Elections, contracts and markets
As the performance of long-term projects is not observable in the short run politicians may pander to public opinion. To solve this problem, we propose a triple mechanism involving political information markets, reelection threshold contracts, and democratic elections. An information market is used...
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| Main Authors: | , |
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| Format: | Book/Monograph Working Paper |
| Language: | English |
| Published: |
Zurich
CER-ETH - Center of Economic Research at ETH Zurich
[2006]
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| Edition: | This version: May 2006 |
| Series: | Working paper / CER-ETH - Center of Economic Research at ETH Zurich
06, 56 (October 2006) |
| In: |
Working papers of the Center of Economic Research at ETH Zurich (06, 56 (October 2006))
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| DOI: | 10.3929/ethz-a-005273019 |
| Subjects: | |
| Online Access: | Resolving-System, kostenfrei, Volltext: http://hdl.handle.net/10419/171500 Resolving-System, kostenfrei, Volltext: https://doi.org/10.3929/ethz-a-005273019 Verlag, kostenfrei, Volltext: https://www.ethz.ch/content/dam/ethz/special-interest/mtec/cer-eth/cer-eth-dam/documents/working-papers/wp_06_56.pdf 
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| Author Notes: | Hans Gersbach, Markus Müller |
| Summary: | As the performance of long-term projects is not observable in the short run politicians may pander to public opinion. To solve this problem, we propose a triple mechanism involving political information markets, reelection threshold contracts, and democratic elections. An information market is used to predict the long-term performance of a policy, while threshold contracts stipulate a price level on the political information market that a politician must reach to have the right to stand for reelection. Reelection thresholds are offered by politicians during campaigns. We show that, on balance, the triple mechanism increases social welfare. |
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| Physical Description: | Online Resource |
| DOI: | 10.3929/ethz-a-005273019 |