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Participation quorums in costly meetings

Research output: Contribution to Journal/MagazineJournal articlepeer-review

Published
<mark>Journal publication date</mark>04/2014
<mark>Journal</mark>Public Choice
Issue number1-2
Volume159
Number of pages20
Pages (from-to)53-62
Publication StatusPublished
Early online date1/08/12
<mark>Original language</mark>English

Abstract

Meetings of shareholders, societies, and clubs often require a minimal participation quorum. In the absence of a quorum, no valid decisions can be made; thus, decisions are postponed to a later meeting. This paper examines the effect of such quorum constraints on both individual behavior and collective outcomes in a model of costly meetings. We show that when a binding quorum constraint delivers an immediate decision, it also induces a welfare loss with respect to the outcome that prevails when no quorum applies, potentially including policy distortions. When the quorum requirement is high and causes the decision to be postponed, the number of participants in the (second) meeting may decrease with respect to the zero-quorum rule.