Information and Dynamic Adjustment in Life Insurance Markets

We analyze an overlapping generations model of voting over ``reform projects''. These resemble investments in that they first require some investment expenditure and later bring a payoff; consequently, older people are more conservative (against reforms) than younger ones. We show that if people vote about a constitution (which is a rule what majority is required in an election for a reform to take place), the constitution will require more than a simple majority. Moreover, from an intuitive social point of view, the equilibrium constitution is too conservative.