D'Hondt method

The d'Hondt method is a method for allocating seats in party-list proportional representation. Israel and Austria are among the places that use this allocation system. This system favors large parties slightly more than the other popular divisor method, Sainte Laguë[?], does. The method is named for Belgian mathematician Victor d'Hondt[?].

Allocation

After all the votes have been tallied, successive quotients are calculated for each list. The formula for the quotient is V/(s+1), where V is the total number of votes that list received, and s is the number of seats that party has been allocated so far (initially 0 for all parties). Whichever list has the highest quotient gets the next seat allocated, and their quotient is recalculated given their new seat total. The process is repeated until all seats have been allocated.

The order in which seats allocated to a list are then allocated to individuals on the list is irrelevant to the allocation procedure. It may be internal to the party (a closed list[?] system) or the voters may have influence over it through various methods (an open list[?] system).

The rationale behind this procedure (and the Sainte-Laguë procedure) is to allocate seats in proportion to the number of votes a list received, by maintaining the ratio of votes received to seats allocated as close as possible.

Variations

In some cases, a threshold or barrage is set, and any list which doesn't receive that threshold will not have any seats allocated to it, even if it received enough votes to otherwise have been rewarded with a seat.

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Original source @ wikipedia.