cen04-2016
Constitutional
Economics
Network
Working Paper
Series
ISSN No. 2193-7214
CEN Paper
No. 04-2016
Social Nudging with Condorcet Juries and its Strategic
Implications for a Paternalistic Implementation of LED
bulbs
Bettina Kalmbach*
*Department of Economic Policy and Constitutional Economic Theory,
University of Freiburg, Germany.
E-Mail: bettina.kalmbach@vwl.uni-freiburg.de
December 31, 2016
University of Freiburg
Institute for Economic Sciences
Department of Economic Policy and Constitutional Economic Theory
Platz der Alten Synagoge / KG II D-79085 Freiburg
www.wipo.uni-freiburg.de
JEL-‐Codes:
B13,
D03,
D60,
H10,
Q20
Social
Nudging
with
Condorcet
Juries
and
its
Strategic
Implications
for
a
Paternalistic
Implementation
of
LED
bulbs
Bettina
Kalmbach
Abstract
In
the
light
of
irrational
behaviour
and
decision
biases
leading
people
to
commit
systematic
blunders,
Thaler
and
Sunstein
(2003)
presented
in
their
approach
of
libertarian
paternalism
the
concept
of
choice
architecture,
to
face
the
problem
of
wrong
decision-‐making
and
resulting
welfare
losses
by
“Nudging”
irrational
agents.
The
debate
about
this
approach
focuses
on
its
compatibility
with
libertarian
principles,
on
its
welfare-‐enhancing
character
and
on
the
knowledge
problem
about
peoples´
true
preferences.
The
goal
of
this
paper
is
to
show
in
part
I
that
with
recourse
to
contract
theory,
applied
constitutional
economics
provides
a
justification
of
both
the
libertarian
character
and
the
profitability
of
libertarian
paternalism.
The
use
of
libertarian
paternalistic
policies
for
environmental
in
particular
to
promote
the
acceptance
and
purchase
of
climate-‐friendly
and
sustainable
LED
bulbs
can
be
justified
as
a
self-‐binding
commitment
induced
by
hierarchical
preferences
for
sustainability.
Referring
to
the
Condorcet
Jury
Theorem,
stating
that
1)
an
expert
jury
is
always
more
competent
than
a
single
expert
and
that
2)
for
large
juries,
group
competence
tends
to
infallibility
with
an
increase
in
group
size,
libertarian
paternalism
for
ecological
goals
can
be
defended
against
the
knowledge
problem.
In
part
II
an
extension
of
the
Condorcet
Jury
Theorem
relaxing
its
restrictive
assumptions
of
binary
choice,
homogeneous
and
independent
voters,
investigates
its
applicability
and
reliability
for
paternalistic
interventions
and
allows
a
new
perspective
in
the
debate
of
choice
framing
paternalism,
namely
the
concept
of
“social
nudging”
to
promote
social
long-‐term
goals.
This
paper
provides
an
approach
of
effective
choice
framing
by
applying
the
CJT
and
implementing
expert
juries
with
the
subsidiary
principle.
It
investigates
with
regard
to
the
support
of
sustainable
“light-‐consumption”
how
far
institutions
should
go
in
shaping
choice
situations
of
consumers
to
promote
their
welfare.
1
INTRODUCTION
Inpiduals
often
fail
to
make
rational
decisions
that
are
consistent
with
their
long-‐term
preferences.
They
commit
systematic
blunders
either
due
to
natural
or
to
cognitive
constraints.
Cass
Sunstein
and
Richard
Thaler
develop
in
their
approach
of
libertarian
paternalism,
a
soft
form
of
paternalism
without
coercion,
which
is
possible
due
to
the
sensitivity
of
preferences
to
the
choice
frame.
A
purposefully
designed
choice
framing,
a
so-‐called
“nudge”
shall
steer
choices
of
irrational
agents
in
a
predicted
and
desirable
direction
to
improve
the
chooser’s
inpidual
welfare.
Critics
raise
doubts
about
the
libertarian
and
welfare-‐
enhancing
character
of
this
approach.
They
emphasize
the
likewise
bounded
rationality
of
a
choice
architect,
who
is
in
charge
of
soft
paternalistic
policy
making,
and
who
has
the
incentives
to
abuse
the
knowledge
about
cognitive
misgivings
of
inpiduals.
Like
any
other
form
of
paternalism,
soft
paternalistic
policies
are
as
well
subject
to
the
Hayekian
knowledge
problem,
stating
that
no
policy
maker
can
know
better
what
is
in
the
best
interests
of
an
affected
inpidual,
than
the
inpidual
itself.
Another
main
topic
to
criticize
this
approach
is
the
vague
and
broad
definition
of
situations
and
decision
contexts
in
which
libertarian
paternalistic
policies
should
be
implemented,
and
who
should
be
in
the
position
to
frame
decision
contexts.
Libertarian
paternalists
use
the
inpidual´s
own
subjective
“well
being”
as
the
basis
for
regulatory
policies
however
critics
mention
conceptual
misgivings
about
an
underlying
notion
of
welfare
to
guide
the
paternalistic
planner.
Part
I
illustrates
that,
pointing
out
the
character
of
consensus
of
soft
paternalism
and
voluntary
inpidual
delegation
of
decision
competences
on
constitutional
level,
in
order
to
minimize
decision
costs
and
errors
on
post
constitutional
stage,
applied
constitutional
economics
serves
as
justification
for
both,
the
profitability
and
the
libertarian
character
of
soft
paternalism.
Findings
from
behavioural
economics
may
then
offer
promising
possibilities
for
(approvable)
environmental
policies
such
as
the
implementation
of
higher
market
acceptance
of
sustainable
LEDs.
Referring
to
the
work
of
Marquis
de
Condorcet
who
argues
for
a
calculus
that
provides
a
proper
guarantee
for
majority
decision
of
a
2
parliament
or
an
assembly
being
correct,
the
Condorcet
Jury
Theorem
(CJT)
can
defend
approvable
soft
paternalistic
interventions
against
the
knowledge
problem.
Furthermore
it
offers
a
hint
who
should
be
in
the
position
of
a
choice
architect.
Given
there
exists
for
an
inpidual
with
incomplete
information
a
welfare
maximizing
option
in
a
choice
set,
the
theorem
states
that
a
jury
of
experts
under
certain
conditions
with
a
simple
majority
voting
is
more
competent
to
find
the
welfare
maximizing
option
than
the
respective
inpidual
itself.
When
soft
paternalistic
choice
framing
is
given
over
from
one
planer
to
expert
juries
(on
post-‐constitutional
level),
choices
made
by
those
expert
juries
are
more
likely
to
be
correct
than
inpidual
choices
and
may
even
converge
to
infallibility,
while
decision
costs
remain
at
a
moderate
level.
Considering
the
approach
of
Sunstein
and
Thaler
the
CJT
can
provide
a
normative
justification
of
soft
paternalism
regarding
the
knowledge
problem.
In
part
II
an
investigation
of
the
conditions,
under
which
the
CJT
holds,
furthermore
allows
a
more
precise
definition
of
the
underlying
notion
of
welfare
as
basis
for
regulatory
policies.
This
paper
contends
that
in
the
course
of
an
extension
of
the
CJT
by
relaxing
its
assumptions
of
homogeneity
and
independence
among
jury
members
as
well
as
the
binary
choice
the
CJT
can
provide
efficient
inquiry
in
true
preferences,
if
social
values
and
common
interests
are
determining
these
(long-‐term)
preferences
of
voters.
In
these
cases
expert
juries
are
able
to
identify
and
promote
true
social
preferences
and
make
“better
choices”
than
inpiduals.
Assuming
the
existence
of
common
interests,
and
juries
implemented
according
to
the
subsidiary
principle,
the
CJT
can
be
adopted
as
a
normative
guideline
to
capture
precisely
citizens´
signals
about
true
preferences,
to
consider
welfare
effects
and
to
make
correct
decisions
about
nudging
policies.
This
classical
interpretation
of
the
CJT
as
a
mean
to
find
a
common
moral
or
social
good
goes
in
line
with
the
contract
theoretical
approach
of
the
“General
Will”
by
Jean
Jacques
Rousseau’s
and
justifies
its
application
from
the
constitutional
economics
perspective
as
a
mean
to
develop
social
preferences.
The
application
of
the
CJT
then
offers
possibilities
to
find
appropriate
means
to
achieve
social
welfare
in
promoting
“right”
consumption
decisions.
While
3
Sunstein
and
Thaler
use
the
inpidual´s
own
well
being
as
the
basis
for
regulatory
policies
and
focus
on
consumer
protection,
health
and
retirement
provisions,
this
article
focuses
on
social
welfare
generated
by
voluntary
self-‐
binding
to
sustainable
consumption.
