The Trembling Chairman Paradox

Abstract

The Chairman Paradox (Farquharson, 1969) is a classical observation in voting games showing that a Chairman endowed with tie-breaking power might end up with her worst outcome. The analysis posits three players whose preferences build a Condorcet cycle and invokes Iterated Elimination of Weakly Dominated Strategies (IEWDS) to select a unique equilibrium. However, IEWDS is a controversial procedure which exhibits well-known weaknesses. This work relies on non-controversial equilibrium refinements instead. For any cardinal payoffs representing the preferences, two pure-strategy equilibria are trembling-hand perfect, the paradoxical one and another one where the Chairman attains her best outcome. The original paradox is restored (and shown not to actually depend on IEWDS) if one considers the stronger concept of proper equilibrium. The analysis casts new light on a classical paradox and illustrates the difference between properness and trembling-hand perfection in a relevant example