Voting power

Decision making has become slow in the 27-member European Union and the Treaty of Nice distributed power in a somewhat arbitrary way. The Lisbon Treaty makes decision making easier, and streamlines the process by removing the most controversial element: the voting weights. The new system relies entirely on population data. We look at the immediate impact of the reform as well as the long term effects of the different demographic trends across countries. We find that the Lisbon rules hurt medium sized countries, especially Central Eastern European countries with declining populations, most, while the United Kingdom is the clear winner.

Agricultural cooperatives are often viewed as appropriate vehicles to facilitate vertical coordination with, or horizontal integration between, small farmers who would otherwise be excluded from value-adding opportunities and discerning markets. In South Africa, renewed interest in development-oriented cooperatives saw the introduction of a new Cooperatives Act in 2005, along with support measures dedicated to 'emerging' cooperatives. This paper contends that the architects of the new Act discounted important trends in international legislation that would have made development-oriented cooperatives more versatile and given their members better access to capital and expertise through equity partnerships with private agribusiness firms. It is concluded that the new Act should be amended to admit non-patron investors as members, and to allow for nonredeemable and hence appreciable and tradable shares. Such innovations are emerging internationally, usually with a cap on non-patron voting power.

This paper argues that the nucleolus can compete with the Shapley value as a measure of P-power. It currently has more solid noncooperative foundations for majority games. It also identifies a set of attractive coalitions that are expected to form (unlike the Shapley value, which is based on the values of all coalitions) and does better than the Shapley value at some postulates of voting power. On the negative side, it may give a payoff of zero to players that are not dummies, though this possibility is excluded for constant-sum weighted majority games. 2RD (United Kingdom); phone +44 115 9515468, fax +44 115 951 4159, e-mail [email protected]. This paper has benefitted from the comments of two referees.

Voting power in voting situations is measured by the probability of changing decisions by altering the cast `yes' or `no' votes. Recently this analysis has been extended by strategic abstention. Abstention, just as `yes' or `no' votes can change decisions. This theory is often applied to weighted voting situations, where voters can cast multiple votes. Measuring the power of a party in a national assembly seems to fit this model, but in fact its power comprises of votes of individual representatives each having a single vote. These representatives may vote yes or no, or may abstain, but in some cases they are not even there to vote. We look at absentees not due to a conscious decision, but due to illness, for instance. Formally voters will be absent, say, ill, with a certain probability and only present otherwise. As in general not all voters will be present, a thin majority may quickly melt away making a coalition that is winning in theory a losing one in practice. ...

This paper develops the symmetric power order, a measure of voting power for multicandidate elections. The measure generalizes standard pivotality-based voting power measures for binary elections, such as Banzhaf power. At the same time, the measure is not based on piv-otality, but rather on a measure of freedom of choice in individual decisions. Indeed, I use the symmetric power order to show that pivotality only measures voting power in monotonic elections, and is not a good measure in multicandidate elections. Pivotality only provides an upper bound on voting power. This result establishes a relation between voting power and strategyproofness.

This paper provides an overview of corporate governance practices in Latin American countries, surveying the available empirical literature, reviewing the reports on the subject prepared by multinational organizations, and providing new data for ownership and control structures of companies in different Latin American economies. Like in other emerging economies corporate governance in Latin America is conditioned by the high level of ownership concentration and the profusion of industrial and financial conglomerates controlling several companies. This corporate structure generates an agency problem between controlling and minority shareholders, that is exacerbated when controlling shareholders hold a disproportionate amount of voting power in relation to their cash flow rights. New empirical evidence indicates that Latin American markets penalize excessive separation between control and cash flow rights held by controlling shareholders. In addition, legislation, regulations and the judiciary power in the region are less effective in promoting and enforcing good practices than in more developed markets. Legal reform has been recently introduced to improve minority shareholder protection and enforcement.

