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Explaining Institutional Change: Why Elected Politicians Implement Direct Democracy

  • David Hugh-Jones


    (Max Planck Institute of Economics, Jena)

In existing models of direct democratic institutions, the median voter beneï¬ts, but representative politicians are harmed since their policy choices can be overridden. This is a puzzle, since representative politicians were instrumental in creating these institutions. I build a model of direct democracy that explains why a representative might beneï¬t from tying his or her own hands in this way. The key features are (1) that voters are uncertain about their representative's preferences; (2) that direct and representative elections are complementary ways for voters to control outcomes. The model shows that some politicians beneï¬t from the introduction of direct democracy, since they are more likely to survive representative elections: direct democracy credibly prevents politicians from realising extreme outcomes. Historical evidence from the introduction of the initiative, referendum and recall in America broadly supports the theory, which also explains two empirical results that have puzzled scholars: legislators are trusted less, but reelected more, in US states with direct democracy. I conclude by discussing the potential for incomplete information and signaling models to improve our understanding of institutional change more generally.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2008-085.

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Date of creation: 10 Nov 2008
Date of revision:
Handle: RePEc:jrp:jrpwrp:2008-085
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  1. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
  2. Jeffrey Banks & John Duggan, 2006. "A Social Choice Lemma on Voting Over Lotteries with Applications to a Class of Dynamic Games," Social Choice and Welfare, Springer, vol. 26(2), pages 285-304, April.
  3. Cukierman, A. & Tommasi, M., 1997. "When does it take a Nixon to go to China?," Discussion Paper 1997-91, Tilburg University, Center for Economic Research.
  4. In-Koo Cho & David M. Kreps, 1997. "Signaling Games and Stable Equilibria," Levine's Working Paper Archive 896, David K. Levine.
  5. Acemoglu,Daron & Robinson,James A., 2006. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521855266.
  6. Carles Boix, 1999. "Setting the rules of the game: The choice of electoral systems in advanced democracies," Economics Working Papers 367, Department of Economics and Business, Universitat Pompeu Fabra.
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