Directing
to
the
market
acceptance
of
sustainable
LED
Bulbs
it
investigates
how
far
nudging
policies
to
promote
values
for
sustainability,
may
improve
social
welfare
and
lead
to
a
higher
market
acceptance
of
LEDs
as
well
as
a
paradigm
shift
in
consumer
behaviour,
while
still
respecting
consumer’s
sovereignty.
Furthermore
it
derives
implications
for
a
policy
strategy
to
implement
soft
paternalistic
institutions
to
increase
the
market
acceptance
of
sustainable
LEDs.
PART
I:
SOFT
PATERNALISTIC
IMPLEMENTATION
OF
LEDs
FROM
A
CONSTITUTIONAL
ECONOMICS
PERSPECTIVE
1. Libertarian
Paternalism
–
its
Potential
and
its
Critics
Recent
findings
of
behavioural
economics
have
raised
doubts
about
the
rationality
of
peoples´
judgements
and
decisions.
Either
due
to
uncertainty
about
the
future
loss
or
risk
aversion
and
overconfidence
in
their
own
forecasting
abilities,
people
exhibit
irrational
expectations
and
fail
to
make
forecasts
that
are
consistent
with
Bayes´
rule.
Instead
they
use
heuristics
that
lead
to
systematic
decision
biases
such
as
endowment
effects
status
quo
orientation
inertia
anchoring
and
framing
effects.
In
Addition,
cognitive
shortcomings
result
in
wrong
or
slow
information
processing
and
errors.
This
lack
of
cognitive
ability
can
mainly
be
put
down
to
the
existence
of
two
different
modes
of
thinking
and
deciding.
Automatic
operations
of
perception
of
the
intuitive
cognitive
system
1
predominate
the
deliberate
operations
of
reasoning
of
the
rational
system
2
in
the
information
processing
and
decision-‐making.
Most
choices
are
made
fast,
effortless
and
intuitive
within
the
System
1
while
System
2
is
only
at
work
for
explicit
judgements
under
an
effortful
deliberation
process.
Intuition
often
fails
to
be
rational,
so
people
exhibit
preference
reversals
and
inconsistencies.
They
make
different
decisions
depending
on
the
design
of
the
decision
problem.
Short-‐
term
preferences
are
unstable
context
dependent
and
in
the
case
of
intertemporal
choice
inconsistent
with
long-‐term
goals
(Thaler & Sunstein, 2003).
4
People
value
present
consumption
much
more
than
future
consumption,
overrate
own
decision-‐making
capacities
and
underestimate
severe
risks
such
as
future
fees
for
the
present
consumption
or
negative
health
effects.
These
systematic
blunders
and
self-‐control
problems
evoke
severe
economical
and
psychological
welfare
losses (Kahneman, 2014).
Thaler
and
Sunstein
considered
in
their
approach
of
libertarian
paternalism
(also
headlined
as
asymmetric
or
soft
paternalism)
these
findings
of
behavioural
economics.
They
introduced
the
concept
of
choice
architecture
to
face
the
problem
of
incoherent
preferences
and
systematic
decision
biases.
In
the
case
of
bounded
rational
inpiduals,
a
carefully
designed
choice
framing
should
influence
peoples´
choices
in
a
predictable
and
desired
direction
to
enhance
their
well-‐being.
They
defend
their
agenda
as
a
weak
and
nonintrusive
type
of
paternalism
helping
irrational
people
to
overcome
cognitive
shortcomings,
while
imposing
no,
or
just
minimal
costs
on
those,
who
decide
fully
rational (Thaler &
Sunstein, 2012).
The
authors
claim,
that
this
kind
of
interference
in
inpidual
decision-‐making
respects
“freedom
of
choice”
and
is
acceptable
even
for
to
committed
libertarians.
Choices
are
neither
blocked
nor
fenced
off.
The
planer
respects
personal
autonomy
and
does
not
prescribe
or
proscribe
any
particular
option,
after
all
people
can
easily
opt
out
of
the
recommended
choices
(Thaler &
Sunstein, 2003).
Thaler
and
Sunstein
contend,
that
this
minimal
kind
of
paternalism
is
inevitable
and
public
or
private
institutions
that
control
choice
frames
will
compulsory
shape
peoples´
preferences
and
choices
because
in
the
case
of
ill-‐formed
or
unclear
preferences
that
vary
with
the
design
of
the
decision
context,
choices
are
inevitably
influenced
by
default
rules,
starting
points
or
the
framing
of
the
decision
problem.
Libertarian
paternalistic
policies
should
then
be
designed
in
the
way,
that
the
framing
of
the
decision
context
imposed
on
an
inpidual
improves
with
soft
incentives
the
chooser’s
own
welfare
(Thaler &
Sunstein, 2003).
Critics
against
this
the
libertarian
paternalism
as
a
form
of
public
decision-‐
making
are
mainly
based
on
the
idea
of
normative
inpidualism
considering
only
the
inpidual
itself
to
being
in
the
position
to
decide
in
its
best
interest,
and
only
if
it
is
free
to
choose,
otherwise
any
kind
of
state
intervention
provokes
5
redistributive
effects
and
welfare
losses.
Glaeser
(2006)
expects
public
decision-‐
making
even
to
increases
cognitive
biases
and
systematic
decision
errors.
He
argues,
that
soft
paternalistic
policy
makers
are
subject
to
the
very
same
cognitive
shortcomings
and
decision
biases.
Beside
the
sensitivity
of
the
choice
architect´s
decisions
to
outside
influences,
he
states
that
decision
biases
and
collective
errors
carried
out
through
voting
i.e.
by
an
“irrational
median
voter”,
will
even
increase
just
in
a
more
complex
manner
and
on
higher
institutional
level.
Furthermore
he
expects
error
correction
on
private
level
to
be
more
successful,
as
private
incentives
to
reduce
errors
are
stronger
and
private
costs
of
learning
are
lower.
Thus
public
decision-‐making
does
not
prevent
to
make
systematic
errors,
and,
due
to
bounded
rational
policy-‐makers
and
a
lack
of
transparency,
libertarian
paternalistic
policies
are
more
difficult
to
control
and
easy
to
abuse
(Glaeser, 2006)
(Rebonato, 2012).
Following
these
Arguments
opponents
of
libertarian
paternalistic
policies
emphasize
beside
the
lack
of
transparency,
as
well
as
a
missing
narrow
definition
of
the
situations
when
nudges
should
be
implemented (Mitchell, 2005) (Grüne-Yanoff, 2012).
Above
all
the
Hayekian
knowledge
problem
faces
Libertarian
Paternalism
as
well
as
any
other
harder
form
of
state
intervention.
Rizzo
and
Whitman
(2009)
argue
that
policy-‐makers
do
not
have
the
access
to
the
knowledge
needed
to
implement
welfare
improving
policies.
Thus
no
policy-‐making
agent
is
capable
of
knowing
better,
what
would
be
in
the
inpidual’s
best
interest
than
the
inpidual
itself.
Committed
Libertarians
expect
rather
the
inpidual
to
know
about
their
preferences
far
better
than
any
third
party
does (Rizzo & Whitman, 2009).
Furthermore,
proponents
of
libertarian
paternalism
express
scepticism
about
the
notion
of
preferences
used
in
welfare
economics,
referring
to
irrational
choices
made
by
inpiduals,
but
their
“true”
preferences
to
consider
welfare
effects
do
not
formally
exist.
Grüne-‐Yanoff
(2012)
expects
an
inquiry
in
inpidual
preferences
to
derive
social
values
and
a
socially
desirable
behaviour
to
fail,
due
to
this
lack
of
information
(Grüne-Yanoff, 2012).
The
weak
spot
of
the
concept
of
libertarian
paternalism
pointed
out,
is
that
it
does
not
endorse
any
particular
measure
of
welfare
that
can
guide
a
planner
to
track
anticipated
choices
to
enhance
welfare.
In
so
far,
Thaler
and
Sunstein
avoid
the
issue
of
what
exactly
welfare-‐enhancement
should
look
like,
which
constitutes
the
most
6
difficult
and
important
question
raised
by
welfare
focused
paternalism (Mitchell,
2005).
There
is
no
normative
criterion
for
libertarian
paternalistic
policies
when
it
comes
to
the
a
goal
that
a
planner
should
try
to
achieve
as
well
as
the
definition
who
should
be
the
“over-‐all-‐rational
planer”
who
would
be
in
the
position
to
“nudge”
inpiduals.
2. Constitutional
Economics
as
Justification
–
Libertarian
Paternalism
as
Collective
Self-‐Binding
of
Reflective
Preferences
Most
critics
against
libertarian
paternalism
refer
to
the
classical
principle
of
normative
inpidualism.