Max Albert has argued that the theory of power indices “should not ... be considered as part of political science” and that “[v]iewed as a scientific theory, it is a branch of probability theory and can safely be ignored by political scientists”. Albert’s argument rests on a particular claim concerning the theoretical status of power indices, namely that the theory of power indices is not a positive theory, i.e., not one that has falsifiable implications. I re-examine the theoretical status of power indices and argue that it would be unwise for political scientists to ignore such indices. Although I agree with Albert that the theory of power indices is not a positive theory, I suggest that it is a theory of measurement that can usefully supplement other positive and normative social- scientific theories.
Preprint: http://personal.lse.ac.uk/LIST/PDF-files/List-EUPolitics.pdf

We preview empirical work by the European Corporate Governance Network on the size of block shareholdings in Europe. The most salient "nding is the extraordinarily high degree of concentration of shareholder voting power in Continental Europe relative to the U.S.A. and the U.K. Thus the relationship between large controlling shareholders and weak minority shareholders is at least as important to understand as the more commonly studied interface between management and dispersed shareholders. 1999 Elsevier Science B.V. All rights reserved.

L S Penrose's limit theorem (PLT) -which is implicit in Penrose [5, p. 72] and for which he gave no rigorous proof -says that, in simple weighted voting games, if the number of voters increases indefinitely while existing voters retain their weights and the relative quota is pegged, then -under certain conditions -the ratio between the voting powers of any two voters converges to the ratio between their weights. Lindner and Machover [3] prove some special cases of PLT; and conjecture that the theorem holds, under rather general conditions, for large classes of weighted voting games, various values of the quota, and with respect to several measures of voting power. We use simulation to test this conjecture. It is corroborated w.r.t. the Penrose-Banzhaf index for a quota of 50% but not for other values; w.r.t. the Shapley-Shubik index the conjecture is corroborated for all values of the quota (short of 100%).

In this account of the history of voting-power measurement, we confine ourselves to the concept of a priori voting power. We show how the concept was re-invented several times and how the circumstances in which it was reinvented led to conceptual confusion as to the true meaning of what is being measured. In particular, power-as-influence was conflated with value in the sense of transferable utility cooperative game theory (power as share in constant total payoff). Influence was treated, improperly, as though it were transferable utility, and hence an additive and distributive quantity. We provide examples of the resulting misunderstanding and mis-directed criticism.

The IGC 2000 had the objective to prepare the European Union for the enlargement. The aim of the present paper is to evaluate the Nice solution of the Council's decision-making rules from the perspective of the decision on the number of candidate countries which should join the EU in 2004, as proposed by the Brussels European Council in October 2002 and approved by the Copenhagen European Council last December. The evaluation is based on the comparison of the Nice solution with all the relevant proposals, which were presented to the IGC 2000. The results bring an assessment of the voting power effect of both the Nice rules and the proposals. The reason for this comparison consists in the fact that these proposals represented the spectrum of approaches considered as plausible, during the last IGC and some of them much earlier. Since ten designated candidate countries should be regular participants of the next IGC and since these proposals might be picked up again if the question of decision-making rules in the Council is reopened by the next IGC, the question of respective voting power consequences of the proposals for the EU25 should be answered. The method used for evaluation of voting power consequences of individual solutions is based on the Banzhaf index. The comparison leads to the conclusions that the distribution of voting power in the Council after enlargement to 25 members will be more even in terms of equitable representation of population of the member countries than most of other solutions proposed to the IGC, but is far from optimal as it disadvantages a group of smaller members to a greater degree than it disadvantages the most populous countries. Another conclusion is that the population criterion will not influence the voting power of member states after oncoming enlargement and would not be effective in any other dual weighted majority solution.

