A central feature of collective decision-making in many social groups, such as political coalitions, international unions, or private clubs, is that the rules that govern the procedures for future decision-making and the inclusion and exclusion of members are made by the current members and under the
current regulations. This feature implies that dynamic collective decisions must recognize the implications of current decisions on future choices. For example, current constitutional change must take into account how the new constitution may pave the way for further changes in laws and regulations. We develop a general framework for the analysis of this class of problems. We provide both an axiomatic and a non-cooperative characterization of dynamically stable states and show that, under reasonable assumptions, these exist and are unique. We then apply our framework to a variety of problems in political economy, in coalition formation, and in the analysis of the dynamics of clubs. Major insights that emerge from this framework are: (1) A particular social arrangement is made stable by the instability of alternative arrangements that are preferred by sufficiently many members of the society. For example, stability of a constitution does not require absence of powerful groups opposing it, but the absence of an alternative constitution favored by powerful groups. (2) Efficiency-enhancing changes are often resisted because of further social changes that they will engender. Consequently, Pareto inefficient social arrangements often emerge as stable outcomes.