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 propose to the full governance committee a total value of all bonuses. The corporation's rule states that the subcommittee may bring a proposal before the full committee under a predetermined 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 member of the seven-member governance committee over alternative total amounts to allocate for bonuses are single-peaked and symmetric about each member’s ideal point, and are arrayed as follows: Bobby and Emma: 0; Amy: 1,500; Cathy: 6,000; Frank: 7,500; Geri: 10,000; and David:12,000

1. The subcommittee is composed of Frank, Geri, and David. What is the subcommittee’s most preferred level of funding?

2. Last year the governance committee allocated $3,000 for bonuses, and this is seen as the status quo. Assuming the subcommittee brings a proposal to the full committee under a closed rule, what is the subcommittee’s proposal, and what will be the outcome? Why?

3. Now assume that the subcommittee is organized as an open rule committee. Will the open-rule subcommittee bring a proposal to the floor? If so, what will it propose? What will be the outcome?

4. Now assume the corporation follows “zero-based budgeting” where the status quo is assumed to be 0. In this case, what would be the policy outcome in a closed and open rule subcommittee?