A
justification
of
soft
paternalism
is
hardly
to
find
sticking
to
this
economic
model
as
it
uses
a
utility
function
with
many
dimensions
but
only
one
level.
Inpidual
decisions-‐making
however
shows
evidence
for
phenomena
like
weakness
of
will
and
time
inconsistencies.
In
these
points
the
traditional
economic
approach
fails
(Kirchgässner, 2014).
A
rejection
of
soft
paternalistic
interference
referring
to
the
absence
of
allocative
biases
and
market
failure
neglects
cognitive
biases
of
revealed
preferences.
In
the
argumentation
of
libertarian
paternalists
welfare
judgements
based
on
a
biased
normative
criterion
of
revealed
preferences
are
expected
to
exhibit
the
same
errors.
Referring
to
the
two-‐system-‐model
of
cognition
used
in
behavioural
economics,
proponents
of
libertarian
paternalism
argue
that
“[...]
the
fact
that
human
persons
reflecting
on
themselves
usually
take
on
the
long-‐run
perspective
rather
provides
evidence
for
the
long-‐run
preferences,
as
does
the
fact
that
inpiduals
often
heavily
underestimate
the
costs
of
the
actions
that
are
guided
by
their
short-‐run
preferences.”
(Kirchgässner, 2014).
Thus
they
assume
inpiduals
that
are
able
to
determine
long-‐term
preferences,
which
are
rated
over
short-‐term
desires,
and
to
judge
about
the
consistency
of
short-‐term
and
long-‐term
preferences.
“Otherwise
it
is
difficult
to
understand
why
people
regret
their
own
earlier
behaviour
when
foreseeable
consequences
become
obvious
that
were
not
taken
into
account
before.”
(Kirchgässner,
2014).
This
model
of
hierarchical
preferences
explains
how
people
bind
themselves
to
overcome
weakness
of
will
or
cognitive
shortcomings
in
order
to
achieve
long-‐term
goals (Kirchgässner,
7
2014)
and
goes
in
line
with
the
behavioural
economics
model
of
two
cognitive
systems.
Referring
to
huge
evidence
for
private
self-‐binding,
libertarian
paternalists
base
their
welfare
judgements
and
policy
implications
rather
on
these
long-‐term
“meta”
preferences,
which
they
consider
to
be
a
“less-‐biased”
and
more
reliable
criterion,
(Thaler & Sunstein, 2003).
If
self-‐binding
is
established
not
only
on
inpidual
but
on
collective
level,
soft
paternalistic
policy
interventions
can
be
understood
as
a
type
of
collective
self-‐commitment
to
higher
ordered
preferences
introduced
through
the
political
process.
These
reflective
preferences
have
higher
relevance
and
are
easier
to
follow
in
the
political
process.
Inpiduals
are
unaware
about
the
costs
for
violating
their
short-‐term
preferences
during
the
voting
process
while
they
suffer
the
costs
of
refraining
short-‐term
desires
immediately
on
markets.
However
taking
a
long-‐
run
perspective
they
can
reflect
about
the
cost
of
violating
long-‐term
preferences,
that
become
relevant
in
the
future.
(Kirchgässner, 2014).
The
relevance
of
higher
ordered
preferences
in
the
political
process
is
observable
when
for
examples
third
persons´
interests
as
well
as
moral
or
ecological
values
are
more
respected.
The
Model
of
hierarchical
preferences
then
provides
a
justification
for
paternalistic
policies
and
fits
with
the
normative
inpidualism.
Following
this
argumentation
does
no
longer
allow
the
use
of
normative
inpidualism
as
a
principle
objection
against
merit
goods
or
paternalistic
policies
(Kirchgässner,
2014).
Furthermore
hierarchical
preferences
defend
the
approach
of
libertarian
paternalism
against
critics
about
its
welfare-‐economical
underpinning
because
they
can
become
integrated
into
welfare
economics.
Kirchgässner
(2012)
points
out
that
in
this
sense
critics
about
the
redistributive
effects
appear
exaggerated
(Kirchgässner, 2012).
Collective
self-‐engagement
induced
by
hierarchical
preferences
corresponds
to
the
analogue
model
of
John
Rawls´
contract
theory
“Justice
as
Fairness”
where
people
decide
in
a
natural
state
of
original
equality
and
behind
the
veil
of
ignorance
in
their
own
interest
but
without
interests
against
each
other,
about
the
principles
to
determine
fundamental
arrangement
of
social
and
political
cooperation.
In
this
natural
state
inpiduals
do
not
know
how
they
end
up
in
the
8
later
political
process
neither
how
decided
rules
will
directly
affect
them.
Due
to
this
lack
of
information
about
the
future
inpidual
situation
long-‐term
preferences
are
likely
to
dominate (Kirchgässner, Sanfter Paternalismus,
meritorische Güter und der normative Inpidualismus, 2012).
Rawls
contends
that
if
inpiduals
reason
in
the
natural
state
about
a
constitutional
design,
the
veil
of
ignorance
is
the
best
model
to
track
the
reasons
of
the
people
and
decided
institutional
settings
reflect
their
rational
preferences
(Rawls, 1971).
The
profitability
and
efficiency-‐enhancing
character
of
libertarian
paternalism
can
then
be
justified
from
the
perspective
of
contract
theory,
by
pointing
out
its
character
of
consensus
and
referring
to
Buchanan´s
applied
constitutional
economics (Vanberg, Albert, & Goldschmidt, 2009).
Government
undertakes
the
task
of
preserving
the
existing
legal
system
on
constitutional
level,
as
a
regulatory
framework
of
legal
allocations
like
entitlement-‐granting
rules
or
procedural
norms
against
which
contracts
are
made
(Sunstein & Thaler, 2003).
Government’s
function
on
the
post-‐constitutional
level
however,
is
to
design
institutional
frameworks
that
enforce
the
mutual
advantages
of
decided
legal
setting.
This
efficiency-‐analysis
of
economic
policy
refers
to
the
long-‐term
process
of
the
realization
of
gains
from
trade.
In
Buchanan´s
applied
constitutional
economics,
the
voluntary
approval
of
contract
parties
as
normative
criterion
for
the
realization
of
long-‐term
gains
is
transmitted
to
the
post-‐
constitutional
level
where
regulatory
changes
are
proposed
and
adopted.
According
to
the
view
that
gains
from
trade
are
only
possible
if
legal
frameworks
enable
and
support
their
realization
voluntary
approval
serves
also
in
constitutional
economics
as
criterion,
to
indicate
how
far
collective
acting
in
the
political
process
can
realize
and
support
the
achievement
of
long-‐term
goals
and
create
collective
advantages.
Thus
voluntary
approval
of
affected
citizen
to
rules
and
regulations
serves
as
criterion
to
judge
about
the
efficiency
and
desirability
of
institutional
rules
and
regulations.
To
what
extent
they
represent
the
interests
of
affected
citizen
and
support
their
realization,
relies
basically
on
their
prevailing
potential
of
consensus (Neumann, 2013, p. 136).
“Such
constitutional
choice
of
constraints
is
a
most
important
means
for
inpiduals,
separately
and
jointly,
to
achieve
their
self-‐chosen
goals
(Vanberg V. J., 2014, S. 341).
9
Applied
constitutional
economics
identify
and
propose
institutional
designs
being
potentially
approvable
by
affected
citizens,
in
a
consulting
manner.
Those
will
be
informed
e.g.
by
a
hypothetical
imperative
which
arrangements
would
be
helpful
to
achieve
certain
goals.
The
decision
about
these
goals
however
remains
up
to
the
citizens
and
respects
electoral
inpidualism.
In
the
process
of
voluntary
approval
citizens
decide
according
to
their
inpidual
values
that
are
not
necessarily
goal-‐oriented (Neumann, 2013, p. 134).
Thus
it
can
also
include
a
social
or
a
moral
value,
which
exceeds
the
model
of
the
homo
oeconomicus,
used
in
classical
welfare
economics,
but
respects
the
normative
inpidualism.
Libertarian
paternalistic
choice
architecture
as
constraints
on
consumers´
choices
is
both,
liberal
and
efficiency
enhancing
if
its
design
draws
from
a
voluntary
constitutional
choice
of
affected
inpiduals
and
respects
the
inpidual
as
ultimate
sovereigns
(Buchanan, 1991, S. 227).
Inpiduals
remain
as
principles
and
decide
about
the
desirability
of
paternalistic
interference
as
well
about
how
and
which
interference
relate
to
their
inpidual
long-‐term
goals.
