Efficient, Anonymous, and Neutral Group Decision Procedures

Author(s): Walter Armbruster and Werner Boge

Source: Econometrica, Vol. 51, No. 5 (Sep., 1983), pp. 1389-1405
Published by: The Econometric Society
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 Econometrica,Vol. 51, No. 5 (September, 1983)

EFFICIENT, ANONYMOUS, AND NEUTRAL GROUP DECISION

PROCEDURES

BY WALTER ARMBRUSTER AND WERNER BOGE'

The well known result that every finite, strictly deterministic game with perfect informa-
tion has a unique solution unless the utility functions of the players lie in a low dimen-
sional exception space, is generalized to games containing chance moves. Two group
decision procedures, "voting by successive proposal and veto" and "voting by repeated
veto," are analyzed in this context. The first procedure is efficient, anonymous, and neutral
for an arbitrary number n of participants and an arbitrary finite set of alternatives, the
second only if n _ 3.

1. INTRODUCTION

GROUP DECISION-MAKING is a fundamental economic and political phenomenon;

one thinks of labor-management disputes, business negotiations, decisions of
federal and municipal governments, international trade settlements, disarmament
talks, etc. The most interesting problem related to such negotiations is of course
the question of optimal bargaining: how should a participant act in order to
reach an agreement which is to his greatest advantage? In order to answer this
question rigorously, the rules of the negotiation procedure and thus the strategic
possibilities of each participant must be precisely defined. This can be done
empirically or normatively. The empirical approach attemps to describe ob-
served, practical group decision procedures as realistically as possible and to
model them as noncooperative extensive-form games, whose equilibrium points
are then analyzed. Since real negotiations are very complicated however, only
simplified, idealized, or experimental procedures have been examined so far, and
even these games have a large number of equilibrium outcomes, so that no
definite conclusion about the bargaining behavior of the players can be reached
(cf. [15], for example).
The normative approach attempts to design rules for new negotiation proce-
dures such that the solution of the corresponding n-person game is unique in
some sense and satisfies certain desirable properties. This is not possible if
uniqueness is interpreted in the narrow sense of each player having a dominant
strategy; cf. [6]. A weaker uniqueness condition is H. Moulin's dominance
solvability [9], which requires that successive elimination of weakly dominated
strategies converges to a Cartesian product D = D, X ... X Dn of strategy sets
on which each player's utility function is constant. In this paper, we shall say that
an n-person extensive-form game has a unique solution if its set S of subgame
perfect equilibrium points is a Cartesian product S = SI x * X Sn of strategy
sets, and if the utility function of each player is constant on S. The product
requirement ensures that an equilibrium point will in fact result even if the
players do not know which equilibrium strategies their opponents choose,
whereas the constancy condition guarantees the uniquess of the equilibrium

'The research of Walter Armbruster was supported by Deutsche Forschungsgemeinschaft Grant

No. Bo 252/2-1. The authors are thankful to the Econometrica referees for their valuable comments.
1389
1390 W. ARMBRUSTER AND W. BOGE

outcome. Moulin has shown [9, Proposition 2] that all finite extensive form
games with perfect information and containing no chance moves, have a unique
solution in this sense, unless the utility functions of the players lie in a low
dimensional exception space.2 In Section 2 below we shall generalize this result to
games containing chance moves as well. The requirement of perfect information
(meaning that the participants act consecutively rather than simultaneously) is a
natural one for group decision procedures, so that a large variety of negotiation
procedures with precisely defined optimal bargaining strategies can be designed.
More difficult is the problem of implementation: The group decision proce-
dure must be designed in such a manner that the participants will actually follow
the procedural rules and not consider it necessary or desirable to supplement the
given formal procedure by extraneous informal bargaining, which is not amena-
ble to mathematical analysis. The latter is bound to occur, however, if not all
sources of dispute are resolved by the formal procedure. For example, if a group
decision involving three or more alternatives is made by a sequence of binary
choices taken by majority votes, the outcome will generally depend on the
sequence in which the alternatives are voted on. Unless this sequence is somehow
specified by the subject matter or dictated by a chairman, it will itself become a
source of dispute,3 which must be resolved before the formal voting procedure
can begin. If an optimal negotiation strategy for this situation is to be found, the
dispute concerning the agenda must also be incorporated into the formal
decision procedure. More generally, we require that the formal group decision
procedure should be designed in such a manner that the outcome does not
depend on any ordering of the alternatives. Procedures satisfying this property
are called "neutral" or symmetric across alternatives.
Similarly, many voting procedures require some committee members to have
special voting powers or arbitration rights without specifying how these individu-
als are to be chosen. It may happen that such privileges reflect inequalities in the
economic or military power of the participants, and thus may not be a source of
dispute, but in general an important part of the negotiation in such situations will
concern the determination of the roles of the participants. In order to avoid the
necessity of such informal bargaining, we require that the solution of a group
decision procedure should be "anonymous" or symmetric across persons.
Finally, if the outcome of a formal decision procedure is unsatisfactory to all
participants, additional subsequent bargaining will take place in order to improve
the result, or the procedure might not even be used in the first place. For
example, the "random dictator procedure," in which one participant is chosen at
random to dictate the outcome, is anonymous and neutral but it would not be
used by a committee in order to, say, divide a sum of money among its members.
2See also Gretlein's [7] reformulation of this theorem, giving a precise relationship between the sets
Xi' (in Moulin's notation) and the solution obtained by successive elimination of dominated
strategies. Since Xi' corresponds to our F,, of Proposition 2.1, the relationship between dominance
solvability and subgame perfect equilibrium points is clear. An earlier result on binary voting
procedures related to the above theorem is given by Farquharson [5].
3The possibility and prevalence of such agenda manipulation has been widely discussed (cf. [1,
12]).
 GROUP DECISION PROCEDURES 1391

