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Faculty of Economics

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Aidt, T. S. and Giovannoni, F.

Critical decisions and constitutional rules

Social Choice and Welfare

Abstract: Many constitutions specify procedures that allow critical decisions to be made with a different rule than routine decisions. We propose a theory of constitutional rules that explains why. The theory is based on the assumption that the type of a decision can be observed, but not verified. We characterize two classes of second-best constitutions, both with clear analogues in real world constitutions: (i) incentive scheme (IS) constitutions that elicit information about the type of a decision through a costly switching procedure and (ii) veto (VT) constitutions that grant limited veto powers to interested parties.

Author links: Toke Aidt  

Publisher's Link: http://search.proquest.com/docview/871034617/14054D7231726BA32A7/3?accountid=9851



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