Why Does Political Power Alternate?∗

The frequent and peaceful transition of power is often taken as the sign of a healthy democracy. Yet alternating power is not without cost, most notably from the time-inconsistency of policy making that is induced. In this paper I offer a novel argument in favor of alternating political power, showing how the transition of power between ideologically opposed parties can per se benefit voters. The effect I identify is purely informational. It is present only when knowledge is incomplete about how policies are mapped into outcomes and does not depend on an ability to tie-the-hands of one’s successor (such as through a budget deficit). By experimenting with policy, a policy maker can shape the choices of her successors by shaping the information they hold. Alternating power improves voter welfare, so much so that it delivers higher utility to voters than they would obtain were policy knowledge