Indeed, making the standard assumption that utility is a concave function of

money, each member would prefer an even division of the money to the outcome
of the above procedure, namely, a lottery in which each member has an even
chance of winning the entire sum. In general we require a group decision
procedure to be designed in such a manner that no matter what the utility
functions of the n participants are, the expected utility n-tuple of the outcome
should not be improved upon by the utility vector of some other possible
alternative. If a procedure satisfies this condition, it is called "efficient" or Pareto
optimal with respect to alternatives. Precise definitions will be given in Section 2
below.
Hence for many applications it is intrinsically necessary (and not just ethically
desirable) that the formal group decision procedure should at least be neutral,
anonymous, and efficient. This stresses the importance of the question whether a
strictly deterministic procedure exists having a unique solution satisfying the
above three properties. If the number of participants n, has a prime factor
smaller or equal to #A, the number of alternatives, the answer is no (cf. [10,
Proposition 1]). This result is discouraging, since negotiations usually involve a
small number of individuals deciding on a large number of possible alternatives,
that is, typically n is smaller than #A.
Fortunately, this dilema is avoided if chance moves are implemented in the
decision procedure. Indeed, in Section 3 we shall introduce a class of neutral
anonymous and efficient negotiation procedures known as "voting by successive
proposal and veto." An example of such a procedure is the following: One of the
n participants is selected at random to make a proposal, which is subject to veto
by the other participants. This step is repeated until either some proposal is
unanimously accepted or the tth proposal has been made, which must be
accepted, the number t being known before the start of the procedure. This
procedure has been examined in several diploma thesis papers (e.g. [8, 13])
written under the supervision of one of the authors, but a game theoretic proof of
its efficiency has not yet been published.
Another group decision procedure which will be analyzed in Section 4 is a
randomized version of "voting by repeated veto." The procedure itself (cf. [10, p.
256]) postulates a given ranking, or permutation 77: {1, . .. , n} - { 1, ... , n} of
the players. Proceeding in the order 7g(1),. . . , rr(n),77(1),. . . the players consec-
utively eliminate one of the possible alternatives, until only one remains, the
outcome of the procedure. The randomized version of this game first selects a
player permutation, g, at random using the uniform distribution, and then
proceeds with the game defined by g above. This modified procedure is neutral
and anonymous, but it is efficient if and only if n 3.
Similarly, any procedure which is not neutral can be made so by adding an
initial chance move selecting a random ordering of the alternatives. Thus, D. C.
Mueller's procedure, "voting by veto," [11] is neutral and efficient but not
anonymous, whereas H. Moulin's "voting by elimination" [9] is anonymous and
efficient but not neutral. The randomized versions of these procedures are
neutral and anonymous, but it is easily shown that they are not efficient.
1392 W. ARMBRUSTER AND W. BOGE

2. GAMES WITH PERFECT INFORMATION AND RANDOM MOVES

For the sake of completeness we shall briefly define subgame perfect equilib-
rium points, restricting ourselves to finite games with perfect information. A
general definition is found in [14].
Let Z = ZOU Z1 U * U Zn U E denote the player partition of a finite game
tree, ZObeing the set of nodes at which a chance move occurs, Zi (i = 1, ... , n)
the set of nodes where player i moves, and E the set of endpoints of the game
tree. For z E Z\E let F(z) denote the set of nodes immediately following z.
Since we are assuming perfect information, player i's strategy set, Xi, is the set of
all functions mapping the nodes of Zi into their direct successors, i.e., Xi
= fl EzzF(z). Define XOanalogously.
If xo E XO, ..., xn E Xn, we denote by xx x XI
x1o x xXn x idE the
uniquely defined mapping x: Z -* Z whose restriction to Zi is xi and whose
restriction to E is the identity map. Let X = {xo0X x I x .. >xXnx idEIXo
E XO . . ., xn E&Xn}. Letting x' denote the i-fold application of the function x,
we define T(z), the length of the subgame starting at z, as follows:
T(z) = maxmin{i E NoIx'(z) E E

Hence, if z E E then T(z) = O, whereas if z 4 E and z' E F(z) then T(z) > T(z').
The length of the entire game will be denoted by T= T(z*), where z*, is the
initial node of the game tree. Thus x T(Z) E E for all z E Z and all x E X.
Player i's utility function is a real valued mapping defined on the set C of
possible consequences or outcomes of the game, ui: C -* DR. Instead of identifying
C with the set of terminal nodes, E, some surjective mapping c: E -* C is
assumed to be given. The outcome function c: Z X XOx ... x Xn -* C can now
be defined as c(z,x0, . .. , xn) = c((x0 X x1 x * * > xxn x idE)T(z)). For each
z E ZO,Pz will denote the probability distribution of the chance move occurring
at z. We shall assume the various chance moves to be independent, i.e., the
probability distribution P on XOis the product measure, P = ?zEPZ0z.
If the players use the strategies x1, .. ., x,n player i's expected utility for the
subgame starting at z is

Ui(Z, . . ,
Xn) = E Ui (C(Z,Xo *... *
xig* Xn))P(Xo).
x0 E XO

Strategy n-tuples which are equilibrium points for all subgames are called
subgame perfect equilibrium points (SGPEP), that is, (x1, ... , xn) is a SGPEP of
the above game with perfect information iff for all z E Z and all i = 1, ... , n
.
Ui ( z, xi ,** , xn) = max ui(z, x1, . .. , xi, *.* .
Xn)
xi, (=X,

