Jacob Paroush

Collective decision making : an economic outlook

This book provides an economic approach to the study of collective decision making. In Social Choice theory, the main problem of collective decision making is normally conceived of as one of aggregating diverse individual preferences. However, in practice, objectives are often common to the individuals - whether, for instance, in the firm, or where a medical diagnosis is required - but the information available to each individual, and their ability to utilise that information optimally, differ. The authors therefore deal with a different problem of decisional skills aggregation assuming homogeneous preferences but differing decisional skills, and develop a framework for the study of collective decision making. They examine the effect of the size of the decision making body; incomplete information on decisional skills; interdependence among decisions; shadow prices of decision rules; and of decision making costs and benefits on optimal group decision making. The model is then illustrated in a range of different fields, including industrial organisation, labour economics and in the design of consulting schemes, medical diagnostic systems, and corporate law.

A nonasymptotic Condorcet jury theorem

Abstract. This paper provides first the condition under which the majority of an odd number of jurists is more likely to choose the better of two alternatives than a single jurist selected at random from the jurists, given that each jurist has a probability larger than one half of choosing correctly, and second that the same inequality holds for a subset of an odd number of jurists chosen at random from the original group.

The effect of forward markets on exporting firms

Abstract This note suggests that exchange rate uncertainty does not affect exports if firms can insure their revenue in forward markets.

Are qualified majority rules special

This essay provides a formal justification for qualified majority rules. Specifically, within an uncertain dichotomous choice framework, in which individual preferences are identical but actual judgments may differ, special majority rules emerge as decision rules that maximize the probability of making correct decisions. The main result specifies the optimal special majority as a function of a priori bias in favor of the status quo, ability, and size of the decision-making body. The analysis of the relationships among these three variables in generating certain common qualified majority rules is then pursued.

The significance of independent decisions in uncertain dichotomous choice situations

The main concern of this paper is the selection of optimal decision rules for groups of individuals with identical preferences but diverse and dependent decisional skills. The main result establishes that within the uncertain dichotomous choice situation independent voting is always weakly superior to any pattern of interdependence among individual decisions. For the special class of total interdependence patterns the optimal rule is explicitly identified.

The Derived Demand with Hedging Cost Uncertainty in the Futures Markets

This study explores the significance of production technology and other parameters on the employment of inputs and hedging. The paper establishes an explicit relationship between the risk as well as prices parameters and the derived demand, production and hedging. The authors find that the futures price relative to the expected spot price affects the demand for production factors. Additionally, the presence of basis risk determines the impact of prices and risk parameters on the derived demand for inputs. Production technology is instrumental in fixing the size of the change in the demand, given a change in the models parameters. Copyright 1992 by Royal Economic Society.

Optimum committee size: Quality-versus-quantity dilemma

Abstract. According to Condorcet, the larger the team of decision-makers using the simple majority rule, the more likely they are to reach correct decisions. This paper examines the validity of this claim under the condition of reduced team competence with size. Determining committee size always involves quality-versus-quantity dilemma. This study provides criteria, as well as an algorithm, for deciding on the optimum size of boards and committees.

A general theorem and eight corollaries in search of correct decision

The main theorem established in this study and its corollaries summarize and generalize the existing results on optimal aggregation of experts judgments under uncertain pairwise choice situations. In particular, we explicate the link between the optimal decision procedure and the decision makers preferences and biases and the judgmental competences of his consultants. The general theorem directly clarifies under what circumstances the optimal decision rule should be the democratic simple majority rule, the elitist expert rule, an intermediate weighted simple majority rule or a biased weighted or simple qualified majority rule.

COLLECTIVE DECISION MAKING IN HIERARCHIES

Abstract This paper investigates properties of composite majority functions with the aid of recursive formulas in the context of collective decision making in multi-tier hierarchies. The effects of changes in system structure on collective competence are examined. In addition to the theoretical importance, the results given here are applicable in designing hierarchies where the cost in the form of competence loss has to be considered against the benefit of time-saving and other expenses.

Optimal decision rules for fixed-size committees in polychotomous choice situations

Abstract. This paper derives optimal decision rules for fixed-size committees in polychotomous choice situations. Earlier studies focus on the dichotomous choice model and thus the present extension broadens the scope of applications of the theory of collective decision making.