A Political Winner’s Curse: Why Preventive Policies Pass Parliament so Narrowly
Preventive policy measures such as bailouts often pass parliament very narrowly. We present a model of asymmetric information between politicians and voters which rationalizes this narrow parliamentary outcome. A successful preventive policy impedes the verification of its own necessity. When policy intervention is necessary but voters disagree ex-ante, individual politicians have an incentive to loose the vote in parliament in order to be rewarded by voters ex-post. Comfortable vote margins induce incentives to move to the loosing fraction to avoid this winner’s curse. In equilibrium, parliamentary elections over preventive policies are thus likely to end at very narrow margins.
|Date of creation:||May 2012|
|Date of revision:|
|Contact details of provider:|| Postal: Hohenzollernstraße 1-3, 45128 Essen|
Web page: http://www.rwi-essen.de/
More information through EDIRC
|Order Information:||Web: http://www.rwi-essen.de/publikationen/|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Duch, Raymond M. & Stevenson, Randolph T., 2011. "Context and Economic Expectations: When Do Voters Get It Right?," British Journal of Political Science, Cambridge University Press, vol. 41(01), pages 1-31, January.
- Christian Schultz, .
"Monetary Policy, Delegation and Polarization,"
EPRU Working Paper Series
98-19, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Diermeier, Daniel & Merlo, Antonio, 1998.
"Government Turnover in Parliamentary Democracies,"
98-31, C.V. Starr Center for Applied Economics, New York University.
- Daniel Diermeier & Antonio Merlo, 1998. "Government Turnover in Parliamentary Democracies," Discussion Papers 1232, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Diermeier, Daniel & Merlo, Antonio, 1998. "Government turnover in parliamentary democracies," Bulletins 7453, University of Minnesota, Economic Development Center.
- Cukierman, Alex & Tommasi, Mariano, 1998.
"When Does It Take a Nixon to Go to China?,"
American Economic Review,
American Economic Association, vol. 88(1), pages 180-97, March.
- Cukierman, A. & Tommasi, M., 1997. "When Does It Take a Nixon to Go to China," Papers 30-97, Tel Aviv.
- Mariano Tommasi, 1995. "Why Does it Take a Nixon to go to China?," UCLA Economics Working Papers 728, UCLA Department of Economics.
- 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.
- Steven A. Matthews, 1989. "Veto Threats: Rhetoric in a Bargaining Game," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 347-369.
- Frey, Bruno S & Schneider, Friedrich, 1978. "An Empirical Study of Politico-Economic Interaction in the United States," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 174-83, May.
- Berlemann, Michael & Enkelmann, Soeren & Kuhlenkasper, Torben, 2012. "Unraveling the complexity of US presidential approval: A multi-dimensional semi-parametric approach," HWWI Research Papers 118, Hamburg Institute of International Economics (HWWI).
- Nannestad, Peter & Paldam, Martin, 1997. "The grievance asymmetry revisited: A micro study of economic voting in Denmark,1986-1992," European Journal of Political Economy, Elsevier, vol. 13(1), pages 81-99, February.
- Michael Dorsch, 2013. "Bailout for sale? The vote to save Wall Street," Public Choice, Springer, vol. 155(3), pages 211-228, June.
- Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
- John McCallum & André Blais, 1987. "Government, special interest groups, and economic growth," Public Choice, Springer, vol. 54(1), pages 3-18, January.
- Smyth, David J & Dua, Pami & Taylor, Susan Washburn, 1994. "Voters and Macroeconomics: Are They Forward Looking or Backward Looking?," Public Choice, Springer, vol. 78(3-4), pages 283-93, March.
- Schultz, Christian, 2002. "Policy biases with voters' uncertainty about the economy and the government," European Economic Review, Elsevier, vol. 46(3), pages 487-506, March.
- Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
- Gartner, Manfred, 1996. "Political business cycles when real activity is persistent," Journal of Macroeconomics, Elsevier, vol. 18(4), pages 679-692.
When requesting a correction, please mention this item's handle: RePEc:rwi:repape:0336. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sabine Weiler)
If references are entirely missing, you can add them using this form.