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Tying the Politicians’ Hands: The Optimal Limits to Representative Democracy

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  • Didier Laussel
  • Ngo Van Long

Abstract

The citizen-candidate models of democracy assume that politicians have their own preferences that are not fully revealed at the time of elections. We study the optimal delegation problem which arises between the median voter (the writer of the constitution) and the (future) incumbent politician under the assumption that not only the state of the world and but also the politician's type (preferred policy) are the policy-maker's private information. We show that it is optimal to tie the hands of the politician by imposing both a policy floor and a policy cap and delegating him/her the policy choice only in between the cap and the floor. We establish two uncertainty principles: (a) the state-uncertainty principle, which states that the greater is the uncertainty about the state of the world, the wider is the delegation interval, and (b) the bias-uncertainty principle, which states that the greater is the uncertainty about political bias, the smaller is the delegation interval. Les récents modèles de la démocratie supposent que les hommes politiques ont leurs propres préférences qui ne sont pas pleinement révélées au moment des élections. Nous étudions le problème de délégation optimale qui se pose entre le votant médian (l'auteur de la constitution) et le (futur) politicien sous l’hypothèse que non seulement l'état du monde mais aussi le type de politicien sont des informations privées. Nous montrons qu'il est optimal de lier les mains du politicien en lui imposant à la fois un plancher et un plafond, et en lui déléguant le choix politique seulement entre le plafond et le plancher. Nous établissons deux principes d’incertitude : (a) le principe d’incertitude des états, selon lequel plus l’incertitude sur l’état du monde est grande, plus l’intervalle de délégation est large, et (b) le principe d’incertitude sur les biais, qui exige que l'intervalle de délégation soit une fonction décroissante de l’incertitude sur le type du politicien.

Suggested Citation

  • Didier Laussel & Ngo Van Long, 2019. "Tying the Politicians’ Hands: The Optimal Limits to Representative Democracy," CIRANO Working Papers 2019s-14, CIRANO.
  • Handle: RePEc:cir:cirwor:2019s-14
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    References listed on IDEAS

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    Keywords

    Representative Democracy; Optimal Delegation; Political Uncertainty; Policy Caps; Policy Floors; Citizen Candidates; Démocratie représentative; Délégation optimale; Incertitude politique; Plafonds de politique; Planchers de politique; Candidats citoyens;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H10 - Public Economics - - Structure and Scope of Government - - - General

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