33 Pages Posted: 1 Dec 2004
Date Written: June 2004
The size of a supermajority required to change an existing contract varies widely in different settings. This paper analyzes the optimal supermajority requirement, determined by multilateral bargaining behind the veil of ignorance. The optimum is determined by a tradeoff between reducing hold-up power of small groups and reducing expropriation of minorities. We solve for the optimal supermajority requirement as a function of the distribution of voter types, the number of voters and the degree of importance of the decision. The findings are consistent with observed heterogeneity of supermajority requirements in different settings and jurisdictions.
Keywords: Supermajority, majority rule, qualified majority, special majority, constitutions, social contract, incomplete contracts
JEL Classification: D63, D72, D74, F34, G34, H40
Suggested Citation: Suggested Citation