Each SGPEP is of course a Nash equilibrium point, but not vice-versa. If the
players use strategies x1, ... , xn in the subgame following z, the probability
distribution which P induces on C will be denoted c(z, x1, . .. , xn), that is for all
 GROUP DECISION PROCEDURES 1393

a Ez C
C(Z, x,. , x4)(a) = P(txo E X0jI(z,XOXP .. *, Xn)
= a}).
Let M l(C) denote the set of all probability measures on C, and define

(1) M= {(z',xi,.* xn)tz' EU U F(z),x,EXI,,. .xn EX

i-==I Z E- Z,

a finite subset of M l(C). The linear extension of ui to Ml'(C) will be denoted by

uii,that is, for all m E M l(C)

iii(m) = I ui(a)m (a).

aE c
Note that u-7(z,x,, ... , x) = i(c(z,x,, . . ., xv)). The appropriate generalization
of Moulin's "one-to-one" assumption [9, p. 1340] to games with random moves
can now be written as4

(2) Vm,m' E M, Vi, j= 1, . . .,n, iii(m) = ai (m')4= j (m) = ij(m').

Under this assumption the set of SGPEP's of the above game is particularly easy
to calculate. One recursively defines vi(z), the value to player i of the subgame
starting at z (z E Z), and F*(z), the set of optimal moves at z (z E Z, U * U
Zn) as follows: For z E E let vi(z) = ui(c(z)). Suppose vi(z') and, if z'
E Z, U ... U Zn, F*(z') have been defined for all z' satisfying T(z') ? t, and let
T(z)= t+ 1. If zeZ0, define vi(z) = zEF(z)vi(z')Pz(z).
, If z E Z i 0, let

F*(z) = E F(z) v(z) = z"&F(z)

Taking an arbitrary z* E F*(z), define vj(z) = vj(z*) for allj = 1, . .. , n. This

definition is meaningful, since vj(z*) does not depend on the particular z*
chosen, as the following proposition shows.

PROPOSITION 2.1: If (2) holds, then Vz E Z1 U ... U Zn, VZ1,Z2 E F(z), Vi,j
= 1, . .. , n, vi(Z) =Vi(Z2) Vj(Z,) = Vj(Z2)

PROOF: The proposition trivially holds for all z E Z1 U ... U Zn satisfying

T(Z) = 0, since this set is empty. Suppose it holds for all z' E Z, U . . . U Zn
satisfying T(z') _ t. For all such z' we can define F*(z') as above, and we denote
by F>i the set of all xi E Xi such that xi(z') E F*(z') for all z' E Zi, i 0,

4The most important special case in which assumption (2) is satisfied is when all voters'
preferences over M are strict, that is, each ii is injective on M. In this case the injectivity and hence
assumption (2) also holds for all utility functions in some neighborhood of (u,..., un). Assumption
(2) in its general form is more convenient for the proof of Proposition 2.1.
1394 W. ARMBRUSTER AND W. BOGE

satisfying T(z') t. We shall show that

(3) v1(z') = (Z7(',X1,. .. , Vx1 Ft,1 E. Ft,Xn

,
n
X")
for all z' satisfying T(z') _ t. Indeed, for arbitrary z E Zi, xo E XO,...., Xn E Xn
c(z, xo, ... ,Xn) = c(xi(z), xo, ... , xn), and hence, using the fact that P is a
product measure,

ui(c(z)) if z E E,

(4) U(z,X1,.
..,) u
{z?1(xj(z) X1,
.I . ., X") if z E
Zj& j 09

| uiZ1(z,x1, . .. ., xn)P(z ) if z E ZO,

zz'EF(z)

whence (3) easily follows for all z' such that T(z') = 0, . .. , t by induction.
In order to prove the proposition, let z E Z1 U ... U Zn 9 T(Z) = t + 1, Z1,Z2
E F(z), and let x1 E Ft1, . .., xn E&Ft,n. Applying (3), Vi(Zk) = Ui(Zk9 X1, .* . . Xn)
-
Ei(c(zk,xI, ... , xn)) for k = 1,2. Since C(Zk,X19 ... X E M, the proposition ,

follows from (2).

PROPOSITION 2.2: Under assumption(2) the set S of subgameperfect equilibrium

points of the above game with perfect informationis a Cartesianproduct; in fact
n
s= I| II F*(z).
i=1 zEZj

Morever, the utility function ui of each player is constant on S.

PROOF: Let xi(z) e F*(z) for all z e Zi, i = 1, ... , n. We use induction on t
to show that (x1, ... , xn) is an equilibrium point of all subgames of length t. For
t = 0 this is obvious. Suppose it holds for subgames of length t or less, and let
T(z) = t + 1, x' E Xi. If z E Zi, then

Ui(z9 X,* ... , xn) = Ui(xi(z),x1, . .. , xn) = vi(xi(z)), by (3),

vi.(x'(z)), since xi(z) E F*(z),

- u.(x'(z),x1, ... , xi', ... , xn), by induction,

whereas, if z E Z4,j # i, (Z x . . . xn) i.(z,xl,... xi' ... ,xn) follows im-

mediately from (4). Conversely, suppose (x1, ... xn) is a SGPEP but for some i ,

and some E z T - t
1(t), xi(z) X F*(z), being the smallest such integer. Define the
strategy xi' to coincide with xi on Zi\{ z}, and let x'(z) be an arbitrary element of
F*(z). Since x, E Ft6, we reach the contradiction u-7(z,x1, ... , xi, .. ., x)
-vi(z) > vi(xi(z)) = i(z,x1, . .. , xn). Finally, uz7(z*,x1, . .. , xn) = vi(z*) for all
(Xg ...** Xn) E=-S. Q.E.D.
 GROUP DECISION PROCEDURES 1395

