Endogenous choice of electoral rules in a multiparty system with two major dominant parties

In this paper we develop a basic model of endogenous choice of electoral rules in a multiparty system with two major dominant parties, that have a positive probability to win the election, in an environemnt of uncertainty about the outcome of the election (adding extra non-dominant ones does not alter the results). Using quasi-lexicographic preferences over the number of seats necessary for a party to form a single-party government (i.e win the majority of the seats in the parliament and pass legislation at will) we explore the choice of the electoral law by the parties. We show that the minor parties never agree to an electoral reform that moves away from the Proportional Representation system (PR). We also show that in the case where the electoral competition among the two dominant parties is non-trivial there exists a unique and stable equilibrium were a unique new electolar rule is being adapted by the parliament in substitution of the pre-existing PR rule. That is we show that there exist strategic incentives that drive the two dominant parties to collude in the presence of uncertainty about the outcome of the elections. The key factor that drives the result is the desire of the parties to secure the majority of the seats in the parliament and not jus