Why So Much Consensus?

2021 ◽  
pp. 95-115
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Decision Making ◽  
Market Failure ◽  
Holistic Approach ◽  
Individual Characteristics ◽  
Collective Decision ◽  
Collective Decision Making ◽  
Pareto Principle ◽  
Market Failures ◽  
Full Agreement ◽  
Clear Cut

An even more holistic approach to the problem is adopted by looking at how collective decision-making impacts the choices and characteristics of individual agents, e.g. their shareholdings, their beliefs about economic prospects, or even their preferences. The thesis is that individual characteristics shape collective choices and are at the same time shaped by them, forming a duality between persons and groups. The analysis is deployed on the network of affiliation of investors to firms. Indeed, suppose the Pareto principle holds at both the collective and individual levels, then a full agreement between all agents occurs within a cluster of investors and firms, despite potentially severe market failures—the ‘single thought’ theorem. Efficiency results from the endogeneity of individual characteristics, yet the theorem is strikingly strong and clear-cut. An analysis of what it takes for the Pareto principle to hold is proposed in each of the three contexts of market failure.

Democracy in the Firm

2021 ◽  
pp. 38-59
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Decision Making ◽  
Political Stability ◽  
Collective Decision ◽  
Majority Voting ◽  
Optimal Rate ◽  
Collective Decision Making ◽  
Market Failures ◽  
Democratic Principle ◽  
The Social ◽  
Decision Making Problem

The problem of collective decision-making arising from market failures is addressed using the democratic principle applied within the assembly of shareholders. A basic requirement is imposed (the Pareto principle): collective choices should not be at odds with the interests of all shareholders, as expressed by their preferences. This requirement puts bounds on what the collective can choose: it should remain within the set of averages of what the shareholders want. Further refining these bounds, a notion of political stability is proposed; it is defined with respect to (super) majority voting. One searches for the smallest rate of super majority for which a stable collective choice exists. This optimal rate is reviewed under classical assumptions from the social choice literature. It is shown how the dimensionality of the collective decision-making problem and the polarization of the electorate critically impact political stability, and hence the optimal rate of super majority.

Making a Virtue of Necessity

2021 ◽  
pp. 116-132
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Decision Making ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Axiomatic Characterization ◽  
Collective Decision ◽  
Collective Decision Making ◽  
Pareto Principle ◽  
Group Agency ◽  
Corporate Social

The Pareto principle can be read as a positive hypothesis, reconciling theory with reality, or as a normative hypothesis, standing for a behavior that might be nudged or not, depending on the desirability of its consequences. The behavioral underpinnings of the Pareto principle are reviewed, together with its ethical foundations. In particular, the thesis of adaptive preferences is critically examined, and an axiomatic characterization of such preferences is proposed. Their likeliness is explored in light of the duality between persons and groups, a classic notion of theoretical sociology. Finally, a contribution to the reflection on group agency and corporate social responsibility is provided. It is argued that environmental and social responsibility can emerge from collective decision-making of selfish individuals depending on the governance adopted.

Introduction

2021 ◽  
pp. 1-10
Author(s):  
Hervé Crès ◽  
Mich Tvede
Keyword(s):  
Decision Making ◽  
Market Mechanism ◽  
Collective Decision ◽  
The Political ◽  
Collective Decision Making ◽  
Market Failures ◽  
Publicly Traded ◽  
Majority Principle ◽  
The Social ◽  
Decentralized Market

The central puzzle of the book is introduced: Why is there so much consensus among shareholders of large firms? Although trading on the market forges agreement between shareholders about the firms’ objectives, residual yet substantial disagreement should persist because of market failures. To resolve the puzzle, a vision of the political economy of the (publicly traded) firm is outlined, showing 1) how the upstream operation of a decentralized market mechanism makes collective decision-making in the firm easier and more stable; and 2) why the democratic (majority) principle is likely to promote economic efficiency as a politically stable choice. Yet more is needed: a vision of the social economics of shareholders showing how collective decision-making shapes individual preferences in a way that promotes the alignment of shareholders. These two visions are laid out in the two parts of the book.

Islands of Stability: Engaging Emergence from Cellular Automata to the Occupy Movement

2014 ◽  
Vol 5 (1) ◽  
Author(s):  
Andrew Pickering
Keyword(s):  
Decision Making ◽  
Cellular Automata ◽  
Black Box ◽  
Collective Decision ◽  
Collective Decision Making ◽  
Occupy Movement ◽  
History Of ◽  
The 1960S

"Instead of considering »being with« in terms of non-problematic, machine-like places, where reliable entities assemble in stable relationships, STS conjures up a world where the achievement of chancy stabilisations and synchronisations is local.We have to analyse how and where a certain regularity and predictability in the intersection of scientists and their instruments, say, or of human individuals and groups, is produced.The paper reviews models of emergence drawn from the history of cybernetics—the canonical »black box,« homeostats, and cellular automata—to enrich our imagination of the stabilisation process, and discusses the concept of »variety« as a way of clarifying its difficulty, with the antiuniversities of the 1960s and the Occupy movement as examples. Failures of »being with« are expectable. In conclusion, the paper reviews approaches to collective decision-making that reduce variety without imposing a neoliberal hierarchy. "

Corruption and Anticorruption in Democratic Athens

2017 ◽  
Author(s):  
Claire Taylor
Keyword(s):  
Decision Making ◽  
Participatory Democracy ◽  
Collective Decision ◽  
Civic Culture ◽  
Collective Decision Making ◽  
Alexander The Great ◽  
Political Equality ◽  
Individual Judgment ◽  
Collective Judgment ◽  
Hidden Knowledge

The chapter examines a major corruption scandal that involved the Athenian orator Demosthenes and an official of Alexander the Great. This episode reveals how tensions between individual and collective decision-making practices shaped Athenian understandings of corruption and anticorruption. The various and multiple anticorruption measures of Athens sought to bring ‘hidden’ knowledge into the open and thereby remove information from the realm of individual judgment, placing it instead into the realm of collective judgment. The Athenian experience therefore suggests that participatory democracy, and a civic culture that fosters political equality rather than reliance on individual expertise, provides a key bulwark against corruption.

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