The Optimal Majority Threshold as a Function of the Variation Coefficient of the Environment
Provides theoretical results for optimal collective decision-making in stochastic environments, relevant to social dynamics and economics.
The paper derives expressions for the optimal majority threshold and maximum expected capital increment in a homogeneous society of rational egoists, as functions of environmental parameters, and identifies an absolute constant for the threshold's rate of change at zero.
Within the model of social dynamics determined by collective decisions in a stochastic environment (ViSE model), we consider the case of a homogeneous society consisting of classically rational economic agents (or homines economici, or egoists). We present expressions for the optimal majority threshold and the maximum expected capital increment as functions of the parameters of the environment. An estimate of the rate of change of the optimal threshold at zero is given, which is an absolute constant: $(\sqrt{2/π}-\sqrt{π/2})/2$.