The assumption (2) above is not very restrictive, since it holds for "almost all"
utility functions in a sense which we shall now make precise.
Recall that utility functions are uniquely determined only up to positive affine
transformations, that is, a person's strategy choice remains unchanged if au + /3
rather than u E R' is defined to be his utility function, where a, /3 E&R, a > 0.
We shall call u, u' E R'Fequivalent and write u--u', if real numbers a > 0 and /3
exist such that u' = au + /3. Obviously , is an equivalence relation on Rc. The
set of equivalence classes can be represented as follows: Let 0 denote the zero
vector in 0RC,and define

U =u (e Rc I u(a) =O and 11ull =I1}

a E= C

the set of "normalized" utility functions. Then every , equivalence class

contains exactly one element of U U {0}. Let X denote the uniform distribution
on U, which is just the # C-2 dimensional unit sphere. We shall say that almost
all utility functions satisfy some property P, if X-almost all u E U satisfy P, that
is, if a set N c Rc exists such that X(N n U) = 0 and all u E U\N satisfy P.

PROPOSITION 2.3: Let M be a countable subset of M '(C), the set of all

probability measures on C. Then the linear extension to M '(C) of almost all utility
functions is injective on M.

PROOF: The set N of all utility functions whose linear extension to M '(C) is
not injective on M is just the union of all sets N(m,m') = {u E RcI u(m)
= u(m')} such that m,m' E M, m m We wish to show X(N n U) = 0. Since
i'.
M is countable, it suffices to prove X(N(m, m') n U) = 0 for all m #4 m' E M.
Let e E Rc denote the vector (1, 1, . . ., 1). Considering M '(C) as a subset of
RC, the scalar product e (m - m') vanishes for all m, m' E M' (C). Hence, if
m i',M the set

L= {u E Rc Iu e = 0 and u *(m - m') = 0}

is a # C-2 dimensional linear subspace of DRc,whose intersection with the # C-2

dimensional unit sphere is a X-null set. Since L n U = N(m, m') n U, the proof is
complete. Q.E.D.

Since the set M defined in (1) above is finite, we have proven that for almost
all player utility functions u1, . . .i, u, the linear extensions ii,..., i-, are
injective on M and hence condition (2) is satisfied. By Proposition 2.2 the value
vj(z.) to player i of a game with perfect information (z* = initial node) can be
defined for almost all player utility functions. In order to show the dependence
of vi(z.) on u , . . ., un, we shall write vi(z*) = vi/(u1, ... ., un). The game is
called anonymous if for almost all utility functions and all player permutations
1396 W. ARMBRUSTER AND W. BOGE

,g:{1,...n)-{1,., n)
Vi* ( U,T( 1), . U,(n))= V,*(i)(Ull
. . . ,
Un) (i= 1, ., n).

The game is called neutral with respect to B (B c C) if for almost all utility
functions and all outcome permutations 9: C -* C such that the restriction of 9 to
C \ B is the identity map

vi* (U ? 69 ... ., Un ? 6)=V*?(u19 . *., Un, . i=1 . n).

The game is called efficient with respect to B, B C C, if for almost all utility
functions no a E B exists with v'(u1, ... , un) < ui(a) for all i = 1, ... , n. The
game is called e-efficient with respect to M, M c M 1(C), if for almost all
normalized utility functions no m E M exists such that for all i = 1, ... , n

Vi* (ul, . . ., Un) + e < i7,(m).

3. VOTING BY SUCCESSIVE PROPOSAL AND VETO

Voting by successive proposal and veto is a multistep procedure, each step

consisting of the following at most n + 1 moves:
1. A chance move selects one of the players i E { 1, ... , n} with probability
1/n.
2. Player i proposes some a E A, the set of possible agreements. Let a:
{1 ... , n - 1} ->{ 1 ... , n} \{i} be an arbitrary bijective mapping, ordering
the remaining players.
3. Player a(1) accepts or rejects proposal a.
4. If player a(1) has accepted, player a(2) accepts or rejects a.

n + 1. If players a(1), ... , a(n - 2) have accepted, player a(n - 1) accepts or

rejects proposal a.
The 0-step procedure consists of a single node whose outcome, W,is called the
conflict outcome. The t-step procedure is described as follows: The above step is
played. If all players accept a, the game ends and the outcome is a. As soon as
one player rejects a, the t - 1 step procedure is played.
Hence the set of outcomes is C = A U {w}; we do not specify whether or not
coE A. This permits us to analyze situations in which the failure of the partici-
pants to reach an agreement is a distinguished outcome. For example, if we
interpret X as the "status quo," the above game is a precise description of a
unanimity rule procedure, which can be used by a committee to propose some
new policy a E A, or leave things as they are, if no agreement is reached. Now it
has often been argued that unanimity is not a useful voting rule, since "it grants
to each member a right to veto every issue proposed, thus encouraging strategic
behavior, and the endless defeat of all issues" [11, p. 57]. However, by analyzing
the above game with w X A it can be shown that this argument is false; indeed,
strategic behavior leads to the immediate acceptance of a Pareto optimal agree-
 GROUP DECISION PROCEDURES 1397

ment in general. The reason that practical unanimity procedures do often result
in an endless defeat of all issues is in our opinion due to (i) the fact that such
procedures are not precisely defined, thus preventing the participants from acting
strategically, and (ii) the circumstance that the participants do not know each
others' preferences precisely enough. The first problem is resolved by the above
precise specification of the procedural rules, whereas the second requires the
theoretical framework of games with unknown utility functions, which will not be
developed here (see, e.g., [2, 3]).
In order to avoid having to discuss uninteresting special cases, the following
assumption will be made, which trivially holds if w E A,
(5) ui(co)-maxui(a) for all i = 1, . . . , n.
aEA

