This system was developed by Thomas Hare (c. 1857). It is used to elect legislatures in the following jurisdictions:
For more detail, see http://www.electoral-reform.org.uk.
The above description has a loophole - the order in which votes are counted can impact on the result. This is because different counting orders will result in different votes being "surplus".
To illustrate, assume an election for two council seats with three candidates (A, B, C) where three votes are required to be elected (Q=3). Voting as follows:
7 Votes: ABC ABC ABC ACB ACB BAC CABIf the three ABC votes are counted first, the final two "ACB" votes will contribute to C - giving C the second seat. But, if the two ACB votes (along with one ABC) vote are counted first, the remaining two ABC votes will give B the second seat.
A modern "tweak" to STV (as used recently here in New Zealand, for example) to avoid this is as follows:
If Candidate A receives N 1st place votes, and N > Q, the value of all those 1st place votes is reduced to Q/N (just enough to elect Candidate A). The remaining partial vote (N-Q)/N is "refunded" back to each ballot and then allocated to the next placeholder.
Using the same example:
7 Votes: ABC ABC ABC ACB ACB BAC CABCounting first place votes gives: A=5, B=1, C=1
But A only needs 3 votes to be elected - she only needs 3/5 of the votes she got.
So, all the ballots for A are refunded 2/5 of a vote, leaving the following (we don't show A since she has been elected):
5 Votes @ 0.4: BC BC BC CB CB 2 Votes @ 1.0: BC CBCounting these gives: B=2.2, C=1.8
Now, we apply Rule #6 from above, eliminating the lowest polling candidate (C) and giving the second seat to B.
Since all votes are considered together, the result is more stable.
A notable downside of this is the amount of extra processing - doing counts by hand becomes prohibitively complex for anything more than toy demonstrations, requiring the use of computers to deliver results in a timely fashion.
Just my 2c -- BevanArps.