
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    Cited by:

    1. Ronen Bar-El & Mordechai E. Schwarz, 2021. "A Talmudic constrained voting majority rule," Public Choice, Springer, vol. 189(3), pages 465-491, December.

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    More about this item

    Keywords

    Decision-making structure; Investment in reputation; Simple majority; Unanimous consent;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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