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Why Are There Democracies? A Principal Agent Answer

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  • Brendan O'Flaherty

Abstract

Many organizations operate by majority rule. Why? I consider elections as ways to aggregate information rather than ways to reconcile preferences. This is a principal‐agent problem with many principals. Only mechanisms that minimize the weighted sum of type 1 errors (neglecting a deserving agent) and type 2 errors (rewarding an undeserving agent) can escape manipulation. Majority rule uniquely minimizes the sum of errors. Thus majority rule is a very good way to aggregate information.

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  • Brendan O'Flaherty, 1990. "Why Are There Democracies? A Principal Agent Answer," Economics and Politics, Wiley Blackwell, vol. 2(2), pages 133-155, July.
    • Handle: RePEc:bla:ecopol:v:2:y:1990:i:2:p:133-155
    DOI: 10.1111/j.1468-0343.1990.tb00027.x
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    1. Mark Allen Satterthwaite, 1973. "The Existence of a Strategy Proof Voting Procedure," Discussion Papers 42, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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    Cited by:

    1. Alexander Galetovic & Ricardo Sanhueza, 1996. "Citizens, Autocrats, and Plotters: A Model and New Evidence on Coups D'État," Documentos de Trabajo 11, Centro de Economía Aplicada, Universidad de Chile.

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