This document discusses several theories related to voting systems and collective decision making, including: - Rawlsian theory of justice and its relevance to South Africa - Median voter theory and its potential strengths and weaknesses - Arrow's impossibility theorem - Logrolling as a means to improve majority voting outcomes - Optimal voting rule theory and whether it provides an optimal majority rule - Behavior of politicians and bureaucrats and its implications for majority voting - Origins and consequences of rent-seeking It also discusses unanimity voting, majority voting, voter preferences, and incentives in bureaucracy.

2. • Discuss the Rawlsian theory of justice and comment on its
relevance to recent political developments in South Africa
• Explain the median voter theory and indicate its potential
strengths and weaknesses
• Discuss the meaning and importance of Kenneth Arrow’s
impossibility theorem
• Consider whether logrolling (or vote trading) is an efficient
means of improving the outcomes of a majority voting system
• Explain the theory of ‘optimal voting rules’ and consider the
question of whether it does indeed provide an ‘optimal rule’ for
majority voting
• Discuss the maximising behaviour of politicians and
bureaucrats, and consider the implications of such behaviour
for majority voting
• Explain the origins and consequences of ‘rent-seeking’.

3. • Pareto-optimal outcome – collective decisions in the
interests of all parties
• Positive sum game.
The unanimity-voting rule means that each member or representative
group within a community must support a proposal before it becomes the
collective decision.

4. • Normative
• Free and rational persons choose principles of justice
• Social contract
• Justice in fairness
• Veil of ignorance
• Equals on the same playing field
•
• Rawlsian welfare function.

5. • Time to reach unanimous decision
• Divergent nature of individual preferences
• Issues
• Cost of unanimity?
• Bargaining
• Minority right to veto.

6. • Majority rule/majority voting
• Direct democratic dispensation
• Representative democracy
• Advantages
– Reaching majority approval takes much less time and thus
less costly
– Less likely that minority will prevent majority.
The median voter theorem:
Under a majority voting system in which preferences are not extreme, it is
the median voter’s preferred option that will win the day, since that is the
option that will produce a minimum welfare loss for the whole group.

7. Ethical conditions
• Rationality assumption
and:
• Independence of irrelevant alternatives
• Pareto principle
• Unrestricted domain
• Non-dictatorship.

8. • Intensity of preferences cannot be accounted for
• Accommodation of preference intensities:
– Vote in the form of “intensity units”
• Normative
• Difficult to implement
• Administratively costly
– Logrolling or vote trading
• Can either increase or decrease ability of a majority voting
system to truly reflect the wishes of the majority.

9. Voter Amount (R million)
Ndlovo 50
Mary 200
Thandi 400
Johan 600
Ibrahim 800

10. Two kinds of costs:
• External
• Decision making.
The ‘optimal’ voting majority varies in accordance with the particular
public issue in question and that these optimal majorities depend on the
costs involved in the act of voting.

12. • Success of intervention requires an adequate and
efficient institutional framework
– Legislative authority (such as parliament)
– Law enforcement
– The Judiciary
– Tax collection or revenue services
– Regulatory bodies
• Value system and behavioural norms should
entrench high levels of trust between:
– Consumers
– Producers
– Government institutions.

13. • Characteristics
– Voters are rationally ignorant of much of what politicians
stand for
– Politicians are elected on the basis of a package of policies
• Implicit logrolling.

14. Policy Strongly favoured by Weakly opposed by
Relocation of
Parliament
Civil servants (33.3%) Rest of electorate (66.7%)
Rugby development Rugby lovers (33.3%) Rest of electorate (66.7%)
Student loan scheme Students (33.3%) Rest of electorate (66.7%)

15. • Do not maximise profit
• Do not face market tests
• Principal-agent problem.
Individuals in the bureaucracy, like the rest of us, do react to different
incentive schemes; they do have various preferences, and have the
capacity, will and desire to fulfil these preferences. They prefer more
rather than less income, power, prestige, pleasant surroundings, and
congenial employees.
Thomas Borcherding (1977)