In
accordance
of
the
Rawlsian
idea
of
an
overlapping
consensus,
in
Buchanan´s
applied
constitutional
economics,
constraints
that
find
the
approval
in
the
political
process
and
are
carried
out
on
the
post-‐constitutional
level,
reflect
those
self-‐binding
Nudges,
which
maintain
liberal
principles
and
generate
mutual
advantages.
Thus
libertarian
Paternalism,
if
voluntary
approvable,
relying
of
Rawls´
and
Buchanan´s
constitutional
theory
can
be
both
liberal
and
efficiency
enhancing.
3. The
Condorcetian
Safeguard
for
Libertarian
Paternalism
Critics
concerning
the
profitability
and
libertarian
character
of
soft
paternalistic
policies
can
be
weakened
referring
to
the
contract
theoretical
model.
Although
Sunstein
and
Thaler
create
with
the
reference
to
consumers´
sovereignty
this
important
link
to
the
contract
theoretical
work
of
John
Rawls,
their
justification
of
libertarian
paternalism
is
more
related
to
the
lack
of
rationality,
that
let
people
fail
to
maximize
their
utility
according
to
their
long-‐term
preferences.
As
libertarian
paternalists
raise
doubts
about
the
normative
criterion
of
preferences
10
revealed
by
choice
it
is
important
to
point
out
that
the
analogy
to
the
situation
of
collective
self-‐binding
only
holds
as
long
as
one
assumes
the
predominance
of
reflective
preferences
on
constitutional
level
(Kirchgässner, Soft Paternalism,
Merit Goods, and Normative Inpidualism, 2014).
Even
if
this
assumption
holds
democratic
decision
making
over
paternalistic
interventions
stays
with
the
problem
that
a
majority
decides
over
means
that
usually
do
not
find
the
consent
among
a
minor
part
of
the
population,
that
nevertheless
has
to
bear
the
costs.
In
the
contract
theoretical
approach
it
should
be
decided
behind
a
veil
of
ignorance
in
which
areas
decisions
about
paternalistic
means
should
be
made
and
how
far
they
should
go.
Which
rules
then
exactly
would
be
decided
is
a
matter
of
speculation,
and
even
if
done
so
in
the
constitutional
economics
approaches,
in
most
cases
such
hypothetical
situation
is
hardly
to
establish
and
at
best
partially
(Kirchgässner, 2014).
Regarding
actual
constitutional
choices
Buchanan
acknowledges
the
little
normative
and
explanatory
significance
of
some
hypothetical
agreement
under
the
ideal
conditions
of
the
Rawlsian
veil
by
establishing
a
veil
of
uncertainty,
whose
“thickness”
may
vary
(Buchanan, 1991, S.
56).
However,
the
more
transparent
the
veil,
the
weaker
gets
the
argument
of
a
reflective
and
rational
inpidual
choice
in
the
political
process,
as
“The
restrictions
on
particular
information
in
the
original
position
are
(…)
of
fundamental
importance.”
(Rawls, 1971, S. 140).
People
who
can
accurately
anticipate
in
which
ways
decided
rules
would
directly
affect
them
may
tend
to
agree
on
rules,
following
biased
preferences
and
we
are
not
sure
whether
approvable
means
reflect
“true”
and
non-‐biased
preferences.
Thus
it
is
possible
that
“true”
preferences
are
neither
revealed
nor
expressed
by
affected
inpiduals.
“Evidence
suggests
that
agents
may
not
have
“true”
preferences
at
all.
This,
in
itself,
presents
a
problem
for
the
new
paternalist
paradigm;
we
cannot
claim
to
make
people
better
according
to
their
preferences
if
such
preferences
do
not
exist”
(Rizzo & Whitman, 2009, p. 922).
Libertarian
paternalists
assuming
that
true
preferences
exist,
are
still
faced
with
the
Hayekian
knowledge
problem
about
inpidual´s
true
preferences:
“Does
the
paternalist
know
the
true
preferences
better
than
the
agent
himself?” (Rizzo & Whitman, 2009, p. 922).
The
approach
of
libertarian
paternalism
does
not
yet
offer
an
approach
for
the
inquiry
in
inpidual
preferences
to
identify
the
shape
of
long-‐term
preferences.
11
Thus
it
does
not
provide
a
clear
commitment
to
a
welfare
criterion,
guiding
a
paternalistic
policy-‐maker
in
choosing
the
“right”
option
in
a
choice
frame.
Thaler
and
Sunstein
mention
methods
to
seek
indirect
proxies
for
a
welfare
criterion,
based
on
the
outcome
of
majority
choices.
That
goes
in
line
with
the
contract
theoretical
model
of
an
overlapping
consensus
to
choose
the
right/rational
option.
However
Rawls
assumes
inpiduals
to
choose
a
rational
plan
of
life
under
hypothetical
conditions
of
“deliberative
rationality”,
where
they
have
full
knowledge
about
ones
circumstances,
capacities
and
interests
(Freeman, 2016).
The
argumentation
of
libertarian
paternalism
however,
sticks
to
behavioural
findings
and
stresses
on
exactly
the
bounded
rationality
under
which
inpiduals
do
their
choices
(under
uncertainty).
Although
they
assume
inpiduals
to
commit
systematic
blunders,
Sunstein
and
Thaler
are
confident
that
a
planner
would
choose
the
rational
alternative,
if
this
option
would
be
either
hypothetically
or
factually
–
“as
required
active
choice”
-‐
approvable
by
majority (Sunstein & Thaler, 2003).
Even
if
they
offer
proxies
for
approaches
to
identify
correct
options
in
a
choice
set,
they
do
not
give
a
normative
criterion
how
to
identify
long-‐term
preferences
as
a
“rational
plan
of
live”
neither
do
they
justify
why
they
expect
majority
decisions
to
be
right.
Libertarian
paternalists
assume
that
choices
made
by
a
majority
converge
to
a
rational
decision
independent
of
inpidual
starting
points,
and
thus
that
they
are
with
a
higher
probability
correct,
than
inpidual
choices.
Furthermore
they
assume,
that
often
outstanding
organisations
do
a
better
job
in
decision
making
as
the
inpidual
itself,
because
organisations
have
the
power
to
induce
organized
proceedings
what
makes
them
more
efficient
in
aggregating
and
processing
information
(Kahneman, 2014; Vanberg V. J., 2014).
This
reference
to
majority
outcomes
encourages
considering
the
Condorcet
Jury
Theorem
(CJT),
as
theoretical
underpinning
for
information
aggregation
in
the
inquiry
in
inpidual
preferences.
The
Condorcet
Jury
Theorem
states,
that
any
jury
of
odd
numbers
of
jurors
is
more
likely
to
select
the
correct
option
between
two
alternatives
than
any
single
juror,
if
voter
have
homogenous
decision
competences
of
more
than
one
half
and
vote
independently.
This
holds
even
if
a
single
outstanding
expert
has
more
private
information.
The
probability
of
being
12
correct
increases
in
the
number
of
jury
members
and
converges
to
a
probability
of
1
in
the
end.
If
decision-‐making
will
be
given
over
to
a
Condorcet
jury,
the
theorem
provides
implications
to
face
the
knowledge
problem
of
paternalistic
policy
measures
i.e.
to
derive
the
correct
option
of
a
choice
setting.
Furthermore
relying
on
the
CJT
one
can
answer
the
question
about
who
should
be
in
the
position
to
design
choice
frames.
Proofing
majority
voting
as
an
efficient
mean
for
aggregating
decentralized
information
in
the
quest
for
inpidual
welfare
the
theorem
provides
with
an
expert-‐jury,
a
so
called
Condorcet
Jury
a
wise
paternalistic
planner.
4. Implications
for
paternalistic
climate-‐change-‐policies.
Applying
the
approach
of
soft-‐paternalism
and
its
constitutional
economics
justification
to
the
problem
of
global
warming
and
a
resulting
desired
goal
to
increase
the
market
share
of
climate
friendly
LED
bulbs,
one
can
assume,
that
inpiduals
are
aware
about
environmental
problems
and
would
agree
on
the
overrated
long-‐term
goal
to
reduce
climate
warming
as
well
as
on
the
(voluntary)
self-‐binding
to
achieve
the
ecological
long-‐term
goal
by
supporting
the
purchase
of
climate-‐friendly
products.
As
inpidual
decisions
involve
costs,
inpiduals
typically
routinize
their
day-‐to-‐day
choices.
They
adopt
a
rule
that
dictates
their
behaviour
for
many
single
choices
to
reduce
the
costs
of
inpidual
decision-‐making
and
will
only
invest
in
decision-‐making,
since
the
marginal
benefits
exceeds
the
marginal
costs
(Buchanan & Tullock, 1999).
