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

See all articles by Manwei Liu

Manwei Liu

affiliation not provided to SSRN

Eline van der Heijden

Tilburg University, CentER

Date Written: April 29, 2019

Abstract

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

Liu, Manwei and van der Heijden, Eline, Majority Rule or Dictatorship? The Role of Collective-Choice Rules in Resolving Social Dilemmas with Endogenous Institutions (April 29, 2019). CentER Discussion Paper Series No. 2019-011, Available at SSRN: https://ssrn.com/abstract=3379647 or http://dx.doi.org/10.2139/ssrn.3379647

Manwei Liu (Contact Author)

affiliation not provided to SSRN

Eline Van der Heijden

Tilburg University, CentER ( email )

P.O. Box 90153
Department of Economics
5000 LE Tilburg
Netherlands

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