The Israelis have been experimenting with a variety of formulas – largely as a result of the desire of the secular parties to minimize the influence of the religious.
Israel has a parliamentary system meaning that the government is run by the party or coalition controlling the parliament. It doesn’t have to be the largest party, and after the previous election it was the party with the second highest totals that was able to form a majority government. An advantage of a parliamentary system is that the legislature and the executive always work together, without gridlock (as opposed to he USA, with an executive chosen separately from the legislature). The Israeli experimented with a system by which the prime minister was chosen is a separate ballot, and they ended up with a prime minister from one party and a kenesset dominated by the opposition – which doesn’t work in a parliamentary system. Some Israelis have preferred a “strong president” system such as the USA, but that could lead to a new set of problems.
In addition Israel uses proportional representation, which is reasonable given Jewish history (we always try to be inclusive, rather than preferring to have a ruling group and ignoring the rest). Thus no party gets a majority. However for the period 1948-1977 the socialist parties usually had majority, and from 1977-2013 the nationalist parties usually had a majority. Since the hareidim are being kicked out of the “nationalist” camp, it isn’t clear will be in the future.