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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  

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Papers and Publications

Recent Publications

Gagnon, J. and Goyal, S. Networks, markets and inequality American Economic Review [2017]

Elliott, M. and Golub, B. A network approach to public goods accepted, Journal of Political Economy [2018]

Carvalho, V. M. and Grassi, B. Large Firm Dynamics and the Business Cycle American Economic Review [2019]