Referendum paradox in a federal union with unequal populations: the three state case

In a federal union, a referendum paradox occurs each time a decision taken by representatives elected in separate jurisdictions (districts, states, regions) conflicts with the decision that would have been adopted if the voters had directly given their opinion via a referendum (Nurmi 1999). Assuming that the population is split into three jurisdictions of respective size n1, n2 and n3, we derive exact formulas for the probability of the referendum paradox under the Impartial Culture model. Then we use these results to show that, in our model, allocating seats to the juridictions proportionally to the square root of their size is an apportionment rule that fails to minimize the probability of the referendum paradox in some federations.