The Legal Theory Bookworm recommends The Strategic Constitution by Robert D. Cooter. Here is a description:
Making, amending, and interpreting constitutions is a political game that can yield widespread suffering or secure a nation’s liberty and prosperity. Given these high stakes, Robert Cooter argues that constitutional theory should trouble itself less with literary analysis and arguments over founders’ intentions and focus much more on the real-world consequences of various constitutional provisions and choices. Pooling the best available theories from economics and political science, particularly those developed from game theory, Cooter’s economic analysis of constitutions fundamentally recasts a field of growing interest and dramatic international importance.
By uncovering the constitutional incentives that influence citizens, politicians, administrators, and judges, Cooter exposes fault lines in alternative forms of democracy: unitary versus federal states, deep administration versus many elections, parliamentary versus presidential systems, unicameral versus bicameral legislatures, common versus civil law, and liberty versus equality rights. Cooter applies an efficiency test to these alternatives, asking how far they satisfy the preferences of citizens for laws and public goods.
To answer Cooter contrasts two types of democracy, which he defines as competitive government. The center of the political spectrum defeats the extremes in "median democracy," whereas representatives of all the citizens bargain over laws and public goods in "bargain democracy." Bargaining can realize all the gains from political trades, or bargaining can collapse into an unstable contest of redistribution. States plagued by instability and contests over redistribution should move towards median democracy by increasing transaction costs and reducing the power of the extremes. Specifically, promoting median versus bargain democracy involves promoting winner-take-all elections versus proportional representation, two parties versus multiple parties, referenda versus representative democracy, and special governments versus comprehensive governments.
This innovative theory will have ramifications felt across national and disciplinary borders, and will be debated by a large audience, including the growing pool of economists interested in how law and politics shape economic policy, political scientists using game theory or specializing in constitutional law, and academic lawyers. The approach will also garner attention from students of political science, law, and economics, as well as policy makers working in and with new democracies where constitutions are being written and refined.
And from the reviews:
Donald J. Boudreaux, American Law and Economics The Strategic Constitution comprehensively analyzes constitutional issues. The result is impressive.
Review Susan Rose-Ackerman Political Science Quarterly : The book has an admirable emphasis on constitutional structure and on the strategic opportunities created by alternative ways of organizing government.
Journal of Economics : A tour de force through a large number of fields of economic theory. . . . Written in a lively language . . . fun to read.
"For anyone looking for a textbook that provides a systematic introduction to the economic analysis of constitutional law in an accessible manner while covering a wide range of topics, it would . . . be hard to find a more suitable book. . . . [It] will encourage students to think about constitutional analysis from a new perspective in an engaging way."–Georg Vanberg, Law and Politics Book Review.