This paper models the process through which proposals are placed on the ballot as initiatives. Importantly, proposals that reach the ballot were not enacted by the legislature. We show that this fact has important consequences for the type of policy proposals that reach the ballot: as the legislature would enact any proposal that increases everyone's utility (in expectation), proposals that reach the ballot must be bad for some segment of the population. We partition the population into voters who would benefit from a group's proposal and those who would not and show that voters can use the legislature's inaction to obtain a better estimate of the initiative's expected value. In particular, we show that voters that are not in the sponsoring group infer that proposals that become initiatives have negative expected value and that the expected value of an initiative is decreasing in the size of the group that sponsors it.
Available at: http://works.bepress.com/frederick_boehmke/4/