Decision-‐making
as
a
matter
of
routine
may
on
the
one
hand
minimize
decision
costs
but
on
the
other,
involve
the
mentioned
heuristics
and
biasing
effects
mentioned
by
behavioural
economists
that
prevent
inpiduals
to
decide
rational
according
to
their
long-‐term
goals.
Being
aware
about
their
bounded
rationality
and
lack
of
willpower
in
(short-‐
term)
buying
decisions,
citizen
are
therefore
expected
to
agree
generally
on
constitutional
level
on
nudging
policies
as
a
voluntary
self-‐binding,
to
prevent
13
the
risk
of
wrong
decision
making
as
well
as
to
minimize
costs
of
an
inpidual
“rational”
decision.
They
delegate
part
of
their
decision
competences
to
an
outstanding
authority
that
will
be
on
post-‐constitutional
level
in
charge
to
purposefully
design
choice
sets
so
that
inpiduals
can
follow
in
a
routinized
way
the
recommended
option
of
the
respective
choice
set.
These
nudges
will
affect
inpiduals
in
the
later
process
and
are
expected
to
help
them
to
behave
according
to
their
self
chosen
long-‐term
goal
of
sustainable
consumption
in
their
day-‐by-‐day
buying
and
behaving
decisions
concerning
the
consumption
of
“light”
In
accordance
to
Buchanan´s
calculus
of
consent
collective
choice
is
considered
to
be
efficient,
if
people
motivated
by
a
“common
good”
decide
unanimously
on
constitutional
level
to
delegate
parts
of
their
decision
competences
to
a
political
institution
and
how
the
respective
institution
should
be
designed
and
regulated,
whereas
on
the
post-‐constitutional
level
collective
decision
making
will
be
carried
out
by
majority
decisions.
In
order
to
minimize
inpidual
decision-‐
making
costs
as
well
the
bargaining
costs
of
collective
choice,
on
post-‐
constitutional
level,
the
outstanding
institution
is
empowered
to
help
inpiduals
to
achieve
their
“common
good”,
which
is
in
our
case
the
ecological
long-‐term
goal
of
energy
efficiency.
The
institution
would
then
be
empowered
to
implement
particular
nudging
policies
that
will
steer
inpidual
choices
towards
LED
consumption
if
they
are
affected
by
decision
biases
or
lack
of
willpower.
Nudges
can
be
expected
to
decrease
inpidual
decision
costs
by
implementing
and
fostering
the
routine
for
sustainable
consumption
pattern
as
well
as
to
decrease
the
search
and
information
costs
for
consumers
regarding
LED
attributes
and
inpidual
needs
(i.e.
light
colours,
lumen)
via
information
provision
and
information
architecture.
The
commitment
to
the
delegation
of
these
decision
competences
as
well
as
the
formation
of
“nudge
units”
would
then
be
subject
of
a
social
contract,
that
defines
pursued
long-‐term
goals
and
the
design
and
regulation
of
such
government
intervention.
On
constitutional
level
people
decide
behind
a
veil
of
uncertainty
about
rules
regulations
of
the
constitutional
setting
for
the
support
of
LEDs.
This
procedural
approach
meets
the
requirement
for
a
fair
social
contract
to
respect
the
inpiduals
as
ultimate
sovereigns.
On
post
constitutional
level
however
the
14
decision
making
underlies
an
outcome
oriented
process,
namely
the
reliability
of
majority
decisions
being
correct
within
a
nudge
unit
and
among
large
electorates.
Constitutional
risks
and
uncertainties
that
arise
in
an
incomplete
contract
when
the
state
of
nature
is
realized
must
be
inferred
on
the
post
constitutional
stage
(Jamil, 2011) by
constraining
a
nudge
unit
and
maximizing
the
probability
of
correct
decision
making
and
thus
effective
choice
framing.1
Given
there
is
consent
among
potentially
affected
citizen
to
delegate
in
the
light
of
ill-‐formed
or
unstable
preferences
to
decision
competences
to
an
outstanding
organisation
and
referring
to
the
Condorcet
Jury
Theorem
as
rational
justification
of
soft
paternalistic
policies
(Dold, 2016) and
proof
for
majority
decisions
being
more
likely
to
be
correct
than
inpidual
decisions,
decision-‐
making
is
planned
to
be
given
over
to
an
outstanding
organisation
like
a
Condorcet
jury.
Instead
of
one
paternalistic
planner,
a
Condorcet
jury
would
decide
about
preferences
and
respective
nudges
relying
on
the
majority
outcome
within
the
respective
jury
and
minimize
the
danger
of
the
knowledge
problem.
Thus
the
formation
of
an
expert
jury
will
increase
the
possibility
of
correct
public
decision
making
by
keeping
the
costs
of
collective
choice
moderate.
The
optimal
size
of
a
Jury
to
minimize
interdependencies
of
bargaining
costs
and
correctness
possibility
of
the
jury
depends
on
inpidual
competences
of
the
jury
members
and
thus
on
the
degree
of
information
about
consumer’s
true
preferences.
Meta
preferences
of
inpiduals
that
are
signalled
to
jury-‐members
serve
as
a
welfare
criterion
upon
which
a
jury
base
its
decisions
about
choice
architecture.
Jury
members
can
observe
signalled
preferences
of
consumers
and
decide
whether
these
are
reflective
preferences
that
will
serve
as
a
welfare
criterion
or
not.
If
signalled
preferences
are
in
accordance
to
approvable
long-‐term
goals,
a
jury
can
base
its
decisions
about
choice
architectures
to
improve
consumers´
welfare
on
these
meta-‐preferences
and
decide
about
appropriate
policies.
1
The
analytical
framework
of
a
social
contract
that
combines
a
procedural
justification
of
paternalistic
policies
on
constitutional
level
with
an
outcome
oriented
measure
on
the
post
constitutional
stage
will
be
elaborated
in
a
separate
paper.
15
PART
II
THE
CONDORCET
JURY
THEOREM
AND
DERIVABLE
IMPLICATIONS
FOR
POLICY
STRATEGIES
FOR
SOFT
PATERNALISTIC
IMPLEMENTATION
OF
LEDs
5. The
reliability
of
the
Condorcet
Jury
Theorem
However
the
Condorcet
Jury
Theorem
itself
-‐
assuming
homogenous
and
independent
voters
with
inpidual
probability
of
correctness
of
>0.5
in
a
binary
choice
underlies
restrictive
assumptions.
In
the
theoretical
framework
the
jury
makes
its
decision
under
circumstances
that
are,
similar
to
the
veil
of
ignorance-‐
model,
far
distant
from
realistic
assumptions.
The
concept
of
real
long-‐term
preferences
as
welfare
criterion
raises
the
question
about,
how
a
Condorcet
jury
could
absorb
signals
for
advocated
decisions,
after
all
if
revealed
choices
are
partly
biased.
A
generalization
of
the
Condorcet
Jury
Theorem
that
transmits
if
from
its
pure
analytical
framework
to
more
realistic
circumstances
and
a
deeper
examination
of
how
true
preferences
can
be
signalled
to
jurors
is
necessary
to
proof
the
applicability
of
the
Condorcet
Jury
Theorem
and
offers
implications
for
Jury
implementation
as
efficient
policy
strategy
for
welfare
inquiry
to
judge
about
choice
architectures
of
consumers
and
to
design
an
appropriate
implementation
strategy
of
LEDs.
6. The
Extension
of
the
Condorcet
Jury
Theorem
Regarding
the
underlying
assumptions
of
the
Condorcet
Jury
Theorem,
one
can
stand
that
in
its
pure
analytical
framework,
The
CJT
assumes
a
decision
under
similar
hypothetic
circumstances
as
the
consent
in
the
contract
theoretical
approach.
However
inpidual
skills
and
information
determining
inpidual
correctness-‐probabilities
are
not
homogenous,
such
as
shared
information
and
unavoidable
rhetorical
or
personal
influence
inevitably
leads
to
correlation
of
voters,
and
after
all
choices
are
seldom
binary.
The
applicability
of
the
CJT
as
a
theoretical
underpinning
and
normative
criterion
for
welfare
inquiry
and
choice
framing
is
given
only,
if
the
theorem
still
holds
after
relaxing
its
assumptions;
i.e.
after
the
suspension
of
homogeneity
as
well
as
(statistical)
independency
of
voters,
and
after
an
extension
to
a
choice
set
of
more
than
two
alternatives.
16
Heterogeneous
Jury
Members
The
assumption
of
homogeneity
can
be
given
up
by
an
extension
of
the
theorem
to
heterogeneous
skills
and
information
among
jurors
if
at
average
the
correctness-‐probability
remains
at
leas
at
0.5.
