PERFECT COMPETITION: An ideal market structure characterized by a large number of small firms, identical products sold by all firms, freedom of entry into and exit out of the industry, and perfect knowledge of prices and technology. This is one of four basic market structures. The other three are monopoly, oligopoly, and monopolistic competition. Perfect competition is an idealized market structure that's not observed in the real world. While unrealistic, it does provide an excellent benchmark that can be used to analyze real world market structures. In particular, perfect competition efficiently allocates resources.
Visit the GLOSS*arama
The guidelines followed by groups of individuals or members of society when making collective or joint decisions that involve casting formal indications of choice (that is, votes). The five most noted voting rules are majority, super majority, unanimity, plurality, and weighted. These rules determine if a choice is or is not approved by the voting group. Voting rules are important for the study of public choice and government inefficiencies that arise in the voting process due to the median voter, logrolling, and the voting paradox. Voting rules are the guidelines established in a election process to determine when an action, candidate, or policy is or is not approved. Without such guidelines there's no way of knowing the outcome. All sides can claim victory. If everyone wins, then no one wins. No decision is made.
The most common voting rule is majority, with the decision going to the side with one vote more than fifty percent. In some cases a super majority, with the standard being something greater than fifty percent, is used. The extreme case of super majority is unanimity, with a decision requiring unanimous approval. Another variation is plurality, with one side receiving the most votes although not majority. A last option is weighted, with importance of a particular vote based on something other than one person, one vote.
Public choice reveals that government inefficiency can arise through the voting process. The median voter principle indicates note only that the median voter determines the outcome of an election using the majority rule, but that the preferences of this voter does not necessarily reflect what is best for society. The voting paradox indicates that groups might cast votes for three or more options that are inconsistent. Logrolling arises when voters trade votes to ensure the success of two or more separate elections when each would not achieve success alone.
Five RulesFive common voting rules are majority, super majority, unanimity, plurality, and weighted.
These voting rules can apply to society-wide general elections (such as that for the President) or for small groups (such as a committee of three). While some of the inefficiency voting problems revealed in the study of public choice are more likely for larger groups of voters, other problems are more important for smaller groups.
- Majority: In most elections the majority rules. The candidate or option receiving the majority of the votes is the winner. The majority is defined as one vote more than fifty percent of the total number of votes cast. If 100 votes are cast, the majority is 51 votes. If 100 million votes are cast, the majority is 50 million and one (50,000,001).
- Super Majority: In some elections a super majority is required for victory. A super majority is a specified fraction of votes greater than 50 percent and less than 100 percent. For example, a super majority of two-thirds is required for Congress to override a legislative veto by the President. A growing number of state and local governments require a super majority approval, usually in the range of 60 to 75 percent, for an increase in taxes.
- Unanimity: Under some circumstances unanimous approval is require. That is, every voter must cast the same vote. Unanimity is used in elections where there is no room for doubt or disagreement. The most common example is court cases where a jury must vote unanimously for conviction or acquittal. Private clubs also employ unanimity vote when admitting new members.
- Plurality: From time to time an election is won with a plurality of the votes. A plurality is defined as the most votes obtained when more than two candidates or options exist, but none receives a majority. If, for example, two of three candidates running for office receive 33 percent of the vote, then the third candidate with 34 percent receives the plurality. Presidential primary elections, which can have up to a dozen candidates, are commonly won with a plurality of the votes.
- Weighted: While most elections place an equal weight on each vote cast (one person, one vote), some elections attach different weights to the votes. For example, the vote cast by one person might count twice as much as the vote cast by another. Elections for corporate officials typically assign voting weights based on the number of ownership shares held by the voters. Weights have also been based on the amount of land owned, the position held in a organization hierarchy, and even the ethnicity of the voter.
Voting ProblemsPublic choice indicates that the voting process is one source of government inefficiency. Efficiency is obtaining the greatest possible satisfaction from available resources. When people make consumption decisions directly, they do so based on the satisfaction they received. However, when government leaders in a representative democracy make the decisions, preferences are conveyed by voting. Public sector inefficiency often arises when the voting process does not convey preferences accurately.
Here are three noted voting problems.
- Median Voter: This voting principle, one that is well known to politicians, is that the median voter determines the outcome of an election. The median voter is the one with an equal number of voters on either side of the vote. As such, the vote cast by THE median voter is the deciding vote. However, this median voter's preference might not generate the best, that is, efficient, result.
- Voting Paradox: While the preferences of individuals is what we call transitive and consistent, the preferences of voters might not be consistent. That is, as a group, voters might prefer candidate A to candidate B and candidate B to candidate C, but then prefer candidate C to candidate A. This is not only paradoxical and confusing, it also can be inefficient.
- Logrolling: This is the process in which voters trade votes to ensure the passage of two separate issues neither one of which would receive approval on its own. This is commonly done in legislative bodies. It's also something that can lead to an inefficient use of resources.
Voting ApathyAnother voting source of government inefficiency results from rational decisions made by voters (and as it turns out, nonvoters). A rational decision is undertaking an action if the benefits of the action outweigh the costs, or alternatively, not undertaking the action of the costs outweigh the benefits. Rational decisions result in what are termed rational ignorance and rational abstention.
- Rational Ignorance: This is the decision NOT to become informed about a topic (such as what a political candidate wants to do) because the cost of acquiring the information is more than the expected benefit. Prospective voters might decide that it's not really worth their efforts to get ALL of the details on every candidate and issue on the ballot. They rationally choose to be ignorant.
- Rational Abstention: This is the decision NOT to do something (such as vote in an election) because the cost of taking the action is more than the expected benefit. Prospective voters might decide that it's not really worth their efforts to participate in the political process or vote in an election. They rationally choose to abstain.
VOTING RULES, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: March 1, 2024].
Check Out These Related Terms...
| | | | | | | | | | |
Or For A Little Background...
| | | | | | | | | | |
And For Further Study...
| | | | |
Back to the WEB*pedia
Today, you are likely to spend a great deal of time strolling around a discount warehouse buying club hoping to buy either car battery jumper cables or a dozen high trajectory optic orange golf balls. Be on the lookout for jovial bank tellers.
Your Complete Scope
This isn't me! What am I?
The average length of a "business lunch" is about 36 minutes.
"The human race has only one really effective weapon and that is laughter."
-- Mark Twain
Tokyo Stock Exchange
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.