4. A seven-member governance committee of a corporation is charged with allocati

Question

4. A seven-member governance committee of a corporation is charged with allocating funds for end-of-year bonuses, and a special subcommittee is appointed to research and then pro- pose to the full governance committee a total value of all bonuses. The corporation's rules state that the subcommittee may bring a proposal before the full committee under a prede- termined amendment procedure (either an open or closed rule). All subcommittee and committee decisions are made using majority rule; the minimum the committee may allocate is $0 and the maximum is $12,000. The preferences of each members of the seven-member governance committee over al ternative total amounts to allocate for the bonuses are single- peaked and symmetric about each member's ideal points, and are arrayed as follows: a Sidney Verba et al., 1967, "Public Opinion and the war in Vietnam," Ameri- can Political Science Review 61, no. 2 (1967): 317-33.

Explanation / Answer

1. The preffered level of funding will be based on maximum amount i.e., $12000

2. If the sub committee brings the proposal under closed rule then the proposed amount for bonuses will be based on amount voted by majority in sub committee and as per closed rule such amount can be changed by only sub committee members and not by 7 members committee.

The outcome will be the 7 members commiitee will not be able to make single peak decisions.

3. If sub committee brings the proposal under open rule the any of the commiitees could recommend changes to the proposal brought to floor by sub committee. In such cases it may happen that the committee prefers for single peaked decision which stays unbetten by open rule.

4. Under zero based budgeting everything is taken from a new view point and in such cases the open rule will be preffed because each member of both committee will be having the rights to vote and debate for the right decision and amount of bonuses to be given.

If it goes on closed decision then decision of either of committees would be considered.

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