If
the
outcome
of
the
vote
is
known
as
well
as
the
rule
used
by
the
group
to
reach
its
decision
it
is
possible
to
derive
proxies
for
inpidual
competences
that
serve
as
a
reference
for
choosing
the
optimal
jury-‐size
and
decision
rule
to
ensure
a
certain
level
of
group-‐
competence.
Low
inpidual
competence
can
be
compensated
by
a
large
jury-‐size,
while
high
inpidual
correctness-‐probabilities
enable
already
small
juries
to
reach
a
correct
decision.
To
maximize
the
probability
of
a
correct
jury-‐decision
in
a
heterogeneous
group
inpidual
votes
can
be
weighted
such
as
the
decision
rule
that
maximizes
the
group´s
probability
of
being
correct
is
given
by
assigning
weights
to
the
jurors.
Analytically
based
on
a
logarithm
Grofman
et.
al.
(1983)
derives
a
theorem,
where
the
weight
assignment
given
to
an
inpidual
depends
exclusively
on
his
competence
independently
of
the
competence
of
other
group
members.
High
inpidual
competence
enables
already
small
juries
with
high
inpidual
weighting
of
votes
to
a
maximal
probability
to
decide
correct
(Grofman, Owen, & Feld, 1983).
Thus
the
heterogeneity
of
inpidual
skills
and
correctness-‐probabilities
supports
the
idea
of
implementing
small
expert
juries
for
optimizing
decision-‐making
A
General
Dependant
Jury
The
assumption
of
statistical
independency
requires
that
there
will
be
no
opinion
leaders,
that
voters
do
neither
communicate,
nor
possess
common
information
or
values,
concerning
culture,
religion,
beliefs
etc.
A
relaxation
if
the
independency-‐assumption
leads
to
mixed
results.
In
the
case
of
negative
correlation,
nonmonotonic
decision
rule
may
lead
to
better
results
than
simple
or
weighted
majority
voting.
Therefore
majority
voting
is
not
necessarily
the
optimal
decision
rule
when
jurors
have
identical
competence (Berg, 1996).
Marginal
changes
in
correlation
among
voters
may
have
only
little
effects
on
the
collective
probability
for
a
correct
outcome.
However
assuming
positive
17
correlation
the
effectiveness
of
majority
rule
voting
decreases
with
an
increasing
degree
of
positive
correlation.
Negative
correlation
that
increases
group
competence
can
mitigate
or
eliminate
those
harmful
effects
of
dependency
by
the
statistical
mechanism
defined
by
CJT
but
in
binary
choices
the
correlation
if
it
is
negative
will
be
small
and
decreasing
in
increasing
jury
size.
Replacing
independent
variables
by
symmetric
dependant
variables
in
a
correlated
binomial
distribution
Berg
(1996)
produces
the
result
that
jury
competence
decreases
linearly
with
the
correlation.
A
moderate
degree
of
inpidual
competence
and
a
high
degree
of
positive
correlation,
leads
to
a
group
competence
that
may
even
fall
beyond
the
inpidual
competence
of
a
juror.
Thus
the
marginal
utility
of
an
additive
jury
member
will
even
be
negative (Berg,
1996)
and
the
infallibility
in
the
limit
is
not
assured.
However
assuming
heterogeneous
inpidual
competences
that
vary
across
a
jury
according
to
a
beta
distribution,
Berg
(1996)
shows
that
the
first
part
of
Condorcet
Jury
Theorem
extends
to
this
beta-‐binomial
model
and
group
competences
indeed
exceeds
inpidual
competence.
To
extend
the
second
part
of
the
Condorcet
Jury
Theorem
to
the
beta-‐binomial
case,
correlation
has
to
vanish
quickly
in
increasing
jury
size.
The
Condorcet
Jury
Theorem
holds
assuming
dependent
voters
if
Juries
are
rather
small
with
a
high
inpidual
competence
and/or
there
is
only
moderate
degree
of
positive
correlation.
Berg
(1996)
concludes
that
generalizations
of
the
Condorcet
Jury
Theorem
taking
it
out
of
its
small-‐group
decision-‐making
context,
to
justify
majority
voting
as
an
efficient
mean
of
aggregating
decentralized
information
by
collective
decision-‐
making
represents
an
extension
to
environments
that
are
far
more
complex
(Berg, 1996).
However
in
small
expert-‐juries
one
may
be
confident
reaching
with
high
probability
a
correct
decision
even
if
there
are
interdependencies.
Dependencies
among
voters
raise
thus
the
question
of
the
extent
to
which
the
conclusions
of
the
Condorcet
Jury
Theorem
continue
to
hold.
Mc
Lennan
(1998)
examines
the
Condorcet
Jury
Theorem
when
a
game
induced
by
the
voting
procedure
is
played
rationally
with
the
result
that
the
profile
of
voting
strategies
constitutes
a
Nash
equilibrium.
He
demonstrates
that
in
a
general
setting
there
18
are
Nash
equilibria
that
have
the
same
properties
as
the
implications
of
sincere
voting
described
by
the
Condorcet
Jury
Theorem.
By
assuming
that
all
inpiduals
have
the
same
preferences
and
the
game
induced
by
voting
procedure
is
a
game
of
common
interest
Mc
Lennan
proofs
„[...]
whenever
sincere
voting
is
a
better
aggregator,
than
inpidual
dictatorship,
an
optimal
strategy
profile
is
both,
at
least
as
good
and
an
equilibrium.
In
addition
as
the
voters
increases,
optimal
strategy
profiles
yield
asymptotically
perfect
decisions
[...]”
(McLennan, 1998, p. 414).
The
implications
of
the
Condorcet
Jury
Theorem
still
hold
if
inpiduals
vote
strategically
according
to
a
symmetric
mixed
strategy
equilibrium
of
the
game
induced
by
voting
procedure.
Peleg
and
Zamir
provide
(2011)
provide
a
sequence
of
a
game
that
satisfies
the
Condorcet
Jury
Theorem
and
give
the
necessary
conditions
for
its
validity (Peleg & Zamir, 2012).
Concluding
that
even
by
assuming
heterogeneity
and
dependency
among
voters
both
parts
of
the
Condorcet
Jury
Theorem
hold.
Especially
the
relaxation
of
its
assumptions
allows
the
claim
that
already
a
small
expert
jury
with
high
inpidual
competence
is
very
likely
to
choose
correct
between
two
alternatives.
Pursuing
common
preferences
and
not
exclusively
inpidual
interests
against
each
other,
a
majority
decision
of
a
large
assembly
decides
as
well
with
a
higher
probability
correct,
than
an
inpidual.
This
probability
with
recourse
to
the
game-‐theoretical
findings
of
Mc
Lennan
(1998),
Peleg
and
Zamir
(2011)
will
asymptotically
increase
with
an
increase
of
group
members.
Thus
the
Condorcet
Jury
Theorem
serves
as
a
reliable
mean
to
aggregate
decentralized
information
by
collective
decision-‐making
even
in
large
assemblies.
However dependencies may lead to strategic voting, especially in the case when one´s
vote is pivotal there are incentives to vote against private information but according to
group-dynamic aspects that involve contrary information. Dependencies and strategic
voting raise questions about the decision rule. As the Condorcet
Jury
Theorem
only
assumes naïve voters majority rule remains not necessarily as the optimal rule.
Empirical
Evidence
–
Challenging
Majority
Rule
Important Juries often use the unanimous rule to optimize the decision outcome.
However this perspective is based on the assumption of non-strategic voting.
19
Incentives for strategic voting in an unanimous juries are fairly high as every single
vote is pivotal, which leads Feddersen and Pesendorfer (1998) to conclude that
unanimity is an inferior decision rule because of the higher probability of strategic
error. This probability of wrong inpidual decision however decreases with
increasing jury member when applying majority rule (Feddersen & Pesendorfer,
1998). Coughlan allows communication among jury members and shows that if it is
possible to have a straw poll before the final vote, there are informative and sincere
equilibria, where voters reveal their information in the straw poll and vote optimally
in the final vote (Coughlan, 2000). This type of voting eliminates the unattractive
aspects of unanimity rule, with regard to strategic voting, and decisions under
majority rule are expected to be identical to those in the non-strategic unanimity case
(Guarnaschelli, McKelvey, & Palfrey, 2000).
