Informational Limits to Democratic Public Policy: The Jury Theorem, Yardstick Competition, and Ignorance

Abstract

Condorcet's jury theorem provides a possible explanation for the success of democracies relative to other forms of governance since the late industrial revolution. In its modern form, the jury theorem predicts that majority decisions will be well informed, because they are based on far more information than possessed by any single voter. On the other hand, it is evident that democratic politicians and policies are not always as good as the jury theorem implies they should be. This paper uses simulations to explore the power and limitations of majority rule as an estimator of candidate or policy effectiveness. The simulations demonstrate that a moderate number of slightly informed voters can make very accurate choices among candidates using majority rule. However, voter ignorance can nonetheless be a significant problem for the accuracy of majority decisions.

Keywords: Elections, Rational Ignorance, Jury Theorem, Delegation, Expert's Dilemma, Simulated Elections, Delegation, Referenda, Efficiency of Democracy

JEL Classification: H110