Economic Policy, Problem 2-1, Exercise sheet 2: Decision-Making Mechanisms

Imagine a situation where you are elected into the student parliament of the University Siegen. You have to organize the parliament’s voting on implementing a student ticket for a route Siegen-Frankfurt. Since you are the designer of the voting procedure, you have to define the “optimal” fraction of total votes m, that is, the size of majority needed to pass your issue. In doing so, you consider the costs of time loss through decision making (negotiating etc.) and the external costs of having an issue pass which leaves a lot of students unsatisfied.