How preferences change institutions: The 1978 energy Act

In this article, we advance a generic theory of institutional change and illustrate it through a study of the Gas Deregulation Act of 1977-78. The passage of the Act provides an informative case study about institutional change as an innovative postcloture filibuster was implemented, and then defeated, in the course of the debate. Contrary to Shepsle's argument that institutions determine outcomes, we argue that the legislative majority shaped the institution to get the policy outcome it wanted. We find evidence that negotiations among competing coalitions constrained outcomes to be inside the uncovered set. When the filibuster-related rules threatened to lead to an outcome outside of the uncovered set, the rules were changed to avoid this outcome. Our analysis calls into question both the view of majority rule as generically leading to chaos and the view that institutions are the essential tool to overcome such instability.