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At the start of their term, politicians often announce which issue they intend to address. To shed light on this agenda setting, we develop a model in which a politician has to decide whether or not to address a public issue. Addressing an issue means that the politician investigates the issue and next chooses for either a major reform or a minor reform. Not addressing an issue means that the status quo is maintained. Politicians differ in their ability to make correct decisions. They want to make good decisions and want to come across as able decision makers. An important characteristic of the model is that politicians and voters have different priors concerning the desirability of a major reform. We show that electoral concerns may lead to anti-pandering. Politicians tend to put issues on their political agenda when voters are relatively pessimistic about a major reform, and keep issues off the table when voters are optimistic about major reform.

In the literature on electoral politics, full convergence of policy platforms is usually regarded as socially optimal. The reason is that risk-averse voters prefer a sure middle-of-the-road policy to a lottery of two extremes with the same expectation. In this paper, we study the normative implications of convergence in a simple model of electoral competition, in which parties are uncertain about voters' preferences. We show that, if political parties have incomplete information about voters' preferences, the voters may prefer some degree of policy divergence. The intuition is that policy divergence enables voters to correct policies that are based on a wrong perception of their preferences.

We identify the conditions under which voters can induce political parties to collect information and to select policies which are optimal from the representative voter's point of view. We show that when parties are office motivated the voting rule should encourage parties to collect information. Voting rules that focus on the opposition party sometimes dominate voting rules that focus on the incumbent party. When parties are policy motivated, they also have to be motivated to select good policies. Generally, it is easier to stimulate policy motivated parties than office motivated parties to collect information. However, in contrast to office motivated parties, policy motivated parties will sometimes select policies that conflict with the representative voter's interest.

In the literature on electoral politics, full convergence of policy platforms is usually regarded as socially optimal. The reason is that risk-averse voters prefer a sure middle-of-the-road policy to a lottery of two extremes with the same expectation. In this paper, we study the normative implications of convergence in a simple model of electoral competition, in which parties are uncertain about voters' preferences. We show that, if political parties have incomplete information about voters' preferences, the voters may prefer some degree of policy divergence. The intuition is that policy divergence enables voters to correct policies that are based on a wrong perception of their preferences. 1 Appendix, 13 References. [Copyright 2004 Elsevier B.V.]

A well-known rationale for representative democracy is that direct democracy leads to a free-rider problem as to the collection of information. A problem with this rationale is that it takes for granted that representatives collect information. In this paper we examine whether or not electoral competition induces political parties or candidates to collect information about policy consequences. We show that the answer to this question depends on the cost of information collection. More surprisingly, we find that endogenizing information may lead to divergence of policy platforms.

Market-based instruments are believed to create more efficient incentives for firmsto adopt new technologies than command-and-control policies. We compare the effects of a directtechnology regulation and of an adoption subsidy under asymmetric information about the costsof technological advances in pollution control. We show that the policy maker may want tocommit to her policy. The reason is that uncertainty about adoption costs induces the policymaker to set subsidy levels that increase over time; firms, expecting higher subsidies in thefuture, postpone investment. Direct regulation offers a commitment possibility that allows toprevent firms from postponing investment.

Using a simple game‐theoretical model, this paper analyzes the role of policy advisers in the policy‐making process. We show that policy makers are inclined to appoint advisers whose preferences coincide with their own preferences. Furthermore, we show that policy makers are biased towards erecting permanent advisory units. This result stems from the policy makers' desire to affect the actions of their successors. A permanent advisory unit induces future policy makers to act in accordance with the preferences of current policy makers. The policy‐makers' bias towards erecting permanent advisory units may drive a wedge between actual policy outcomes and socially desired policy outcomes.

This paper studies the selection of information collecting agents by policy makers in the light of two agency problems. First, it is often hard to ascertain how much effort agents have put in acquiring information. Second, when agents have an interest in the policy outcome, they may manipulate information. We show that unbiased advisers put highest effort in collecting information. Eliminating manipulation of information, however, requires that the preferences of the policy maker and the adviser be aligned. Therefore, policy makers appoint advisers with preferences that are less extreme than their own.

In a multiperiod setting, decision-makers can learn about the consequences of their decisions throughexperimentation. In this paper we examine how in a two-party system polarization and political instability affectlearning through experimentation. We distinguish two cases:the decision to be made is not salient and does notaffect the outcome of the following elections (exogenous elections) andthe decision is salient and the election outcome depends on it (endogenous elections).We show that while the possibility of learning increases activism,the existence of political instability distorts learning. Furthermore, in contrast to the existing literature, wedemonstrate that, when elections are exogenous, polarization between political parties does not always decreaseactive learning. In the case with endogenous elections we find that electoral concerns may induce candidates not toexperiment, even if the majority of voters prefers activism.

Using a simple game-theoretical model, this paper analyzes the role of policy advisers in the policy-making process. We show that policymakers are inclined to appoint advisers whose preferences coincide with their own preferences. Furthermore, we show that policymakers are biased toward erecting permanent advisory units. This result stems from the policymakers' desire to affect the actions of their successors. A permanent advisory unit induces future policymakers to act in accordance with the preferences of current policymakers. The policymakers' bias toward erecting permanent advisory units may drive a wedge between actual policy outcomes & socially desired policy outcomes. 2 Tables, 1 Figure, 20 References. Adapted from the source document.