Supermajority Rule Research Articles

Nash implementation of supermajority rules

AbstractA committee of n experts from a university department must choose whom to hire from a set of m candidates. Their honest judgments about the best candidate must be aggregated to determine the socially optimal candidates. However, experts’ judgments are not verifiable. Furthermore, the judgment of each expert does not necessarily determine his preferences over candidates. To solve this problem, a mechanism that implements the socially optimal aggregation rule must be designed. We show that the smallest quota q compatible with the existence of a q-supermajoritarian and Nash implementable aggregation rule is $$q=n-\left\lfloor \frac{n-1}{m}\right\rfloor$$ q = n - n - 1 m . Moreover, for such a rule to exist, there must be at least $$m\left\lfloor \frac{n-1}{m}\right\rfloor +1$$ m n - 1 m + 1 impartial experts with respect to each pair of candidates.

THE APPLICATION FOR LEAVE TO APPLY TO COURT FOR REVIEW OF A SCHEME OF ARRANGEMENT IN TERMS OF SECTION 115 OF THE COMPANIES ACT 71 OF 2008 Sand Grove Opportunities Master Fund Ltd v Distell Group Holdings Ltd [2022] ZAWCHC 46

Schemes of arrangement in terms of section 114 of the Companies Act 71 of 2008 (the Companies Act) have become a prevalent mechanism of implementing business combinations, takeovers or restructurings of the share capital in South Africa. In contrast to the 1973 Companies that required court approval for a company to implement a scheme of arrangement, the implementation of a scheme of arrangement under the current Companies Act is initiated by the board of directors and is subject to the supermajority rule, that is, shareholder approval by way of a special resolution. One of the principal protective mechanisms for minority shareholders in a scheme of arrangement, as in the other fundamental transactions, is the appraisal remedy in terms of section 164 of the Companies Act – which acts as an exit mechanism for dissatisfied minority shareholders instead of them thwarting the implementation of a scheme of arrangement. Another protective mechanism for dissenting shareholders is the involvement of the court in schemes of arrangement, which is, however, limited to court approval or court review of the implementation of a scheme of arrangement in clearly circumscribed circumstances. In Sand Grove Opportunities Master Fund Ltd and Others v Distell Group Holdings Ltd and Others [2022] ZAWCHC 46 (Sand Grove), the Western Cape Division of the High Court (the court) dealt with some pertinent issues relating to the application for leave to apply for court review of schemes of arrangement under section 115(3)(b), (6) and (7) of the Companies Act. These issues included the standing to bring proceedings in terms of section 115, application for leave to intervene as co-applicants in these proceedings, condonation of a non-compliance with prescribed period within which the application for leave to apply for court review must be brought, as well as the validity of the meeting and the special resolution approving the scheme of arrangement. This note, therefore, examines the above key issues raised in Sand Grove and provides a critical discussion of the judgment and its significance. The note also highlights the practical implications of this case for companies, directors, shareholders (especially dissenting minority shareholders), beneficial holders of shares and other participants under schemes of arrangement.

Judicial review of supermajority rules governing courts’ own decision-making: A comparative analysis

AbstractThis article provides a comparative analysis of how courts have performed judicial review on supermajority rules governing courts’ decision-making. Through an empirical approach, covering the cases of the United States, Peru and Poland, the article argues that the supermajority’s legal source and the chronology of its establishment may influence the court’s ability to review such rules and the case’s outcome. Finally, the article addresses the paradox of whether courts must apply the very provision they are tasked to review.

Why would a majority agree to adopting supermajority rules when they empower a minority? The institutional choice of the National Assembly of Korea

ABSTRACT Despite the importance of supermajority rules in protecting minorities, our understanding of supermajority rules has been limited to the experience of the U.S. Senate. This study seeks to contribute to our understanding of institutional choice by introducing another case of supermajority-rule adoption. Once known for legislative brawls, the National Assembly of Korea reformed its procedures in 2012 to require a supermajority to pass controversial legislation. The evidence presented in this study suggests that supermajority rules were adopted in an attempt to reduce chaos and uncertainty in the lawmaking process by shifting the legislature from a norm-based one to a rule-based one. This article demonstrates this by drawing on official documents, interviews, and an automated text analysis of newspapers.