This study examines the effect of concentration of ownership both external block ownership and managerial share ownership on capital structure decision of Pakistani non-financial firms. The panel data is used to investigate the relationship between capital structure with external and internal ownership structure and fixed effect model gives a better explanation of the model. The relationship suggested by analysis between external ownership concentration and leverage ratio, patronage the "passive voting hypothesis" that large external shareholders select corporate managers through their voting power by ignoring the interest of the small shareholders. While large insider ownership significantly enhances the voting power and influence the corporate decisions. Which result difficult to control managerial behavior of getting high level of debt in capital structure. The findings of joint model divulged that ownership variables, insider ownership and external block holders have positive and significant association with leverage. Our analysis also finds the relationship between external block holders and leverage fluctuates with the level of insider ownership and don't support the "curvilinear relationship" among insiders ownership and leverage ratio. Large sized firms with more cash flows issue more debt. The profitable firms having earning volatility and non-debt tax shield and less dividend paying are less likely to choose higher debt which supports that firms follow the Pecking order theory in making financing decisions. The contribution of the present study is to give insight about capital structure and ownership structure to the investors and corporate managers and influence of ownership on corporate debt decisions. The finds of the present study will help both managers and investors in their investment decisions.. This is the first attempt to explore relation between concentration of ownership both internal and Asian Economic and Financial Review journal homepage: http://aessweb.com/journal-detail.php?id=5002 Asian Economic and Financial Review, 2013, 3(12):1583-1597 1584 external and capital structure in case of Pakistani firms where ownership and financial structures are different relative to those in developed markets.

Obtaining user opinion (using votes) is essential to ranking user-generated online content. However, any content voting system is susceptible to the Sybil attack where adversaries can out-vote real users by creating many Sybil identities. In this paper, we present SumUp, a Sybilresilient vote aggregation system that leverages the trust network among users to defend against Sybil attacks. SumUp uses the technique of adaptive vote flow aggregation to limit the number of bogus votes cast by adversaries to no more than the number of attack edges in the trust network (with high probability). Using user feedback on votes, SumUp further restricts the voting power of adversaries who continuously misbehave to below the number of their attack edges. Using detailed evaluation of several existing social networks (YouTube, Flickr), we show SumUp's ability to handle Sybil attacks. By applying SumUp on the voting trace of Digg, a popular news voting site, we have found strong evidence of attack on many articles marked "popular" by Digg.

Abstract. The a priori voting powers of member countries in the council of ministers of the European Union have been discussed in the literature mainly from the view–point of Banzhaf and Shapley–Shubik indices. This paper discusses — in the light of these and other more recent (Colomer's, Holler's as well as Deegan and Packel's) power indices — the interaction of the council ministers and the European Parliament (EP) under the assumption that the consent of both bodies is needed to carry a motion or piece of union–wide legislation. Moreover, the double–majority principle is discussed from the view–point of voting power distribution. Finally we consider the voting power distribution in a three–chamber system consisting of Commission, Council and EP.

It has often been claimed that the current allocation of votes among EU states is not fair. In this paper we verify this assertion by carrying out an evaluation of the distribution of power among the member states. The results show that the current distribution of votes for the qualified majority does not lead to a fair distribution of power whatever definition of the EU is considered. It can not be claimed however that the current voting process has a systematic bias in favor of certain states. We also present a simple method to derive voting weights which lead to a fair allocation of power.

I N this paper I will present various concepts of coalition formation and power measures and discuss them with respect to the view 'that situations where minor players possess greater potential for power are not anomalous, but occur rather frequently in real-world situations'. ' We shall see that the analysis of the various concepts of coalition formation will teach us much about the implications of the so-called power indices and the character of a priori voting power. A new index will be introduced which considers the coalition value of a public good and takes into consideration the distinction between power and luck. The values of this index will be calculated for the parties of the Finnish Parliament (Eduskunta) for the period 1948-79.

We study the determinants of governments and legislatures’ survival in Italy from the unification to the end of the I Republic (1861-1994) - excluding the fascist period and the subsequent transitory institutional period, "Constituente" (1946-1948). We test whether institutional features such as electoral systems, form of State and extent of suffrage had any effect on the survival of legislatures and

This paper presents a simple model of distribution dynamics in which non- convexities in the private education production function and politically determined fiscal redistribution in kind combine to generate Pareto and Lorenz rankable equilibria. Agents choose between low-quality free public schools and high-quality fee-paying private schools. The quality of public education is determined endogenously, through voting on its financing. Voting

