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Representative versus Direct Democracy: The Role of Informational Asymmetries

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Author Info
Anke Kessler

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Abstract

The paper studies the relative merits of direct and representative legislation in a setting where voters are uncertain both with respect to the likely consequences of different policies and with respect to the political preferences of their fellow citizens. Under representative legislation, the latter translates into uncertainty on the elected official's future policy intentions which involves a loss of control. The resulting discretionary power, however, also leads officials to endogenously acquire competence on the issues they oversee and specialize in policy formation. Policies determined in representative democracies are therefore better tailored to relevant contingencies but less close to the preferences of a majority than those determined in popular ballots. It is shown that the extent of the resulting trade-off depends on the set of alternatives among which the policy is to be chosen. Two extensions, referenda and the possibility of re-election, are briefly considered.

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File URL: ftp://web.bgse.uni-bonn.de/pub/RePEc/bon/bonedp/bgse18_2000.pdf
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Publisher Info
Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse18_2000.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 35
Date of creation: Nov 2000
Date of revision:
Handle: RePEc:bon:bonedp:bgse18_2000

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Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 9221
Web page: http://www.bgse.uni-bonn.de/index.php?id=494

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Related research
Keywords: Direct Democracy; Representative Democracy; Constitutional Choice; Delegation; Asymmetric Information;

Other versions of this item:

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Friedrich Schneider, 1999. "Die Entwicklung der Sozialpolitik in repräsentativen und in direkten Demokratien: Königsweg oder Sackgasse? Einige Bemerkungen aus der "Public Choice"-Perspektive," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 135(III), pages 387-406, September. [Downloadable!]
  2. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
    Other versions:
  3. Feld, Lars P. & Matsusaka, John G., 2003. "Budget referendums and government spending: evidence from Swiss cantons," Journal of Public Economics, Elsevier, vol. 87(12), pages 2703-2724, December. [Downloadable!] (restricted)
  4. Castanheira, Micael, 2002. "On the (Non) Paradox of (Not) Voting," CEPR Discussion Papers 3126, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. Osborne, Martin J & Slivinski, Al, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 65-96, February. [Downloadable!] (restricted)
    Other versions:
  6. Harrington, Joseph E, Jr, 1993. "Economic Policy, Economic Performance, and Elections," American Economic Review, American Economic Association, vol. 83(1), pages 27-42, March.
  7. Steunenberg, Bernard, 1992. "Referendum, Initiative, and Veto Power: Budgetary Decision Making in Local Government," Kyklos, Blackwell Publishing, vol. 45(4), pages 501-29.
  8. Matsusaka, John G, 1992. "Economics of Direct Legislation," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 541-71, May. [Downloadable!] (restricted)
  9. Osband, Kent, 1989. "Optimal Forecasting Incentives," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1091-1112, October. [Downloadable!] (restricted)
  10. Frey, Bruno S, 1994. "Direct Democracy: Politico-economic Lessons from Swiss Experience," American Economic Review, American Economic Association, vol. 84(2), pages 338-42, May. [Downloadable!] (restricted)
  11. Anthony M. Marino & John G. Matsusaka, 2005. "Decision Processes, Agency Problems, and Information: An Economic Analysis of Capital Budgeting Procedures," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 18(1), pages 301-325. [Downloadable!] (restricted)
  12. Cukierman, Alex & Tommasi, Mariano, 1998. "When Does It Take a Nixon to Go to China?," American Economic Review, American Economic Association, vol. 88(1), pages 180-97, March. [Downloadable!] (restricted)
    Other versions:
  13. Feld, Lars P. & Kirchgassner, Gebhard, 2000. "Direct democracy, political culture, and the outcome of economic policy: a report on the Swiss experience," European Journal of Political Economy, Elsevier, vol. 16(2), pages 287-306, June. [Downloadable!] (restricted)
  14. Besley, Timothy & Coate, Stephen, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 85-114, February.
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  15. Lars P. Feld & John G. Matsusaka, 2000. "Budget Referendums and Government Spending: Evidence from Swiss," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  16. Besley, Timothy & Coate, Stephen, 1998. "Sources of Inefficiency in a Representative Democracy: A Dynamic Analysis," American Economic Review, American Economic Association, vol. 88(1), pages 139-56, March. [Downloadable!] (restricted)
  17. Matsusaka, John G & McCarty, Nolan M, 2001. "Political Resource Allocation: Benefits and Costs of Voter Initiatives," Journal of Law, Economics and Organization, Oxford University Press, vol. 17(2), pages 413-48, October.
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christian Schultz, 2003. "Information, Polarization and Delegation in Democracy," EPRU Working Paper Series 03-16, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]
    Other versions:
  2. Simon Hug, 2009. "Some thoughts about referendums, representative democracy, and separation of powers," Constitutional Political Economy, Springer, vol. 20(3), pages 251-266, September. [Downloadable!] (restricted)
  3. Lars Feld, 2005. "The European constitution project from the perspective of constitutional political economy," Public Choice, Springer, vol. 122(3), pages 417-448, March. [Downloadable!] (restricted)
    Other versions:
  4. Lars P. Feld & Gebhard Kirchgässner, 2004. "The Role of Direct Democracy in the European Union," Marburg Working Papers on Economics 200423, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
    Other versions:
  5. John Matsusaka, 2005. "The eclipse of legislatures: Direct democracy in the 21st century," Public Choice, Springer, vol. 124(1), pages 157-177, July. [Downloadable!] (restricted)
  6. Fischer, Justina AV, 2009. "Development of Direct Democracy in Swiss Cantons between 1997 and 2003," MPRA Paper 16140, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-17.

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