A core case for supermajority rules in constitutional adjudication

Abstract In this article, I present a conditioned argument—also called a “core case”—for using supermajority rules in constitutional adjudication. I hold that, given some assumptions, constitutional courts should replace majority rule with supermajority rules to declare statutes unconstitutional. I assume that (i) there are substantive standards for assessing the constitutionality of legislation; (ii) given reasonable disagreement, statutes should be presumed constitutional; (iii) my claims only apply to some constitutional adjudication systems; and (iv) my claims only apply to “well-functioning democracies.” Given these assumptions, I argue that constitutional courts should use supermajority rules to declare statutes unconstitutional for three reasons: first, supermajority rules may boost judges’ accuracy more than majority rule on mathematical grounds and on deliberative grounds; second, supermajority rules may increase constitutional courts’ reputation by signaling consensus; and third, supermajority rules may embody the presumption of constitutionality of legislation. I finish by tackling some possible objections. Specifically, I tackle the concern that, under supermajority rules, too many statutes that should be declared unconstitutional would stay constitutional; the concern that supermajority rules in constitutional adjudication could be used to erode a democracy; and the concern that, under supermajority rules, some declarations of unconstitutionality that one judges as correct may not have happened.

Supermajority politics: Equilibrium range, policy diversity, utilitarian welfare, and political compromise

The standard Bowen model of political competition with single-peaked preferences (Bowen, 1943) predicts party convergence to the median voter’s ideal policy, with the number of equilibrium policies not exceeding two. This result assumes majority rule and a unidimensional policy space. We extend this model to static and dynamic political economies where the voting rule is a supermajority rule, and the policy space is totally ordered. We show that the exact number of equilibria in these settings is an increasing correspondence of the supermajority’s size. Our findings have implications for the depth of policy diversity across structurally identical supermajoritarian political economies. We also examine the equilibrium effects of supermajority rules on utilitarian welfare and political compromise under uncertainty.

Marching (Senate Style) Towards Majority Rule

Abstract The United States Senate is marching, Senate style, toward majority rule. Chamber rules have long required super, rather than simple, majorities to end debate on major and minor matters alike. But occasionally over its history – and several times over the past decade – the Senate has pared back procedural protections afforded to senators, making it easier for cohesive majorities to secure their policy goals. Both parties have pursued such changes – sometimes imposed by simple majority, other times by a bipartisan coalition. Why has the pace of change accelerated, and with what consequences for the Senate? In this article, I connect rising partisanship and electoral competition to the weakening of partisan commitments to Senate supermajority rule. No one can predict with any certainty whether the Senate will yet abolish the so-called “legislative filibuster.” But pressures continue to mount towards that end.

Do supermajority rules really deter extremism? the role of electoral competition

This study investigates how supermajority rules in a legislature affect electoral competition. We construct an extensive-form game wherein parties choose policy platforms in an election. Post election, the policy is determined based on a legislative voting rule. At symmetric equilibrium, supermajority rules induce divergence of policy platforms if and only if the parties are sufficiently attached to their preferred platform. Thus, supermajority rules may not always lead to moderate policies once electoral competition is considered.

Brexit: A comparison of dynamic voting games with irreversible options

A large polarized electorate decides repeatedly between a reversible alternative (REMAIN) and an irreversible alternative (LEAVE) in an environment where the aggregate short-term effects of the decision vary from period to period. Decisions by simple majority or by a too low supermajority may perform poorly under circumstances where it is socially optimal to never LEAVE, as they can exhibit equilibria where LEAVE is chosen quickly. In general, a too low supermajority rule can have much higher welfare costs than a too high supermajority rule. If REMAIN also becomes permanent when it wins by a large enough margin, and if a new vote is triggered otherwise, particularly poor performances of the simple majority rule are avoided. The large asymmetry in potential welfare costs disappears, and the majority requirement becomes a relatively less important instrument.

Using supermajority rules to aggregate judgments of possibly biased experts

A group of n≥2 experts has to pick one winner from a group of m≥2 candidates. Different experts may have different judgments about who the best candidate is. A social choice rule (SCR) is q-supermajoritarian (with q≥n2+1) if, whenever a candidate is judged as best by at least q experts, that candidate is considered to be the deserving winner. Experts may be biased and their preferences are not necessarily aligned with their judgments. Then, the social planner has to design a mechanism that implements the SCR. We show that implementability of a q-supermajoritarian SCR in an ordinal equilibrium concept requires the group of experts to satisfy a condition of impartiality that depends on q (the higher q, the weaker the condition).