Power in hierarchical organizations can be investigated in different ways This paper focuses on the study of a priori voting power in such organizations. It is shown that every 'restricted' game with a permission structure can be represented as a compound game. Furthermore, it is pointed out that the existing research in voting power in hierarchical structures is necessary, but not sufficient to understand the nature of a priori voting power in hierarchical organizations. This is because it does not take into account: (i) that players who participate in a decision-making in hierarchical organizations in general have a damatis personae, and (ii) that the top of a hierarchical organizations can have a board-structure. Once we account for these two factors we arrive at some counterintuitive characteristics of hierarchies, i.e. the violation of known monotonicity properties of power in hierarchical organizations such as structural monotonicity and dis-and conjunctive fairness.

The focus for the Centre is research into individual and strategic decision-making using a combination of theoretical and experimental methods. On the theory side, members of the Centre investigate individual choice under uncertainty, cooperative and non-cooperative game theory, as well as theories of psychology, bounded rationality and evolutionary game theory. Members of the Centre have applied experimental methods in the fields of public economics, individual choice under risk and uncertainty, strategic interaction, and the performance of auctions, markets and other economic institutions. Much of the Centre's research involves collaborative projects with researchers from other departments in the UK and overseas.

In this paper we try to bridge the gap between special interest politics and political business cycle literature. We build a framework where the interplay between the lobby power of special interest groups and the voting power of the majority of the population leads to political business cycles.

This paper investigates whether investment spending of firms is sensitive to the availability of internal funds. Imperfect capital markets create a hierarchy for the different sources of funds such that investment and financial decisions are not independent. The relation between corporate investment and free cash flow is investigated using the Bond and Meghir (1994a) Eulerequation model for a panel of 240 companies listed on the London Stock Exchange over a 6 year period. This method allows for a direct test of the first-order condition of an intertemporal maximisation problem. It does not require the use of Tobin's q, which is subject to mis-measurement problems. Apart from past investment levels and generated cash flow, the model also includes a leverage factor which captures potential bankruptcy costs and the tax advantages of debt. More importantly, we investigate whether ownership concentration by class of shareholder creates or mitigates liquidity constraints.

Voting power methodology offers insights to understand coalition building in collective decision making. This paper proposes a new measure of voting power inspired from accounting for the proximity between voters by capturing how often they appear in winning coalitions together. Using this proximity index, we introduce a notion of relative linkages among coalition participants as determinant of coalition building. We propose an application to the governance structure of the International Monetary Fund, with linkages being represented by bilateral volumes of trade between voters. The results are able to explain several important features of the functioning of this particular voting body, and may be useful for other applications in international politics.

We evaluate the accuracy of power indices by experimentally measuring the political power embodied in blocks of votes per se. The experiment incorporates several subjects interacting in online chat rooms under supervision. Chat rooms and processes for selecting subjects reduce or eliminate extraneous political forces leaving logrolling as the primary political force. Results show that two standard power indices reflect

In a simple yet illustrative model basic notions of classical vot-ing theory are extended to serve the goal of identifying the most influential actors in social influence dynamics. Feature of the model is that now the indirect power of those actors in democratic processes without institutional power (like insurgency and lobbyists) can be measured for a given social network structure.

In this paper we will discuss constraints on the number of (non-dummy) players and on the distribution of votes such that local monotonicity is satisfied for the Public Good Index. These results are compared to properties which are related to constraints on the redistribution of votes (such as implied by global monotonicity). The discussion shows that monotonicity is not a straightforward criterion of classification for power measures.

In a homogeneous jury, the votes are exchangeable correlated Bernoulli random variables. We derive the bounds on a homogeneous jury's competence as the minimum and maximum probability of the jury being correct, which arise due to unknown correlations among the votes. The lower bound delineates the downside risk associated with entrusting decisions to the jury. In large and not-too-competent juries the lower bound may fall below the success probability of a fair coin flip-one half, while the upper bound may not reach a certainty. We also derive the bounds on the voting power of an individual juror as the minimum and maximum probability of her/his casting a decisive vote. The maximum is less than one, while the minimum of zero can be attained for infinitely many combinations of distribution moments.