If this assumption did not hold it would also be difficult to justify why A should
not be enlarged to include o.
The game tree of the t-step procedure can be described as follows. The set ZO
of nodes at which a chance move occurs, can be partitioned as ZO=
ZO U ... U ZO, each z e ZObeing the initial node of a subgame consisting of s
steps. The set of successors of z E ZO can be written F(z) {(z, i)I i
= 1, . . . , n}. The player nodes are either of the form z' = (z, i) (z E ZO, i _ n),
in which case z' E Zi and F(z') = {(z',a)I a E A}, or, if players a(1), ....
a(j - 1) (1 -Ij n - 1) have already accepted a E A, of the form z" = (z, i,
a, + +j_ l), in which case z" E Z and F(z") = {(z", + ), (z", -)} Here
a: {1, . . ., n- - } {1, . . . , n}\{i} is an arbitrary bijection, " +" denotes ac-
ceptance and "-" denotes rejection of proposal a. The terminal nodes are either
of the form z'=(z,i,a,+ . . . , +n- ), for which c(z') = a, or of the form
z" = (z, i, a, + I...,+j_ - ) (z C Z 1,j n
n-1), in which case c (z")-=c.
The order a in which the players respond to some proposal may arbitrarily
vary from one step to the other. This ordering is formally necessary if the
procedure is to be described as a game with perfect information, in which players
must act sequentially. The following proposition shows, however, that the solu-
tion of the game does not depend on the ordering used.

PROPOSITION 3.1: The value v1' to player i of the t-step procedure "voting by
successiveproposal and veto" exists for almost all player utilityfunctions and can be
calculated as follows: v. = ul(w). For s = 0,1, . . . let AS = {a A IVi ui(a)
> vs}. If A 5 0, let ajs C A S such that uj(ajs)`-uj(a) for all a E A s.

+ { ui(ajs if As #0,

vis if As =0.

PROOF: For almost all utility functions assumption (2) holds and vi(z) can
be calculated recursively as in Section 2: Let z E Zs" and let Zj= (z, i,
1398 W. ARMBRUSTER AND W. BOGE

a, + . .. * +j E Za,(j) * If j = n - 1, then v,(]j) (zj) = max{ ua(j) (a), vas(j)}, and

hence
-
up(a) if U,(j)(a) > Va(j)

vp(z9)-l VS otherwise,

for all p = 1, . . , n, using Proposition 2.1. Proceeding by induction, we find

thatforallj= 1,.. .,n-1 andallp= 1,. ..,n,

p( if uk(a) > v,Y(k) for all k =j,.. ., n- 1,

vpj otherwise.

In particular,

vi(z,i,fa) u=(a) if uj(a) > vjs for all j7 i,

vis otherwise.

Defining Ais = {a e A IV]j #4 i uj(a) > vjs}, we can write vi(z, i) = maxt vi(z, i, a)
Ia E A} < max{ui(a) Ia E Ais} U {vis}. If A#s7 0, then there is an a E Ais such
that ui(a) > vis and hence vi(z, i) = max{ ui(a) Ia E Ais} = max{ ui(a) Ia e A s}.
If A s = 0, then ui(a) - viS for all a E Ais and hence vi(z, i) vis. If for some
a E A vis = ui(a), then vi(z, i, a) = vis and hence vi(z, i) = vis. If not, then ui(a)
< vis for all a E Ais. By (5), vi -? max{ ui(a) Ia E A }. Assuming that vil, . .., vif
can be calculted as in the above proposition, we see that vis max{ ui(a) a
E A}. Therefore Ais A. For a e A\Ais we have vi(z,i,a) = vis and hence
vi(z, i) = v s in this case as well. Defining afs as in Proposition 3.1 if A s 7 0,
Proposition 2.1 implies that for all p
(z,i)p= {Jafs if A s z0,
VP
) [VPS if A s 0,

and
Vn
V+1
vp+l = v(z) =
n vp(z,i), p = ,... n. Q. E. D.

Note that the s-step procedure is efficient with respect to A if and only if A s is
empty. If A s 7- 0, then vf +1 > v/ for all i and A s + 1= A s (in particular, for some
& { 1, . , n} ajs A s\A s+ 1). Since A is finite, there exists a smallest nonnega-
j .E
tive integer t such that A' = 0. Hence, for all s _ t, the s-step procedure is
efficient with respect to A. It is in fact efficient with respect to C, since vi ' v5i
for all i.
If 1 -< s < t, the actual decision process corresponding to a subgame perfect
equilibrium point of the s-step procedure consists only of one step; namely, if
player i is chosen, he will propose some a e A s- 1 satisfying ui(a) ' ui(b) for all
b e A s-1, and all other players will accept this proposal. If s > t and a SGPEP is
used, the s-step procedure will actually end after s - t + 1 steps. During the first
 GROUP DECISION PROCEDURES 1399