Constitutional locks

Abstract Legal designers use different mechanisms to entrench constitutions. This article studies one mechanism that has received little attention: constitutional “locks,” or forced waiting periods for amendments. We begin by presenting a global survey, which reveals that locks appear in sixty-seven national constitutions. They vary in length from nine days to six years, and they vary in reach, with some countries “locking” their entire constitution and others locking only select parts. After presenting the survey, we consider rationales for locks. Scholars tend to lump locks with other tools of entrenchment, such as bicameralism and supermajority rule, but we argue that locks have distinct and interesting features. Specifically, we theorize that locks can cool passions better than other entrenchment mechanisms, promote principled deliberation by placing lawmakers behind a veil of ignorance, and protect minority groups by creating space for political bargaining. Legislators cannot work around locks, and because locks are simple and transparent, lawmakers cannot “break” them without drawing attention. For these reasons, we theorize that locks facilitate constitutional credibility and self-enforcement, perhaps better than other entrenchment mechanisms.

Contractarianism, constitutionalism, and the status quo

The constitutional political economy (CPE) approach as developed by James Buchanan places emphasis on supermajority rules—in particular, a unanimity requirement for constitutional change. Critics argue that this approach “privileges the status quo” in two problematic ways: (1) alternatives are treated unequally, because the status quo requires a smaller coalition to be “chosen” than any other institutional arrangement selected to replace it; and (2) individuals are treated unequally, because those who happen to support the status quo have excessive power to impose their will on the larger group, implying that a minority illegitimately is privileged to block change. This is a serious and important challenge. At the same time, we argue that critics have conflated two analytically distinct issues in arguing that the CPE paradigm (and constitutionalism more generally) “privilege the status quo”. Moreover, we aim to show that in rejecting the “privileged position of the status quo”, critics must confront an equally challenging task: Providing a “measuring stick” by which the legitimacy of the status quo, and changes to it, can be judged. It is precisely skepticism regarding the possibility of providing a criterion of legitimacy that is independent of agreement that leads to the peculiar position of the status quo in Buchanan’s thought.

Is Majority Rule Justified in Constitutional Adjudication?

Abstract In this article, I challenge the use of a majority voting rule (majority rule) to declare statutes unconstitutional in many constitutional courts. To do this, I briefly present four main features of majority rule and assess whether these features (separately and jointly considered) provide definitive reasons for using this voting rule over others in constitutional adjudication. I conclude that these features do not provide such reasons either individually or taken together. This conclusion enables one to analyse whether constitutional courts should use other voting rules in constitutional adjudication, such as supermajority rules.

Intuitions about the epistemic virtues of majority voting

The Condorcet Jury Theorem, along with empirical results, establishes the accuracy of majority voting in a broad range of conditions. Here we investigate whether naïve participants (in the U.S. and Japan) are aware of this accuracy. In four experiments, participants were provided with information about an assembly voting to decide on one of two options, one being better than the other. In Experiments 1 and 2, participants were provided with specific parameters and they vastly underestimated the probability that the majority would select the right option. In Experiment 3, participants were provided with less specific information, and still underestimated the probability that the majority would select the right option. In Experiment 4, participants were asked to compare majority rules and supermajority rules. Most participants failed to grasp the relative weakness of supermajority rules. Our results are compatible with participant relying on a simple model of the voting situation based either on the competence of an individual voter, or on the minimum proportion required for a majority to form, making them largely blind to the “miracle of aggregation.”

Information acquisition and voting with heterogeneous experts

AbstractA social planner selects heterogeneously biased experts to (either sequentially or simultaneously) acquire costly signals, and then agents vote between two alternatives. To maximize social welfare, the social planner adopts an alternating mechanism—choosing extremely biased experts whose preferences oppose the pivotal voter's current preference—in the optimal sequential mechanism, whereas she chooses mildly biased experts in the optimal simultaneous mechanism. Despite the flexibility of a sequential mechanism, the optimal simultaneous mechanism can achieve strictly higher social welfare when information cost is low. Supermajority rules can dominate simple majority rule in terms of both information acquisition and social welfare.