Guarnaschelli et. al. (2000) provide empirical evidence running an experimental study
to examine the variables of group size, decision rule and pre-vote deliberation. Voters
received signals about the true state of the world and decided based on this private
information. Votes based exclusively on private information showed evidence for
strategic voting and resulting errors, in a 6-person group to a higher extend than in the
3-person group. In the case of a straw poll, jury members revealed their information
and voted then optimally in the final vote. Shared information eliminated strategic
voting in the unanimity vote, while under majority rule voters adapted strategically
their vote to the outcome of the straw poll. Thus communication could mitigate the
incentives to vote strategically in the unanimity case and created incentives to reflect
about the private information under majority rule. In both cases errors were reduced
(Guarnaschelli, McKelvey, & Palfrey, 2000). This evidence supports the idea of
majority voting leading to correct decisions even under complete suspension of the
independency assumption. In the case of a simultaneous game, errors decrease in size
of the electorate and makes the theorem applicable even for large electorates (if voters
pursue a common goal), while in the case of small jury the aggregation of information
eliminates negative aspects of strategic voting under unanimity rule and creates
incentives to reflect about private signals, which leads to equal and high jury
competence independent of the decision rule.
20
The
Many-‐Option-‐Case
The Extension of the Condorcet
Jury
Theorem
relaxing the assumptions of a
homogeneous and independent jury members allows its extrapolation from juries to
electorates, more generally. However the Condorcet
Jury
Theorem
assumes a binary
choice, which constitutes real limits on the theorem as most important decisions are
not necessarily going to boil down on two options and people are not generally more
than half-likely to choose the right option. An Extension of the Condorcet
Jury
Theorem
to a plurality options case is possible with recourse to the Condorcetian pair
wise comparison. The vote between more than two alternatives is then carried out by
a pairwise decision between the alternatives, but the probability to choose the right
option between each of those pairs still remains by more than 0.5. List and Goodin
(2001) proof that the theorem still holds in the case of more than two alternatives
when the inpidual correctness-probability falls below 0,5 in the many-option case,
as long as inpidual probability to choose the right option is higher than the
probabilities to choose any other option, even if more slowly this likelihood that the
correct option will be the plurality winner increases in the size of the electorate (List
& Goodin, 2001). List and Goodin challenge the plurality rule from the perspective of
epistemic democracy, i.e. to examine whether plurality vote is a reliable truth tracker
in the sense that the outcome reflects the preferences of the electorate. They compare
plurality rule with other social decision rules, like the pairwise Condorcet, the Borda
count, the Hare system and Combs system. By doing this they manifest that already at
a size of 50 voters the outcome of a plurality vote is expected to be the epistemically
desirable outcome and more sophisticated decision rules perform only marginally
better (List & Goodin, 2001). Being a good truth-tracker from the epistemic
perspective and straightforward to carry out, plurality votes among citizens, as
electorates, will reliable reflect their preferences and serve as signals about true
preferences to jurors in expert juries.
Rousseau´s
General
will
-‐
Consensus
beyond
a
“Natural
State”
The CJT
as
a
mean
to
develop
a
true
common
preferences
supports the approach to
identify and pursue common interests by voting. Grofman and Feld (1988) interpret
the theorem, as analytical underpinning of Rousseau’s theory of the general will. An
understanding of the implications of the CJT
enables to clarify and promote
21
Rousseau’s confidence about the possibility to discern the general will by means of
voting in an Assembly of the People. The basic Idea of Rousseau’s notion of the
general will is based on three substantial assumptions: 1) There is a common good,
and 2) citizens do not always judge correctly about what this common good is, but 3)
when citizen strive to identify this common good and vote in accordance with their
perceptions of it, the vote in an Assembly of the People can be understood as most
reliable means to ascertain the common good. Rousseau distinguishes between the
“general will” and the “will of all” and describes the latter as a sum of particular
private self-interests. People differ in inpidual self-interests and care about the
protection and realization of these interests, but there exists a common social major
interest that is approvable even when people decide according to private interests.
People’s judgements about what is in the public interest determines then social values,
as a general will and inpidual self-interest will be cancelled out in the process of
aggregation. CJT
proves in an analytical manner that true social values and
preferences can be determined by majority voting (Grofman & Feld, 1988). There is
similar underlying basic idea of the contract theory of Rawls´ and the general will, but
contrary to Rawls, Rousseau does not expect people to vote behind a “veil of
ignorance” under ideal circumstances of in an abstract of a natural state but under
“reasonable” circumstances that fit more with the model of the “humans” used in the
libertarian paternalism. The general will therefore does not possess the absolute claim
of infallibility but it is always upright and tends towards the public utility. Although
deliberations of the people may have different rectitude, collective judgment is
reliable to declare the general will if assembly members vote under reasonable
conditions, i.e. informed, sincere, and without communication among themselves.
Rousseau’s notion of the general will provides a link to a regulatory concept, which
considers entirely real circumstances. It provides beside the analytical, empirical and
epistemical proofs of the implications of the Condorcet
Jury
Theorem,
a justification
to identify common values by majority voting from a social-democratic perspective.
7. The
Condorcet
Jury
Theorem
in
Practise
-‐
Implications
for
a
soft
paternalistic
implementation
strategy
of
LEDs
The
Condorcet
Jury
Theorem
defends
Libertarian
Paternalism
in
different
ways.
On
the
one
hand
it
can
provide
analytical
arguments
why
people
fail
to
achieve
22
long-‐term
goals,
namely
if
they
are
little
competent,
largely
influenced
and/or
subject
to
contagion.
On
the
other
hand
the
Condorcet
Jury
Theorem
defends
choice
architecture
against
the
knowledge
problem
and
the
question
who
should
be
in
the
position
to
frame
choice
settings.
The
delegation
of
decision-‐making
to
a
Condorcet
Jury
translates
the
substantial
criterion
for
nudging-‐policies´
efficiency
–
the
voluntary
approvability
of
the
recommended
choices
–
to
the
level
of
the
paternalistic
policy
maker
and
heightens
the
libertarian
spirit
of
the
concept.
Thaler
and
Sunstein
imply
that
potentially
approvable
choices
help
inpiduals
to
avoid
inpidual
errors
(Sunstein & Thaler, 2003),
the
CJT
proofs
that
the
approvability
of
choice
frames
within
a
jury
results
in
correct
choice
architecture.
Its
applicability
as
normative
criterion
for
guidelines
that
direct
paternalistic
policy
maker,
outside
the
restrictive
analytical
framework
but
under
circumstances
that
fit
to
real
life
can
be
justified
by
relaxing
the
assumptions
of
homogeneity
and
independence
among
voter
such
as
extending
binary
choice
to
a
many-‐option
case.
Relaxing
these
assumptions,
one
can
conclude
that
in
the
case
of
pursuing
common
interests,
the
Condorcet
Jury
Theorem
even
extends
to
large
electorates
and
the
plurality
winner
of
a
democratic
vote
constitutes
a
reliable
truth-‐tracker
of
citizens´
true
preferences.
What
implications
for
carrying
out
choice
framing
architecture
can
we
derive
from
these
findings?
First,
the
extension
of
the
CJT
provides
a
narrow
definition
in
which
situations
the
signals
about
true
preferences
directed
to
jury-‐members
are
expected
to
give
correct
information
about
inpidual
preferences,
namely
when
people
share
common
interests
and
values,
and
goals
refer
to
collective
social
welfare.
Second,
if
common
preferences
are
signalled
by
majority
votes,
the
application
of
the
CJT
leads
to
a
twofold
safeguard
against
the
knowledge
problem
on
the
level
of
citizen
and
on
jury
level
we
are
assured
to
get
the
right
outcome.
This
justifies
the
delegation
of
the
deliberation
process
about
correct
choices
and
the
decision-‐making
to
a
Condorcet-‐jury.
23
Libertarian
paternalists
assume,
that
inpidual
long-‐term
and
meta-‐preferences
do
exist
but
rather
in
an
expressive
form.
Given
a
certain
majority
that
expresses
long-‐term
values
and
signals
these
true
preferences
to
a
juror,
then
the
outcome
of
a
majority
vote
in
a
jury,
where
jurors
reveal
private
information
and
vote
than
optimally
can
a)
decide
whether
signalled
preferences
are
indeed
true
or
false,
and
b)
which
option
within
a
choice
setting
would
be
the
hypothetically
approvable
and
thus
the
right
one,
and
c)
how
this
option
should
be
recommended
by
a
nudge
like
a
starting
points,
a
default
option
or
other
incentives
mentioned
by
Thaler
and
Sunstein.
Welfare
judgements
are
then
no
more
subject
to
biased
inpidual
choices,
but
to
the
deliberation
process
and
the
decision-‐making
competence
of
a
jury,
whose
expert-‐members
distinguish
themselves
by
high
inpidual
competence
and
maximize
jury
competence
already
at
small
jury
size.
Condorcet-‐juries
then
enable
to
run
an
effective
strategy
in
order
to
boost
social
values
and
long-‐term
goals
without
imposing
taxes
or
bans
on
inpiduals.
