Dynamics and Stability of Constitutions, Coalitions and Clubs

A central feature of collective decision-making in many social groups, such as political coalitions, international unions, or private clubs, is that the rules that govern regulations, procedures for future decision-making, and inclusion and exclusion of members are made by the current members and under the current regulations. This feature implies that dynamic collective decisions must recognize the implications of current decisions on future decisions. For example, current constitutional change must recognize how the new constitution will open the way for further changes in laws and regulations. We develop a general framework for the analysis of this class of problems. We provide both an axiomatic and a noncooperative characterization of dynamically stable states and show that, under relatively mild assumptions, these exist and are unique. We then apply our framework to a variety of problems in political economy, in coalition formation, and in the analysis of the dynamics of clubs. Major insights that emerges from this framework are: (1) a particular social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society; (2) efficiency-enhancing changes are often resisted because of the further social changes that they will engender.