kMajority Cost Simulation
Journal of International Money and Finance (2021)
Madeira Carlos
By Dougherty Keith L., Edward Julian, and Ragan Robi
Working Paper San Jose State University (2013)
Several authors have examined the optimal k-majority rule using a variety of criteria. We formalize and extend the original argument laid out by Buchanan and Tullock (1965) using the expected costs of a rational voter. In our model rational voters may be a member of one of several groups, representing different religious or ethnic backgrounds or clusters of people with similar preferences. Individuals make a decision theoretic choice about the k-majority rule which minimizes the sum of expected external costs and expected decision costs given the utility and expected voting behavior of others. We consider both up or down votes on a single proposal as well as voters over a series of proposals. We find that the optimal k-majority rule depends on a number of parameters, most notably the number of rounds needed to make a proposal that will pass under each k-majority rule. In some cases, the external cost function can actually increase over a range. In others larger k-majority rules can fail to pass Pareto preferred proposals.
Dougherty K., Edward J., and Ragan R. (2013) The Value of Formalism: Re-examining External Costs and Decision Costs with Multiple Groups. Working Paper San Jose State University.