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Representative versus Direct Democracy: The Role of Informational Asymmetries

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  • Kessler, Anke

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.

Suggested Citation

  • Kessler, Anke, 2003. "Representative versus Direct Democracy: The Role of Informational Asymmetries," CEPR Discussion Papers 3911, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3911
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    References listed on IDEAS

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    Cited by:

    1. Castanheira, Micael & Nicodème, Gaëtan & Profeta, Paola, 2011. "On the political economics of tax reforms," CEPR Discussion Papers 8507, C.E.P.R. Discussion Papers.
    2. Dimitrios Xefteris, 2011. "Referenda as a Catch-22," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(1), pages 121-138, June.
    3. Galletta, Sergio & Jametti, Mario, 2015. "How to tame two Leviathans? Revisiting the effect of direct democracy on local public expenditure in a federation," European Journal of Political Economy, Elsevier, vol. 39(C), pages 82-93.
    4. Lars P. Feld & Gebhard Kirchgässner, 2003. "The Role of Direct Democracy in the European Union," CESifo Working Paper Series 1083, CESifo Group Munich.
    5. John Matsusaka, 2005. "The eclipse of legislatures: Direct democracy in the 21st century," Public Choice, Springer, vol. 124(1), pages 157-177, July.
    6. Buehler, Benno & Kessler, Anke, 2010. "Ideologues: Explaining Partisanship and Persistence in Politics (and Elsewhere)," CEPR Discussion Papers 7724, C.E.P.R. Discussion Papers.
    7. Simon Hug, 2009. "Some thoughts about referendums, representative democracy, and separation of powers," Constitutional Political Economy, Springer, vol. 20(3), pages 251-266, September.
    8. Lars Feld, 2005. "The European constitution project from the perspective of constitutional political economy," Public Choice, Springer, vol. 122(3), pages 417-448, March.
    9. Gebhard Kirchgässner, 2009. "60 Jahre Grundgesetz der Bundesrepublik Deutschland: Einige Bemerkungen zu Demokratie und Föderalismus in Deutschland aus schweizerischer Perspektive," University of St. Gallen Department of Economics working paper series 2009 2009-28, Department of Economics, University of St. Gallen.
    10. Seebauer, Michael, 2015. "Does direct democracy foster efficient policies? An experimental investigation of costly initiatives," FAU Discussion Papers in Economics 01/2015, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    11. George Tridimas, 2010. "Referendum and the choice between monarchy and republic in Greece," Constitutional Political Economy, Springer, vol. 21(2), pages 119-144, June.
    12. George Tridimas, 2012. "Constitutional choice in ancient Athens: the rationality of selection to office by lot," Constitutional Political Economy, Springer, vol. 23(1), pages 1-21, March.
    13. Le Bihan, Patrick, 2015. "Popular Referendum and Electoral Accountability," IAST Working Papers 15-31, Institute for Advanced Study in Toulouse (IAST).
    14. John G. Matsusaka, 2005. "Direct Democracy Works," Journal of Economic Perspectives, American Economic Association, vol. 19(2), pages 185-206, Spring.
    15. Tridimas, George, 2007. "Ratification through referendum or parliamentary vote: When to call a non-required referendum?," European Journal of Political Economy, Elsevier, vol. 23(3), pages 674-692, September.
    16. Justina AV Fischer & Antonio Rodriguez-Andr�s, 2008. "Political institutions and suicide: A regional analysis of Switzerland," TWI Research Paper Series 33, Thurgauer Wirtschaftsinstitut, Universit�t Konstanz.
    17. Fischer, Justina AV, 2009. "Development of Direct Democracy in Swiss Cantons between 1997 and 2003," MPRA Paper 16140, University Library of Munich, Germany.
    18. Mario Jametti, 2014. "Weathering the Global Financial Crisis - Is Direct Democracy of any Help?," IdEP Economic Papers 1405, USI Università della Svizzera italiana.

    More about this item

    Keywords

    constitutional choice; delegation; direct democracy; representative democracy;

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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