In the study, the relevance of several optimum-currency-area (OCA) criteria is formally worked out in a welfare approach. The optimum monetary-policy rules of the supranational central bank are derived within the Barro-Gordon framework, and consideration is given to how the welfare of the member countries of a currency union is affected by symmetric and asymmetric national output shocks. The welfare

Starting from Max Weber’s definitions of power we discuss the meaning of his concept Chance and its relationships to the probabilistic notions that play a central role in definitions of indices of measuring voting power. Using Martin Hollis’s distinction between two models of man—plastic and autonomous—we argue that the common measures of voting power when interpreted in terms of probabilities

IVIE working papers o®er in advance the results of economic research under way in order to encourage a discussion process before sending them to scienti¯c journals for their¯nal publication. * We want to thank M. Maschler and J. M. Zarzuelo for their insightful comments. This research has been supported by the Training and Mobility of Researchers programme initiated by the European Commission, by the IVIE, and by the DGES of the Spanish Ministerio de Educaci ¶ on y Cultura, under project PB96-0247.

THE International Monetary Fund (IMF) is attempting to enhance surveillance and harmonise rules related to member countries' banking and financial systems to strengthen the international financial architecture.1 However, the effi-cacy of these initiatives depends upon the level ...

The Banzhaf index, Shapley-Shubik index and other voting power indices measure the importance of a player in a coalitional game. We consider a simple coalitional game called the spanning connectivity game (SCG) based on an undirected, unweighted multigraph, where edges are players. We examine the computational complexity of computing the voting power indices of edges in the SCG. It is shown that computing Banzhaf values is #P-complete and computing Shapley-Shubik indices or values is NP-hard for SCGs. Interestingly, Holler indices and Deegan-Packel indices can be computed in polynomial time. Among other results, it is proved that Banzhaf indices can be computed in polynomial time for graphs with bounded treewidth. It is also shown that for any reasonable representation of a simple game, a polynomial time algorithm to compute the Shapley-Shubik indices implies a polynomial time algorithm to compute the Banzhaf indices. This answers (positively) an open question of whether computing Shapley-Shubik indices for a simple game represented by the set of minimal winning coalitions is NP-hard.

TheShapley-Shubik power index in a voting situation depends on the number of orderings in which each player is pivotal. TheBanzhaf power index depends on the number of ways in which each voter can effect a swing. We introduce a combinatorial method based ingenerating functions for computing these power indices efficiently and we study thetime complexity of the algorithms. We also analyze the meet of two weighted voting games. Finally, we compute the voting power in the Council of Ministers of the European Union with the generating functions algorithms and we present its implementation in the system Mathematica.

TheShapley-Shubik power index in a voting situation depends on the number of orderings in which each player is pivotal. TheBanzhaf power index depends on the number of ways in which each voter can effect a swing. We introduce a combinatorial method based ingenerating functions for computing these power indices efficiently and we study thetime complexity of the algorithms. We also analyze the meet of two weighted voting games. Finally, we compute the voting power in the Council of Ministers of the European Union with the generating functions algorithms and we present its implementation in the system Mathematica.

The concept of strict proportional power is introduced, as a means of formalizing a desire to avoid discrepancy between the seat distribution in a voting body and the actual voting power in that body, as measured by power indices in common use. Proportionality is obtained through use of a randomized decision rule (majority rule). Some technical problems which arise are discussed in terms of simplex geometry. Practical implications and problems in connection with randomized decision rules are indicated.

The likelihood that a firm will enact a management-sponsored antitakeover charter amendment depends on ownership structure. This implies that the adoption of antitakeover amendments may be anticipated. Then announcement returns provide a biased estimate of wealth effects. An estimator that corrects for the bias induced by anticipation indicates that the enactment of an antitakeover amendment is associated with a statistically significant decrease in shareholder wealth. The voting power of employee stock ownership plans and the chief executive officer plays a prominent role in determining whether a firm will adopt this type of takeover defense.