Explaining Institutional Change: Why Elected Politicians Implement Direct Democracy

Why did representative politicians introduce direct democratic reforms, thus binding their own hands? This paper presents a formal model in which (1) voters are uncertain about their representative’s preferences; (2) direct and representative elections are substitute methods for voters to control outcomes. Some politicians benefit from the introduction of direct democracy, since they are more likely to survive representative elections. Historical evidence from the introduction of the initiative, referendum and recall in America supports the theory, which also explains two puzzling empirical results: legislators are trusted less, but reelected more, in US states with direct democracy.