1. NOTE: To change the image on this slide, select the picture and delete it. Then click the Pictures icon in the placeholder to insert your own image. CHOOSING IN GROUPS MUNGER AND MUNGER Slides for Chapter 2 Becoming a Group: The Constitution

2. Outline of Chapter 2  Determining group preferences  Constituting collective choice  Constitutional moment  Constitutional design  The fundamental transformation  Agenda manipulation  Revelation manipulation  Constraining domain  Inherited disequilibrium  Analytical politics Slides Produced by Jeremy Spater, Duke University. All rights reserved.2

3. Determining group preferences  Axiology: Knowledge of “the good”  “What is a good society?”  Ontology: Knowledge of “what is”  “What types of societies exist?”  Epistemology: Knowledge of “what can be known”  “How can we empirically assess the effects of policies?” Slides Produced by Jeremy Spater, Duke University. All rights reserved.3

4. Determining group preferences (2)  Problem of collective choice  Older work treats group preference is a question of epistemology  “Given individual preferences, how can we know the group preference?”  This is problematic  What is the group’s preference when the members disagree?  Question should be treated ontologically, not epistemologically  Methodological individualism  Approach that grounds group behavior in individual preferences  Individuals might not agree with the directives of the group  Nonetheless, individuals give consent to be bound by group directives  Everyone agrees to obey the group, even when they disagree with individual decisions Slides Produced by Jeremy Spater, Duke University. All rights reserved.4

5. Constituting collective choice  Group forms association through agreement or contract  Rules regarding:  How to choose as a group  How to become a member  How to leave the group  How to change the rules (amendment process)  Forming a group, whether state or private, is political Slides Produced by Jeremy Spater, Duke University. All rights reserved.5

6. Constitutional moment  Constitutional moment: Buchanan and Tullock (’62)  Unanimous: no involuntary coercion of minority  Disinterested: Rawlesian “veil of ignorance”  Free and Bound  Individual is bound to group decisions  Agreement is meaningless without enforcement  Individual is still free  Voluntarily chose to join group for own benefit  Voluntary and involuntary coercion  Voluntary: ex post enforcement of contract we voluntarily agreed to  Involuntary: ex ante threats to force agreement to contract Slides Produced by Jeremy Spater, Duke University. All rights reserved.6

7. Constitutional moment (2)  Impartiality (disinterest)  Rawls (‘71): “Veil of Ignorance”  Start from “original position”: unconstituted state  Agree ex ante without knowing consequences for you  Ensures fair outcome: won’t agree to terms that are unfair to anyone (because it might be you!)  Buchanan and Tulloch (‘62): Uncertainty  Uncertain ex ante about whether “winning” or “losing” on particular issues  Choose fair institutions to minimize risk  More dynamic conception than that of Rawls; coalitions changing over time  Impartiality confers legitimacy  If rules are chosen to benefit some at expense of others, they clearly are not fair  People will not willingly uphold illegitimate constitution Slides Produced by Jeremy Spater, Duke University. All rights reserved.7

8. Aside on Impartiality: The “Unoriginal Position” Rawls is rightly credited with developing the “original position” in a way that gave him analytical purchase of the problem of justice as fairness. But there were important precursors. Tomasi (2012), for example, calls Rawls’s use of the idea “the unoriginal position” and points to a passage in Hayek that takes much the same logic and applies it to fairness in laws. But an even earlier “original position” can be found in Montesquieu. Every day one hears it said that it would be good if there were slaves among us. But, to judge this, one must not examine whether they would be useful to the small, rich, and voluptuous part of each nation; doubtless they would be useful to it; but, taking another point of view, I do not believe that any one of those who make it up would want to draw lots to know who was to form the part of the nation that would be free and the one that would be enslaved. Those who most speak in favor of slavery would hold it the most in horror, and the poorest of men would likewise find it horrible. Therefore, the cry for slavery is the cry of luxury and voluptuousness, and not that of the love of public felicity. Who can doubt that each man, individually, would not be quite content to be the master of the goods, the honor, and the life of others and that all his passions would not be awakened at once at this idea? Do you want to know whether the desires of each are legitimate in these things? Examine the desires of all. (Montesquieu, 1750 / 1989Ref401; Book XV, Chapter 9, p. 253; emphasis added). Slides Produced by Jeremy Spater, Duke University. All rights reserved.8

9. Constitutional design  Five basic problems  The fundamental transformation  Agenda manipulation  Revelation manipulation  Constraining domain  Inherited disequilibrium Slides Produced by Jeremy Spater, Duke University. All rights reserved.9

10. Constitutional problems: Fundamental transformation  Fundamental transformation of strategic situation  Before contract: pure competition  After contract: bilateral monopoly  Hold-up  Ex-post recontracting  Parties to agreement can fail to uphold it  Wronged party can seek redress, or leave agreement altogether  However, these options are often more costly than simply accepting transgression Slides Produced by Jeremy Spater, Duke University. All rights reserved.10

11. Constitutional problems: Agenda setting  Voting rules can change outcome  Choosing a chair can mean choosing a dictator  Poorly chosen voting rules can cause constitutional collapse  Even the best rules are subject to manipulation  Best option may be the rules that people understand and trust Slides Produced by Jeremy Spater, Duke University. All rights reserved.11

12. Constitutional problems: Revelation manipulation  Possible response to agenda manipulation  Vote strategically, rather than sincerely  Obtain desired outcome by lying about preferences  Limits power of agenda setter  Borda voting (ranking alternatives) is especially prone to this Slides Produced by Jeremy Spater, Duke University. All rights reserved.12

13. Constitutional problems: Constraining domain  Circumscribe domain for collective choice  Protect minority from will of majority  Ex ante, provide general protections  Example: freedom of speech  Majority might try to silence minority  Ex ante, everyone has interest in making sure their own voice is not silenced Slides Produced by Jeremy Spater, Duke University. All rights reserved.13

14. Constitutional problems: Inherited disequilibrium  Citizens push for institutions to achieve their desired ends  Conflict about ends leads to conflict about institutions  Outcome is subject to manipulation  Citizens’ beliefs about connection between means and ends may be confused or wrong  This confusion can be exploited by self-seeking politicians  Outcome is “unpredictable as poetry” (Riker ‘80) Slides Produced by Jeremy Spater, Duke University. All rights reserved.14

15. Analytical politics  This book limits its focus to the problem of choosing in groups  This means starting in the middle  Group has already constituted itself  Ignores problem of group constitution  Sometimes groups don’t choose as groups  Groups can disband  Factions within group can fight for control  These situations are outside purview of this book Slides Produced by Jeremy Spater, Duke University. All rights reserved.15