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Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

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Author Info
Gersbach, Hans

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Abstract

We develop democratic mechanisms where individual utilities are not observable by other people at the legislative stage. We show that an appropriate combination of three rules can yield efficient provision of public projects: first, flexible and double majority rules where the size of the majority depends on the proposal and verifiable parameters and taxed and non-taxed individuals need to support the proposal; second, flexible agenda costs where the agenda-setter has to pay a certain amount of money if his proposal does not generate enough supporting votes; third, a ban on subsidies. We provide a rationale why double majority rules are used in practice. We also show that higher degrees of uncertainty about project parameters can make it easier to achieve first-best allocations and that universal equal treatment with regard to taxation is undesirable.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5013.

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Date of creation: Apr 2005
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Handle: RePEc:cpr:ceprdp:5013

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Related research
Keywords: democratic constitutions; double majority rules; flexible agenda cost rules; unobservable utilities;

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Find related papers by JEL classification:
D62 - Microeconomics - - Welfare Economics - - - Externalities
D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H40 - Public Economics - - Publicly Provided Goods - - - General

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References listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Francesco Giovannoni & Toke S. Aidt, 2004. "Constitutional Rules," Econometric Society 2004 North American Summer Meetings 540, Econometric Society. [Downloadable!]
    Other versions:
  2. Felix Bierbrauer & Marco Sahm, 2006. "Informative Voting and the Samuelson Rule," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2006_18, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  3. Felix Bierbrauer & Marco Sahm, 2006. "Informative Voting and the Samuelson Rule," Discussion Papers 159, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
  4. Aidt, T.S. & Giovannoni,F., 2005. "Critical Decisions and Constitutional Rules," Cambridge Working Papers in Economics 0523, Faculty of Economics, University of Cambridge. [Downloadable!]
  5. Felix Bierbrauer & Marco Sahm, 2008. "Optimal Democratic Mechanisms for Taxation and Public Good Provision," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2008_09, Max Planck Institute for Research on Collective Goods. [Downloadable!]
  6. Hans Gersbach & Lars Siemers, 2005. "Can Democracy Educate a Society?," IZA Discussion Papers 1693, Institute for the Study of Labor (IZA). [Downloadable!]
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