Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs

40 Pages Posted: 16 Oct 2002

See all articles by Hans Gersbach

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

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Date Written: July 2002

Abstract

We introduce democratic mechanisms where individual utilities are not observable by other people at the legislative stage. We show that the 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 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 also illustrate that higher dimensional uncertainty about project parameters can make it easier to achieve first-best allocations and that universal equal treatment with regard to taxation is undesirable.

Keywords: Democratic Constitutions, Unobservable Utilities, Double Majority Rules, Flexible Agenda Cost Rules

JEL Classification: D62, D72, H40

Suggested Citation

Gersbach, Hans, Democratic Mechanisms: Double Majority Rules and Flexible Agenda Costs (July 2002). CESifo Working Paper Series No. 749. Available at SSRN: https://ssrn.com/abstract=322764

Hans Gersbach (Contact Author)

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Centre for Economic Policy Research (CEPR)

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