New parties, information uncertainty, and government formation: evidence from Central and Eastern Europe. Issue 3 (10th April 2015) - Grotz, Florian
Abstract : Government formation in multi-party democracies is notoriously ridden with information uncertainty. Uncertainty is aggravated when new parties enter parliament, which generally suggests a 'newcomer handicap' in government formation. However, relegating newcomers to the opposition comes with uncertainty in its own right, which suggests immediate cabinet participation as new leaders seize the opportunity and established parties pursue containment. We explore elite responses to this strategic problem in the postcommunist democracies of Central and Eastern Europe (CEE) where new parties often gain parliamentary representation. Even in CEE, a newcomer handicap in government formation is apparent, controlling for other detrimental party attributes. However, this applies to small newcomers only. For larger parties the handicap turns into a bonus, an effect only qualified once the newcomer outnumbers its competitors. Either way, newness-induced uncertainty thus intensifies the strategic rationale of government formation. As party systems become more volatile, these findings are relevant beyond CEE.