s - t steps player i will propose some alternative out of A \A/t which will be
rejected. In the next step, which is the start of the t-step procedure, the game
ends as above. Although the number s must be decided upon before the s-step
procedure can be played, the determination of s will not be a source of dispute,
since for all s ' 0 and all i vs' v? . Furthermore, using the formulas for v7
above, it can easily be shown that "voting by successive proposal and veto" is
anonymous and neutral with respect to C \ tc.
In many situations the conflict outcome w will be specified in a natural
manner by the economic, political, or military framework of the negotiation
procedure. The actual conflict which results if no agreement is reached need not
be described game theoretically in order to apply the above group decision
procedure. In other situations where, for example, the participants must reach
some definite agreement from a given set A, it is desirable to design a specific
conflict resolution procedure, which has A as the set of possible outcomes and
which takes the place of the 0-step procedure above. If this latter procedure is
anonymous and neutral with respect to A, then the entire t-step procedure will
also have these properties. In particular, the version of voting by successive
proposal and veto described in the introduction, in which the conflict resolution
procedure is just the random dictator procedure, is anonymous, neutral with
respect to A = C, and, for sufficiently large t, efficient with respect to C.
Since the outcome 5(z*,xI, . .. , xn) of a game with random moves is itself a
probability distribution on C, it can be argued that a group decision procedure
should be efficient not merely with respect to C but with respect to M '(C). We
shall show that for arbitrary e > 0 a modification of the above procedure, in
which the players may propose not merely elements of A but certain lotteries on
A, is e-efficient with respect to M '(A) U {X}. Particularly, if w E M '(A), the
modified procedure is e-efficient with respect to M '(C).
For a C A let a E M '(A) denote the probability measure whose entire mass is
concentrated on a, that is, a(a) = 1. For an arbitrary natural number k E N
define the finite set Lk C M '(A) of lotteries as follows:

Lk= t a(a)a' E a(a) = k andVa&E Aa(a) EJNo}

ka EA a EA

Let Fk denote the following modification of voting by successive proposal and

veto: The players may propose elements of Lk rather than merely of A. If some
proposal m E Lk is accepted by all other players, the alternative a C A is selected
with probability m(a). The set of outcomes C is unchanged, C = A U {wX},but
the set Mk of induced probability measures defined by (1) varies with k. Note
that for all k 1 Mk C M', where

M'= {m E M'(C)IVa E Cm(a) E}

is the set of probability measures on C with rational coefficients. We assume that

each player's utility function ui: C--> R satisfies

(6) U1 is injective on M' (i=1,...,n).

1400 W. ARMBRUSTER AND W. BOGE

Since M' is countable, this condition is not very restrictive, being satisfied for
almost all utility functions, by Proposition 2.3. Since (6) implies (2), the value vi/
to player i of the t-step procedure 'k can be calculated for arbitrary k as in
Proposition 3.1: Let AS = {m E Lk I ui(m) > vif Vi}. If A s = 0, then vis+ =vis;
otherwise visf - (Iln)2fl i(mS) where mjsE As, m odified
Since Lk is finite, some natural number tk exists, such that the-=tk-step modified
procedure 'k is efficient with respect to Lk U {X}.
Each m E M '(A) can be weakly approximated by some m' E Lk if k is chosen
large enough. More precisely, for all e > 0 there is a k = k(E) E N such that for
all m E Ml(A) there exists an m' E Lk satisfying |u(m) - ui(m')I < e for all
normalized utility functions u E U. (Proof: Let 2 A/e < k E=N. Let b E A.
For all a E A\{b} let a (a) ERN0 such that a (a) ? km(a) < ao(a) + 1. Let a (b)
= k - ,a7,b o(a). Then m' = ,ae A(a(a)/k)a' is easily verified to be the desired
approximation to m.)
It follows, that for arbitrary e > 0, there exist t, k E N such that the t-step
modified procedure 'k is e-efficient with respect to Ml(A) and hence with
respect to M '(A) U {w}. Indeed, letting k = k(E) and t = tk as above, suppose
vi' < ii(m) - E for some m E Ml(A) and all i = 1, . .. , n. There exists an
mt E Lk such that for all i i2i(m)< iij(m') + e and hence vi' < iii(m'), contradict-
ing that 'k is efficient with respect to Lk.
Specifically, if t : log(E/2V2i)/log(1 - 1/n) and k - 2V2# A/E, then the t-
step modified procedure 'k is e-efficient with respect to M'(A), for 0 < e K 1.
(Proof: Applying Proposition 3.1, induction on s shows that ui(a) - vis <(1 -
/n)s(ui(a ?)-vvi) for all a E As and i = 1, .. . , n. If ui E U and (1-1/n)'
c/2V2,
E ?
then ui(a,?) - vi,=<4 and Va e(A' ui(a) v.'+ E/2, implying e/2-
efficiency with respect to Lk of t-step 'k for all k. If k _ 2V2# A/E, each
element of Ml (A) is in an e/2-neighborhood of some element of Lk, proving
e-efficiency with respect to Ml(A).)
The above technique of modifying a group decision procedure which is
efficient (or e-efficient) with respect to A in order to make it e-efficient with
respect to Ml(A) is quite general, being applicable to other procedures-such as
"voting by repeated veto" discussed in the next section-as well.
Finally, note the results, which we have obtained for the above t-step proce-
dure, remain valid even if the players do not know the utility functions of their
opponents, as long as they know the corresponding preference profiles on the
finite set Lk U {w,w,.w . . , Xtl} of probabilitymeasures,where ws+l = (1/n)
z, =,mjs and mjS is defined recursivelyas above. If A s=0, S+ = s. The
definition of mjs does not depend on the players' utility functions, but merely on
their preference relations over the set Lk U { ,w . .., s}. For the unimodified
procedure (k = 1) the information requirement reduces to the weak assumption
that each player knows each other player's preference profile on A U {w,
W) .. Wt-l
(x )}
4. VOTING BY REPEATED VETO

