Majority Rule or Dictatorship? The Role of Collective-Choice Rules in Resolving Social Dilemmas with Endogenous Institutions
CentER Discussion Paper Series No. 2019-011
49 Pages Posted: 23 May 2019
Date Written: April 29, 2019
Collective-choice rules aggregate individual choices into a group choice. This study addresses the role of collective-choice rules in a social dilemma situation in which group members can repeatedly choose a combination of institutions to achieve self-governance. Specifically, we investigate three collective choice rules: majority voting, dictatorship and rotating dictatorship. We identify a direct and an indirect channel through which collective-choice rules may affect groups’ behavior and performance in the game.
Our main findings are:
(1) In terms of the direct effects, there is no evidence of a “democracy premium" (i.e., cooperation level is higher under the institutions chosen via a democratic rule than when the same institutions are chosen via a non-democratic rule).
(2) In terms of the indirect effects, institutional choices produced by a fixed dictator are more stable than produced by rotating dictators.
(3) Overall, groups with a fixed dictator earn the highest payoffs.
Keywords: collective decision-making; social dilemma; institutions; majority rule; dictatorship; cooperation
JEL Classification: C92; D02; D71
Suggested Citation: Suggested Citation