Working Paper: CEPR ID: DP3911
Authors: Anke Kessler
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.
Keywords: constitutional choice; delegation; direct democracy; representative democracy
JEL Codes: D61; D78
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Representative democracy (D72) | Better-informed policy outcomes (D78) |
| Discretionary power (H61) | Better-informed policy outcomes (D78) |
| Elected officials' knowledge (D72) | Policies sensitive to relevant contingencies (E61) |
| Voters' uncertainty regarding representatives' future intentions (D72) | Policies not reflecting majority's preferences (D72) |
| Delegation to representatives (D72) | Quality of decision-making (D91) |
| Voters' informational asymmetries (D72) | Preferences for direct vs. representative democracy (D72) |
| Referenda and reelections (D72) | Accountability and officials' incentives to acquire information (D82) |