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Direct Democracy, Political Delegation, and Responsibility Substitution

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  • Carlo Prato
  • Bruno Strulovici

Abstract

Can direct democracy provisions improve welfare over pure representative democracy? This paper studies how such provisions affect politicians’ incentives and selection. While direct democracy allows citizens to correct politicians’ mistakes, it also reduces the incentives of elected representatives to search for good policies. This responsibility substitution reduces citizens’ ability to screen competent politicians, when elections are the only means to address political agency problems. A lower cost of direct democracy induces a negative spiral on politicians incentives, which we characterize by a disincentive multiplier. As a consequence, introducing initiatives or lowering their cost can reduce voters’ expected utility. Moreover, when elections perform well in selecting politicians and provide incentives, this indirect welfare reducing effect is stronger.

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Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1515.

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Date of creation: 09 Dec 2010
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Handle: RePEc:nwu:cmsems:1515

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Keywords: Direct Democracy; Initiative; Referendum; Political Agency; Delegation JEL Classification Numbers: D72; D78; P16;

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Cited by:
  1. Tim Willems, 2013. "Political Accountability and Policy Experimentation: Why to Elect Left-Handed Politicians?," Economics Series Working Papers 647, University of Oxford, Department of Economics.

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