Competition of politicians for incentive contracts and elections
When politicians have lower discount factors than voters, democratic elections cannot sufficiently motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and election...
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| Main Author: | |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Munich
Univ., Center for Economic Studies
2001
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| Series: | Working paper series / CESifo
406 |
| In: |
CESifo working papers (406)
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| Subjects: | |
| Online Access: |
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| Author Notes: | Hans Gersbach |
| Summary: | When politicians have lower discount factors than voters, democratic elections cannot sufficiently motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and elections can alleviate such inefficient decision-making in politics. This mechanism still works if the public cannot commit itself to a reelection scheme or if the public is unsure about the politicians' time preferences. In the non-commitment case, incentive contracts may need to include a golden parachute clause. |
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| Item Description: | Literaturverz. S. 19 - 20 Auch im Internet unter der Adresse ftp://129.187.96.124/CESifo_WP/406.pdf verfügbar |