Publication

This paper describes how majority rule defines the number of club-members that must approve a policy proposed to replace the status quo. The author explains that since the majority rule dictates the extent to which winners must compensate losers, it also determines the incentives to invest in order to become a winner of anticipated projects. The paper states that if the required majority is large, the members invest too little because of a hold-up problem. If it is small, the members invest too much in order to become a member of the majority coalition. The author provides recommendations for solving such situations and describes how such solutions might also apply to the future EU Constitution.