Collective decisions:
 
 

    Constitution:
 
 

        Constituion vs. laws:
 

        Constitution as a contract:  Public choice regards a constitution as an agreement among the people in a democracy.

            Helps them accomplish three ends:

            1.

            2.

            3.
 

            Note:  the public goods "nature" of national defense and enforcement of property rights is not technical in nature, it is due to the implicit assumption that members of the collective have already specified that no one shall be excluded.
 

    Definition of a Constitution:

       Means for the members of a large community:

    (1)

        These can include: (see chart p. 6)
 
 
 

    (2)
 

         This consists of two parts:

            a)

            b)
 

Electing Politicians

    Due to the high costs of hiring agents, it is reasonable to assume that members of a community would want to turn the hiring of some agents over to a special group of other agents.

    Have two classes of agents:

        (1)  Politicians:
 
 

        (2)  Bureaucrats:
 
 

                Two types of bureaucrats:

                    a)  appointees:
 

                    b)  long-term bureaucrats:
 

                        Long-term bureaucrats introduce two kinds of biases into
                        collective decision-maing:

                            1.  conservativism:
 
 
 
 
 

                            2.  Larger government bias:
 
 
 
 

                                Power of the bureaucrats to sway legislators:

                                    (1) voters:
 

                                    (2) have specialized knowledge and
                                       functions:
 
 

The Problem of Choosing Politicians:

        The collective decision to hire politicians has two parts:  choosing candidates and deciding which candidate will be hired.

        Examinations vs. a set of election rules:
 
 

        Personal characteristics such as age, education, length of residence
        in a society, etc.?
 

        Deciding which candidate wins: If the number of candidates that
        the rules specify is 5 for example, which one wins?  Must have:

      Voting Rules:

        1.  The unanimity rule:  all must agree.  The only voting rule certain to
            lead to Pareto-preferred public good quantities and tax shares.

                Two main criticizms:

                    a)
 

                    b)
 
 
 
 

                           However:

        2.  Majority Rule:  Choose the candidate who is ranked first by more
            than half of the voters.

                External costs:  the difference in utility levels actually
                secured and those that would have been secured under a full
                unanimity rule.

              The optimal majority (James Buchanan and Gordon Tullock):
                % of the committee at which the external costs (loss in utility)
                plus the decision-time costs are minimized.  Must trade-off the
                external costs with costs of obtaining unanimity.

              Graph (The Optimal Majority):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

            Note:  Since these costs are likely to differ from issue to issue
              there is no optimal voting rule for all issues.

          Majority rule and redistribution:  Redistribution to the majority takes place through the inclusion in the larger community budget a good that is of benefit to only a subset of the community (public goods which are only used by some for example -- our D1 and D2 example).  When a good is collectively purchases and supplied to the community in equal quantities per person.  There is an efficiency loss because of the constraint placed on each individual's behavior, when all are forced to consume the same quantity of the good.

             Logrolling and the majority rule:
 

                    Majority rule with trading can lead to too much government
                    (Tullock).  The worst examples of logrolling are in which
                    private or local public goods are added to the agenda
                    for redistribution purposes to be financed out of the
                    public budgets at a higher level of aggregation than is
                    appropriate.  For example, tariff bills, tax loop holes, etc.
                    (Minority gains at big expense of majority).
 
 

        3.  Plurality Rule:  Choose the candidate who is ranked first by the
            largest number of voters.
 

        4.  Condorcet Criterion:  Choose the candidate who defeats all
            others in pairwise elections using majority rule.
 

        5.  Borda count:  Give each of the n proposals a score of from 1 to
             n based on its ranking in a voter's perference ordering.  Add
             the points for each proposal over all voters.  Highest points wins.
 

        6.  Exhaustive voting:  Ask each voter to indicate the candidate he
              ranks lowest from the list.  Remove him.  Go on until one is left.
 

        7.  Approval voting:  Each voter casts a vote for all of the
            candidates on the list of n of whom he approves.  The
            candidate with the most votes wins.
 
 
 

      Gerrymandering:
 
 
 
 
 

      Median Voter Model:
 
 
 
 
 
 
 
 

      The Voters' Paradox: