Voter initiatives are important for policy making in many countries. While much research shows that the initiative process affects policy choices, almost no evidence explains how the initiative process affects policy. Initiatives might change policy directly through voters approving laws that...

This paper uses fundamental principles of public choice, mainly the median voter theorem, to develop a simple theory of redistricting. The focus is on how closely policy outcomes correspond to majority rule. The main results are: (1) Potential policy bias in favor of nonmajority groups is...

Demographic, political, and technological trends are fueling an unprecedented growth in direct democracy worldwide. If the trends continue, direct democracy threatens to eclipse legislatures in setting the policy agenda. This article reviews existing scientific knowledge about the initiative and...

In this paper, we formalize the idea of human capital as the ability to follow and enforce the rules necessary for orderly conduct of economic transactions. People in the US and other developed countries stand in lines while waiting for the bus, etc., while in many developing countries lines...

In the public sector, employment may be inefficiently high because of patronage, and wages may be inefficiently high because of public employee interest groups. This paper explores whether the initiative process, a direct democracy institution of growing importance, ameliorates these political...

This paper uses recent regulations that have required some companies to increase the number of outside directors on their boards to generate estimates of the effect of board independence on performance that are largely free from endogeneity problems. Our main finding is that the effectiveness of...

This paper develops a theory in which individuals can use one of two types of human/social capital to enforce contracts: "Local capital" relies on families and other personal networks; "market capital" relies on impersonal market institutions such as auditors and courts. Local capital is...

New government spending must be approved by a referendum of citizens in many Swiss cantons. This decisionmaking procedure seems like a simple way to address citizen-legislator agency problems, but little systematic evidence is available concerning its effect on spending outcomes. We estimate...

This article examines the stock market response to acquisition announcements during and immediately after the conglomerate merger wave of the late 1960s. The main finding is that acquirer shareholders benefited from diversification acquisitions, which implies that diversification was not driven...