Voting Over Efficient Decision Rules in Budget Balanced Organizations

We examine the choice of efficient decision rules in a budget-balanced organization. The organization awards a scarce ``project'' to the organization member who values it most, and redistributes some surplus from the project among all remaining members. An auction-based allocation rule tends to generate majority support when the number of members in the organization is large, and when the ex ante distribution of member types is relatively symmetric. A decrease in the value of the project, or an increase in the the amount that is redistributed under the ``managerial allocation'' rule, increases support for this rule when the probability of intermediate types winning the auction is small relative to 1/n.