Referendum Design: An Exercise in Applied Social Choice Theory

The formal status of the referendum institution in democratic system varies from consultative and optional to mandatory and binding. Despit the formal status, it can be argued that in all systems the legislators can hardly ignore the referendum results. The article presents two arguments: (1) The results of social choice theory suggest that the number of alternatives in referenda should to be restricted to two in order to a void severe problems of interpretation and agenda manipulation. (2) The consultative referendum system may lead to quite dramatic norm conflicts for both legislators and voters. Taken together, these two arguments imply that referenda are appropriate only in cases where there is natural way to dichotomize the issue at hand. Moreover, whenever a referendum is called, its result should be binding.