“Parliamentary and Congressional Systems : Policy under Incomplete Information” by Francesco GIOVANNONI
Countries where a vote of confidence procedure is available in their legislatures, tend to have higher welfare spending and more rigid labor markets. This paper presents a signaling model where voters have incomplete information about their representatives' preferences. On the other hand, voters can replace representatives they don't like. In the case where voters can monitor their representatives, I show that policies will be more extreme than they would have been in the case of complete information. In countries where a confidence procedure is available this effect is even stronger, in a way that is consistent with the data. I also introduce lobbying through the provision of information to voters and show that the same results hold provided lobbyists' and voters' preferences are similar.