Supermajority Politics: Equilibrium Range, Diversity, and Compromise

Do legislative voting rules affect the diversity of policies observed across structurally similar political economies, and if so, to what extent? To what degree do these voting rules affect legislative compromise and the stability of the social optimum? Using a spatial model of political competition with single-peaked preferences, we examine these questions in settings where changing incumbent or proposed policies requires supermajority consensus. We develop three findings pertaining to equilibrium policies that are immune to change by any supermajority coalition. First, we prove that at least one equilibrium policy exists and then find the maximum number of equilibrium policies that exist as a function of the supermajority's size. Policy diversity increases, in a nontrivial manner, in the size of the supermajority coalition needed to change the status quo, and the Median Voter Theorem is a particular case of the result with minimal policy diversity. Second, we find the optimal level of compromise needed by a leader to ensure that her proposed policy is not defeated and establish that compromise decreases in the supermajority's size. Third, we identify the minimal supermajority rule that ensures the stability of the social optimum. The robustness of these findings and their theoretical and policy implications are further investigated in the paper.

A Political Reciprocity Mechanism

This paper considers the problem faced by a political authority that has to design a legislative mechanism that guarantees the selection of policies that are stable, efficient, and inclusive in the sense of strategically protecting minority interests. Experimental studies suggest that some of these desirable properties can be achieved if decision-makers (e.g., legislators) are induced to display reciprocal and pro-social behavior. However, the question of how a voting mechanism can be designed to incentivize ``selfish individuals to display such behavior remains unresolved. We propose such a mechanism and find that it is a simplification of legislative procedures used in some democratic societies. This mechanism defines a new equilibrium concept--the reciprocity set--that satisfies all of the aforementioned properties under mild conditions, and it is easily implementable. In addition, it encourages positive reciprocity and generally protects minorities without having to make use of a supermajority rule as many real-world political institutions do. Finally, a comparative analysis shows that this mechanism has other desirable features and properties that distinguish it from other well-known political procedures.

Endogenous Political Rules: A Rationalization Based on Policy Importance

The rules that are employed to pass policies in legislative bodies vary widely. It is generally argued that policies that differ in complexity or importance level should be decided under different kinds of voting rules. While this question has been examined for static legislative mechanisms, an analysis of the precise relationship between the level of policy complexity and the type of voting rule is still missing for dynamic mechanisms. We address this problem from the perspective of a preference-blind political designer. Given the level of complexity of the decision that is to be made, the political designer's goal is to select the supermajority rule that avoids (1) policy instability; (2) guarantees efficiency; and (3) minimizes institutional status quo bias. We provide an answer to this objective problem, deriving a closed-form relationship between voting rule and policy complexity. Our analysis rationalizes the use of different rules to adopt different types of policy only when preferences are weak. When preferences are strong, the optimal rule is unique, and it does not vary by level of policy complexity. These findings significantly differ from those obtained for static mechanisms. Our study also implies that more complex policies are more likely to be persistent, even after a change in political preferences.

Do Judicial Review Theories Ground Majority Rule in Constitutional Courts?

In this article, I challenge constitutional courts’ use of a majority voting rule (hereinafter “majority rule”) to declare statutes unconstitutional from the standpoint of the prevalent theories of judicial review. Put differently, in this article, I examine whether the main theories of judicial review provide conclusive or definitive reasons for using majority rule over other voting rules to scrutinize the constitutionality of legislation. After reviewing these theories, I conclude that none of them provides such reasons. This conclusion is relevant since it suggests that neither democratic theory nor constitutional theory suffices to ground majority rule in judicial review. In turn, this means that there is a rather wide space to explore whether constitutional courts should use other voting rules—such as unanimity rule and supermajority rules—to control the constitutionality of statutes.

ESG and Responsible Institutional Investing Around the World: A Critical Review

This survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing. While there is no consensus on the exact list of ESG issues, responsible investors increasingly assess stocks in their portfolios based on nonfinancial data on environmental impact (e.g., carbon emissions), social impact (e.g., employee satisfaction), and governance attributes (e.g., board structure). The objective is to reduce exposure to investments that pose greater ESG risks or to influence companies to become more sustainable. One active area of research at present involves assessing portfolio risk exposure to climate change. This literature review focuses on institutional investors, which have grown in importance such that they have now become the largest holders of shares in public companies globally. Historically, institutional investors tended to concentrate their ESG efforts mostly on corporate governance (the “G” in ESG). These efforts included seeking to eliminate provisions that restrict shareholder rights and enhance managerial power, such as staggered boards, supermajority rules, golden parachutes, and poison pills.