Majority Rule Determination and Uncertainty Aversion: A Critical Systematic Review

Abstract

This article surveys the issue of uncertainty in the constitutional design, with emphasis on the majority rule determination, from the Constitutional Political Economy (CPE) perspective. The analysis starts from the seminal contribution to CPE – The Calculus of Consent: Logical Foundations of Constitutional Democracy – of Buchanan and Tullock (1962), and reviews the relevant behavioral models of majority rule determination in the light of their policy implications. In these models, the constitutional stage is described as a game, whereas the postconstitutional stage is modeled either as a game or a lottery. From a behavioral point of view, the main finding is that risk aversion leads voters to prefer a higher majority threshold. This result reflects a psychological distortion: the fear of losing and being subject to a majority tyranny. However, more recent experimental evidence suggests that voter’s aversion to uncertainty might have originated from the ignorance of the objective probabilities of outcomes (winning, losing, status quo); that is, from ambiguity, not risk. Therefore, extended models of decision making are needed in order to better capture heterogeneity of voters’ preferences on majority rules.