Grunewald, Andreas Hansen, Emanuel Pönitzsch, Gert
Year of Publication:
Bonn Econ Discussion Papers 05/2015
This paper studies the effects of power-concentrating institutions on the quality of political selection, i.e., the voters' capacity to identify and empower well-suited politicians. In our model, candidates are heterogeneous in two unobservable quality aspects: ability and public-spiritedness. As voters can only base their ballots on the candidates' binding policy proposals, low-quality candidates face incentives to mimic their high-quality counterparts and a selection problem arises. We find that power-concentrating institutions amplify this selection problem as they increase electoral stakes and thus the incentives for mimicking. However, they also allocate more political power to the voters' preferred candidate. As a consequence, the optimal institutional setting depends on the conflict of interest between voters and candidates. The larger the conflict of interest, the smaller is the level of power concentration that maximizes voter welfare. A complete concentration of power in the hands of the election winner is optimal if and only if the conflict of interest is small.
Elections Constitutional Design Selection Asymmetric Information