Given a finite set A of alternatives and an ordering 7: {1, ... , n}

- {1, ... , n} of the n players, "voting by repeated veto" prescribes that the
 GROUP DECISION PROCEDURES 1401

players, following the order 7T(l), .. ., 7(n),7T(l), ... consecutively eliminate

one alternative each, until only one remains. More precisely, let the cardinality of
A be m, for k EN let k denote the unique element of { 1, ... , n} which is
congruent to k modulo n (that is, there exists an integer s such that k = sn + k).
Defining 7T'(k)= 7T(k), the order in which the players veto is 7'(1), . . ., 7'(m -
1), that is, first player 7T'(1)vetoes some alternative al E A, then player 7T'(2)
vetoes one of the remaining alternatives a2 E A\ a}, . . , and finally player
7'(m -1) vetoes some alternative amI ECA\ta1, . . a2}. - The remaining
alternative {am} = A \ { a1, . . . , am-l } is the outcome of the procedure.
Throughout this section we shall assume that each player's utility function
Ui: A -R is injective. The total order on A defined by ui will be denoted ', that
is, a -b u.(a)? u.(b). For B c A, the minimal element in B with respect to
the order will be denoted miniB, thus ui(miniB) = min{ui(b) Ib E B)}. The
results of Section 2 imply that if the players choose subgame perfect equilibrium
strategies (xl . I xn) E S, the outcome J(z*,x1 . I xn) does not depend on
the particular strategies chosen. This unique outcome, which we denote a', can
be calculated as follows (cf. [10, p. 259]): Let 7 denote the reverse ordering of the
players, that is, for k = 1, . , m - 1, F(k) = 7T'(m- k), and define

a = min,0)A, a,q = min-(k)A\{ aI, * a

(k = 2, ... ., m-1)

then {am} = A\{aV, . a. ,

In the following, H shall denote the set of all orderings of the players, i.e., the
set of bijective maps 7: {1, . . ., n)}-*, . . ., n }.

LEMMA 4.1: Let n = 3, g, E , k c {1, . . , m}. There exists an h c

{1, . . .,hm}, h-k + 3, such that a,.. ., a7} C {a', . .a a.

PROOF:The case m - k + 3 being trivial, we shall assume m > k + 3 in the

following. Furthermore, the abbreviations ak for a7 and bk for aka will be used.
1. k= 1: There is an h E {1,2,3} such that a(h) = q(l). Abbreviate F(1)=: i.
If aI tb ,...,bh.I}, then a1?,min,A\tb ..., =bh, while bh
=-miniA = a1, that is, al = bh. Thus atI Eb1, . . .h, b}.
2. In order to prove the induction step, we first consider the case a(k)= Fi(k)
: i. By the induction hypothesis at, . . . Il} c b1, . . ., bh -} for h = k +
3. If ak E A\b 1, ... , bh-} then

ak = miniA\{ a,, . . . ak-I

= miniA\{bl, . . ., bh-} = bh

Thus ak E {bI, * * I, bh}-

3. Suppose now a(k) Tr(k) =:i. Then there is an h E {k + 1, k + 2} such
that a(h) = i. We shall prove: if M t b1, . . * I bhI
ak then bh M {a *.* * v ak-I}.
Hence, if ak E tb1, .- .I bh -I}I then bh --miniA\t a1, . .. , ak -} = ak as well as
1402 W. ARMBRUSTERAND W. BOGE

ak ?i bh. This provesak E {b, . . , bh}. Thus it suffices to contradict

(*) ak{(bl,...,bh_l} and bhE{al,...,ak-l}=: B.

If (*) holds, then bh = a, for some t E { 1, ... ,k - l}. Let j = 97(t). Obviously
j# i, otherwise t + 3 c k < h follows, which by the induction hypothesis implies
the contradiction

bhE {a,, . . . , a,) C {bi, . .. , bt+3} c {bl, . . .h, )-

Therefore an s E { h - 1, h - 2) exists, satisfying s(s) =j. Since bs <j bh = a, it

follows that bs C { a, . . . , a, I}; otherwise we would reach the contradiction
b_5-?minjA \ { a1, . .. , a, - I} = a,. Hence { bs, bh} C B. If k = 2 we have contra-
dicted (*), where #B = k - 1 is assumed. If k > 2 then bh-3 E B as well, since
ak ?ibh >ibh-3. Since ak X (b, ... , bk3}, the induction hypothesis implies
{bl, . . ., bk-3} CB. Hence {bl, . . ., bk-3,bh-3,bS,bh} is a subset of B; a
contradiction since the first set contains k elements, whereas # B = k - 1.

PROPOSITION 4.2: Let E = {a,n I 7 E H). If n ? 3, there exists no a E A such

that a >iminiEfor all i = 1, ... ., n.

PROOF: For n = 2 the proof is given in [10, p. 268], or in [4]. For n = 3 denote
ei = miniE, and suppose a > i ei for i = 1, 2,3.
#
1. First consider the case 4el, e2, e3} = 3. Let g E H, let a = ak for some
k_- m, denote i = 7F(k), and let ei = ah for some h _ m. Obviously k > h,
otherwise we would have ah >iminiA\{a', . . . , a _r} = ak, contradicting e1
< i a. By the above Lemma E c { a,m 3, ... , a,,}, and hence m -3 _ h < k, that
is, a e {am3,...
amT} ., as well. Thus E U {a} = {am-3, ... , am} = {e(,e2,e3,
a). Note that ei = miniE U {a}, and in fact ei = mini(E U {a})\B for all B C E
such that e, 4 B. Denote j = -
(m-1), j' = (m-2), j" = r(m-3). Then

am3 = minj A\{a', * . , a,n4} = minj E U {a) = ej,

am-2 = minj (E U {a})\{ ej } = ej1, since ej,, z- ej,,

m- = minj(E U {a})\ { ej, , ej,} = ej, since ej _ { ej- , ej,}.

Hence a = a'. Since q7was arbitrary, this implies E = {a}, a contradiction.

