Designing Consent: An Ethical Evaluation of Choice Architecture in Proxy Voting

Co-authors: T. Artiga González and P. Calluzzo.

Abstract

This paper examines how corporate management designs shareholder voting procedures in ways that shape, and sometimes distort, shareholder consent. Drawing on behavioral ethics and democratic theory, we present proxy voting as a form of corporate democracy and analyze how its “choice architecture” influences shareholder voting. Using hand-collected data from SEC proxy filings, we identify three pervasive nudging practices: norm nudges (board recommendations), default nudges (unmarked ballots counted as support), and slate nudges (vote-for-all structures). We present a normative framework to evaluate these practices ethically. Using mutual fund voting records, and a novel online experiment,  we show that these nudges also materially inflate shareholder consent, even when independent evaluators recommend opposition. Our findings reveal how procedural design can transform genuine consent into designed consent, raising questions about fairness and legitimacy with current corporate governance practices.