“if a investor doesn’t review a proposal, we assume that they are submitting an unconditional sell bid.” Of ALL of their shares, at any price?
Yes!
Seems a way to force a sale at a low price.
This only happens if the all the proposals have a low price, including the “Change Nothing” proposal. The hope is that at least one proposal will be valued at at least the true current value of the company. The “Interaction with a stock market” section even includes a mechanism to force the winning proposal value and the price on the stock market to match.
More abstractly, here’s an argument that if a group of actors could force a shareholder to sell at a low price under my sealed-bid formulation, they could do a similar amount of damage to that shareholder in a standard futarchy. They would have to suppress the value of every proposal. To do so, they must themselves be shareholders (so they can submit sell bids) and convince people not to submit buy bids. This is extremely difficult and costly. But if they are power enough to control the bids in this way, then in the standard futarchy they could force through a proposal that gives away all of the value of the company.
I think if the entire market (buyers and sellers) was super lazy, this might happen by default. If this laziness is a problem, I think there are ways to modify the convention (or even let each market participant set their own convention). Overall, I think this risk is still worth the benefit of being able to accept unlimited bids!
Yes!
This only happens if the all the proposals have a low price, including the “Change Nothing” proposal. The hope is that at least one proposal will be valued at at least the true current value of the company. The “Interaction with a stock market” section even includes a mechanism to force the winning proposal value and the price on the stock market to match.
More abstractly, here’s an argument that if a group of actors could force a shareholder to sell at a low price under my sealed-bid formulation, they could do a similar amount of damage to that shareholder in a standard futarchy. They would have to suppress the value of every proposal. To do so, they must themselves be shareholders (so they can submit sell bids) and convince people not to submit buy bids. This is extremely difficult and costly. But if they are power enough to control the bids in this way, then in the standard futarchy they could force through a proposal that gives away all of the value of the company.
I think if the entire market (buyers and sellers) was super lazy, this might happen by default. If this laziness is a problem, I think there are ways to modify the convention (or even let each market participant set their own convention). Overall, I think this risk is still worth the benefit of being able to accept unlimited bids!