True
preferences
can
be
observed
either
by
referring
to
empirical
studies
and
surveys
as
already
mentioned
by
Thaler
and
Sunstein
or
they
can
be
expressed
by
voting
in
opinion
polls
when
people
answer
from
a
long-‐term
perspective.
This
kind
of
“voting”
applies
directly
to
the
notion
of
Rousseau’s
general
will.
True
preferences
however
can
also
be
expressed
by
consumers´
choices
and
explicit
changes
in
inpidual
work-‐,
leisure-‐
or
especially
consumption-‐
behaviour.
Consumers
would
then
“vote
by
foot”.
These
changes
then
are
based
upon
an
explicit
and
reflective
decision
against
previous
behavioural
pattern
and
potentially
signal
true
preferences,
if
explicit
changes
in
inpidual
behaviour
are
greatly
appreciated,
so
that
they
find
a
strong
and
increasing
consent
among
the
population
and
may
lead
to
behavioural
turnarounds.
In
this
case
a
subsidiary
organisation
and
implementation
of
Condorcet-‐juries
offers
promising
possibilities
for
the
application
of
the
Condorcet
Jury
Theorem
and
weaken
the
argument
found
in
Rizza
about
missing
local
knowledge
of
a
planner
(Rizzo &
Whitman, 2009, p. 905f).
As
local
juries
are
close
in
touch
with
people
they
can
examine
rather
quickly
and
in
a
differentiated
manner
whether
collective
changes
introduce
a
behavioural
turnaround
a
or
not
and
examine
if
such
a
24
paradigm
shift
of
consumption
behaviour
involves
a
pareto-‐improvement.
If
there
is
a
pareto-‐improvement
to
be
expected,
a
citizen-‐friendly
jury
is
able
to
decide
optimally
how
to
support
in
a
well-‐directed
manner
welfare-‐enhancing
behavioural
trends
and
then
derive
choice
frames
to
promote
the
desired
option.
A
structure
of
implementing
expert
juries
according
to
the
subsidiary
principle
would
enable
them
to
catch
and
boost
best
possible
the
dynamics
of
new
social
values,
whenever
there
occurs
a
pareto-‐efficient
change
of
population’s
ideas
and
values.
In
particular
the
federal
structure
in
Germany
enables
an
implementation
of
juries
with
a
subsidiary
character
to
advance
changes
in
trends
that
have
emerged
in
the
recent
years,
like
trends
towards
consuming
renewable
energies,
organic
food,
fair-‐trade
as
well
as
sustainable
products
or
the
support
of
local
and
regional
agriculture
and
economy.
The
subsidiary
degree
determines
to
what
extent
a
successful
and
differentiated
inquiry
in
common
preferences
is
feasible,
to
boost
these
preferences
and
respect
at
the
same
time
the
plurality
and
subjectivity
of
inpidual
values.
Thaler and Sunstein already mentioned the successful effect to save energy and
resources only through green default-options and information architecture, e.g. by
informing consumers about the anonymous energy consumption of same-sized
households in the neighbourhood on the energy consumption bill (Thaler & Sunstein,
2012). Energy supplier could set a green default option with the possibility to opt out
to another tariff. The example of the community of Schönau in the Black Forest
illustrates the power of default rules. The opt out rate of the green default to use other
energy sources than the environmental-friendly energy of Schönau Power Company
has been less than 1% in the recent years. Saving resources however can also be
implemented by setting default options on the working place like printer settings from
“print on a single-page” to “print on front-and-back (Sunstein & Reisch, 2014)”.
While “buying green” or in particular “buying organic” is often done for status
reasons information provision like symbols e.g. a “fair-trade” or “organic” seal
provides soft incentives. “Behaving green” however is less visible and due to
automatic and rapid judgement, people often fail to pursue this social long-term goal,
the concept of regional expert juries to design choice frames to use the large effect of
25
default rules offers promisingly possibilities to boost the transition in the use of
energy.
8. A paternalistic implementation for LED bulbs
In the light of new challenges for environmental policies caused by climate change a
paradigm shift of consumers´ behaviour towards the consumption of sustainable LED
bulbs instead of the banned incandescent light bulbs or halogen bulbs offers a
promising success in facing the climate change challenges. Assuming that there is a
self-binding consent about the common long-term goal of saving energy to face the
climatic heating, nudging policies to foster LED bulb acceptance among consumers
offer a new perspective in environmental policies while retaining from bans and
coercion.
Considering the consumption of sustainable LED bulbs, juries could optimally design
nudging strategies with respective policies, taking into account that even if there
exists the consent of energy-saving consumption, consumers often choose less
expensive light bulbs than sustainable LED. Either they run an immediate cost-benefit
analysis and suffer a hyperbolic discounting, or they are unaware about the particular
attributes of LEDs (like amount of lumen or light-colour) their respective preferences
and spare the search costs for their inpidual appropriate “good of light”. A
differentiated implementation of a jury would mean: one has to develop which
expertise of jurors does best meet the respective target group of consumers. Private
consumers, huge enterprises, factories where workers work night shifts or public
institutions like schools or day-nurseries will have different preferences regarding
light-colour, light-power (lumen) or quantities. Juries implemented close to respecting
consumers can absorb signals about different preferences regarding the attributes of
LED bulbs, the willingness to pay to pursue the long-term “sustainability- preference”
and the intense of this preference. Observing different target groups a Condorcet jury
are as well able to identify for which reasons some consumers might not follow these
preferences. After a deliberation process within a Condorcet jury, experts decide
about strategies to establish and boost preferences for sustainable lightning systems
with aiming for example to an increase of the willingness to pay thanks to a deeper
understanding of the value “sustainability”, or by providing information about the
different attributes of LEDs to minimize the search costs of uninformed consumers.
26
9. Conclusion
This paper argues that the character of consensus of libertarian paternalism justifies
its profitability and implies reliability on majority votes. The Condorcet
Jury
Theorem
provides an analytical approach to defend libertarian paternalism against
the knowledge problem. Turning theory into reality, The Condorcet
Jury
Theorem
is
able to justify choice framing interference in inpidual decision-making referring to
common values. This form of social nudging is promising in areas like consumer or
environmental protection, social justice and sustainability in the use of resources,
where inpiduals often fail to act according to long-term goals, due to cognitive
shortcomings. However, interference in the purely inpidual lifestyle can only be
justified if there are collective values to develop of how a “correct” life-balance
should look like. Whether people should be nudged to “help” them facing self-control
problems, which consequences has to bear only the inpidual himself e.g. by
promoting healthy food or higher savings, depends if at all a collective moral concept
about e.g. “a healthier-lifestyle” or “a sustainable retirement” exists, that still respects
plurality and subjectivity of inpidual values. In this case the critics about a missing
theoretical underpinning or a “Nanny-State” may be fair. Examining a soft
paternalistic implementation of sustainable LEDs to face the challenge of climate
warming I conclude: if and to which degree of interference into inpidual decisions
and life-balance, a Condorcet jury will be a wise planner and able to derive common
preferences and values depends on the subsidiary degree of jury-implementation. The
more citizen-friendly choice framing and decision-making is delegated the closer to
citizens everyday needs can choice frames be set. Referring to Rizzo (2009) who
acknowledges: “Yet friends and family are more likely than policymakers to have the
local knowledge necessary to make wise decisions” (Rizzo & Whitman, 2009, p. 924)
In general and referring to the most famous examples of Sunstein and Thaler, a
parent’s or works council may debate about the arrangement of healthy and unhealthy
food in the cafeteria or whether and how to implement saving plans. If necessary it
can decide whether to help those who would be grateful for a nudge to resist certain
temptations. Public institutions on higher institutional level however, should refrain
doing so, as they cannot be assured to respect private subjective preferences.
Regarding the pursuit of common long-term goals a so-called social nudging, in
27
particular the sustainable consumption of light and the increase of market acceptance
of LED, the Condorcet
Jury
Theorem
proofs that a Condorcet jury if implemented in
a subsidiary manner can successfully identify and promote preferences for sustainable
light consumption and respective LED attributes. The precision to observe and absorb
signals of “true” preferences increases in the degree of the intensity the subsidiary
principle will be applied. With regard to the implications of the Condorcet
Jury
Theorem, we can be confident about a Condorcet jury to select the right option in a
choice setting based on signals of “true” preferences even outside the pure model-
framework and under realistic assumptions. The approach to implement Condorcet
juries in accordance with the subsidiary principle, allows to a large extend a precise
inquiry in inpidual preferences and offers promisingly possibilities to apply (social)
welfare-enhancing choice framing that respects subjectivity and plurality of inpidual
values, within institutional frameworks that are citizen-friendly and close to affected
people.
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