Cumulative voting

Abstract: Democratic institutions aggregate preferences poorly. The norm of one-person-one-vote with majority rule treats people fairly by giving everyone an equal chance to influence outcomes, but fails to give proportional weight to people whose interests in a social outcome are stronger than those of other people — a problem that leads to the familiar phenomenon of tyranny of the majority. Various institutions that have been tried or proposed over the years to correct this problem — including supermajority rule, weighted voting, cumulative voting, "mixed constitutions," executive discretion, and judicially protected rights — all badly misfire in various ways, for example, by creating gridlock or corruption. This paper proposes a new form of political decision-making based on the theory of quadratic voting. It explains how quadratic voting solves the preference aggregation problem, giving proper weight to preferences of varying intensity, and how it could be implemented as well as addressing concerns about its consequences for equity.

Abstract: Since the theory of games was first made widely available, with application to economic behavior, its use has been suggested in many other areas, from the global to the individual. Several correspondences between game theory and certain aspects of political process have been noted. The contribution of game theory to substantive knowledge in the empirical sciences, however, has been modest; Luce and Raiffa judge that its impact has been greater in applied mathematics. The area of political behavior—despite the apparent applicability of the notion of conflict of interest—is similarly lacking in studies, although a few notable exceptions exist.

Abstract: Using a sample of nearly 700 firms, we documented a significant level of substitution between monitoring efforts by shareholders and bonding of Chief Executive Officers' (CEO)compensation with shareholder wealth. Direct shareholder monitoring effectiveness is measured by various dimensions of voting rights, e.g., equal voting, cumulative voting, and confidential voting. Indirect monitoring is measured by the degree of independence of the board of directors. Bonding of CEO compensation with shareholder wealth is gauged by a new pay-performance sensitivity measure that incorporates volatility in firm value. The results are consistent with prediction of agency theory that compensation contracts are designed to reduce the owner-manager conflict.