Optimal voting rules for two-member tenure committees

A tenure committee first votes on whether to hire a candidate; if it does, it receives an informative performance signal, and then votes on whether to tenure the candidate; rejection at either stage returns the committee to a candidate pool, endogenising the value of the outside option. A candidate's fate depends only on the behaviour of two 'weather-vane' committee members. Committee members may vote against favoured candidates if the weather-vane is opposed; enthusiastic assessments by one of these weather-vanes may harm a candidate's chances by increasing others' thresholds for hiring him; sunk time costs may lead voters who voted against hiring to vote for tenuring him, even after a poor probationary performance. For two member committees that are patient and perceptive, the optimal voting rule is a (weak) majority at the hiring stage and unanimity at the tenure stage; when such committees are impatient or imperceptive, the double (weak) majority rule is optimal. Perversely, the performance of a patient, imperceptive committee improves as its perceptiveness further declines. Consistent with practice, falling threshold rules are not optimal. Results on optimal voting rules are also presented in limit cases as committee members' beliefs become more correlated. Finally, we compare the model to a discrete-time European options model.