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The effect of democratic decision-making on investment in reputation

  • Ruth Ben-Yashar
  • Miriam Krausz
  • Shmuel Nitzan
Article
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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.

Keywords

Decision-making structure Investment in reputation Simple majority Unanimous consent 

JEL Classification

D7 

Notes

Acknowledgements

The authors are indebted to the Editor, an Associate Editor and two anonymous referees for their most useful comments and suggestions. The third author is grateful to HIAS, Hitotsubashi Institute for Advanced Study, Hitotsubashi University, for enabling the completion of this paper.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  • Ruth Ben-Yashar
    • 1
  • Miriam Krausz
    • 2
  • Shmuel Nitzan
    • 1
    • 3
  1. 1.Department of EconomicsBar Ilan UniversityRamat GanIsrael
  2. 2.Faculty of EconomicsAshkelon Academic CollegeAshkelonIsrael
  3. 3.Hitotsubashi Institute for Advanced StudyHitotsubashi UniversityKunitachiJapan

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