2. Suppose #{e, e2, e3) = 2; without loss of generality el = e2. For some
E IIHe1= am. Let a = ak1 for some k < m and denote i = Fi(k). Since a'k
< iam, while a > i ei and a >2e2 = e , we must have i = 3. Let e3 = ah and] =
-?(h). Since ah' <ja, while e3>ie1 and e3 >2ee, j= 3. If h _ k, ah -3
min3A\{ a, . . ., ak-}) = ak1, contradicting e3 <3a. Hence h < k, and in fact
hc k-3 since TF(h)=.r(k). For all a EH {a a,h...,a}c {a,a...,aha+3}
C {al,... ., a,_-1 by the above lemma. This contradicts the fact that e3 = a
for some a E II.
 GROUP DECISION PROCEDURES 1403

3. Suppose e1=e2=e3. Let X E II, e =a*', a =ak, i= (k). If h k, then

ah \{a7,
.E. ., and hence ah -iak,
a 7} contracting ei <ia. Hence
h < k-' m for all g, contradicting the fact that el = a' for some a E H. Q.E.D.

Consider now the randomized version of the above procedure, in which some
(= H is first chosen with probability 1/ n! and then the procedure defined by 17
above is played. Since the SGPEP's of the randomized game coincide with those
of the games defined by the various (=-H, the value of the randomized game to
player i is vi = (I/n!)E,, =eui(a, ). Since vi_ ui(ei) for all i, the above proposi-
tion implies: there exists no a E A such that ui(a) > vi for all i = 1, . . ., n, if
n - 3. In other words, the randomized version of "voting by repeated veto" is
efficient with respect to A if n - 3. If n ' 4 this is false, as is shown by the
following counterexample.
Let n ' 4 and A = {a, b, c}. Let k be the smallest integer such that 2k ' n. For
= 1, . .. , k let ui(a) < ui(b) < ui(c), whereas for i = k + 1, . .. , n let u1(a)
> u1(b) > ui(c). Since a utility function is determined only up to positive affine
transformations, we may assume without loss of generality that ui(a) = 0, ui(c)
= 1 if i-' k, whereas if i > k, ui(a) = 1, ui(c) = 0. The following proposition
shows that for all utility functions in a "rather large" set, the solution of the
randomized version of "voting by repeated veto" is not Pareto optimal.

PROPOSITION 4.3: If in the above example ui(b) > (n + 1)/2(n - 1), then ui(b)
> vi.

PROOF: H is the disjoint union of the sets

HlI= { 7 E IHI 7T(1) _ k and 7T(2)_ k}

H2= {7TEH17T(1) > k and T(2) > k}, and

13 = H\(HI U 112)'

whose cardinalities are respectively (n - 2)! k(k - 1), (n - 2)!(n- k)(n - k - 1),
and (n -2)! 2k(n - k). For all 7 E III, a3 = c; for 7 E H1, a3 = a; for 7 E 173,
a"= b. Hence
f (2k(n - k)u1(b) + (n - k)(n - k - 1))/n(n - 1) if i > k,
l (2k(n - k)ui(b) + k(k - 1))/n(n - 1) if i= k

and ui(b) > vi iff

ub > (n-k)(n-k-1 )/(n(n-1 )-2k(n-k)) if i > k,

I
k(k-l)/(n(n-1)-2k(n-k)) if i=' k.

If n is even, then n = 2k and hence ui(b) > vi iff ui(b) > 1/2. If n is odd, then
1404 W. ARMBRUSTER AND W. BOGE

n = 2k - 1 and hence ui(b) > vi iff

f (n + 1)/2(n-1) if i> k

For arbitrary i and n ? 4, a sufficient condition that ui(b) > vi is therefore

ui(b) > (n + 1)/2(n - 1).

5. SUMMARY

The design and analysis of a group decision procedure is meaningful only if it

can be expected that the participants will not supplement the given formal
procedural rules by extraneous, informal bargaining, not incorporated in the
mathematical model. We have argued that for this reason a group decision
procedure should at least be neutral (with respect to the alternatives under
discussion), anonymous, and (ex ante) efficient. The only procedure known so
far satisfying these properties for an arbitrary number n of participants and an
arbitrary finite set A of alternatives is "voting by successive proposal and veto"
described in Section 3.
Two versions of this procedure are provided, corresponding on the one hand to
situations where, if no agreement is reached, a given conflict outcome X will
result, and on the other hand to situations where the negotiations must end in
agreement on some alternative in A. The procedure consists of at most t steps,
the number t having to be decided upon before negotiations begin. Efficiency
(with respect to A U {X} and with respect to A respectively) of the procedure is
guaranteed only if t is sufficiently large, for example, t ? #A. Another bound
t(c, n), not depending on the cardinality of A is also given, such that for
t _ t(E,n) the t-step procedure is c-efficient with respect to A. With this bound
e-efficiency can be ensured even with respect to M 1(A), the set of all probability
measures on A, provided the participants are allowed to propose lotteries on A.
In Section 4 a randomized version of the widely studied procedure "voting by
repeated veto" was examined, since this version was previously known to be
neutral, anonymous, and-if there are only n = 2 participants-efficient with
respect to A. We have proven that efficiency also holds for n = 3 but, surpris-
ingly, not for n ' 4.

Universityof Heidelberg

ManuscriptreceivedMarch, 1982; final revisionreceivedJuly, 1982.

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Mathematical Economics, ed. by 0. Moeschlin and D. Pallaschke. Amsterdam: North-
Holland, 1981.
 GROUP DECISION PROCEDURES 1405

[3] ARMBRUsrER, W., AND W. BOGE: "Bayesian Game Theory," in Game Theoryand Related Topics,
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[5] FARQLJHARSON, R.: Theory of Voting. New Haven: Yale University Press, 1969.
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[7] GRETLEIN, R. J.: "Dominance Solvable Voting Schemes: A Comment," Econometrica, 50(1982),
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