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Competition of politicians for incentive contracts and elections

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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...

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Bibliographic Details
Main Author: Gersbach, Hans (Author)
Format: Book/Monograph Working Paper
Language:English
Published: München CESifo 2001
Series:CESifo Working Paper 406
In: CESifo working papers (406)

Subjects:
Arbeitspapier
Graue Literatur
Spieltheorie
Politische Entscheidung
Wahlverhalten
Asymmetrische Information
Ökonomische Theorie der Demokratie
Online Access:Resolving-System, Volltext: http://hdl.handle.net/10419/75843
Verlag, Volltext: http://www.cesifo-group.de/de/ifoHome/publications/working-papers/CESifoWP/CESifoWPdetails?wp_id=14561081
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Author Notes:Hans Gersbach
Description
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.Keywords: Incentive contracts, politicians, long-term policies, elections and contracts, golden parachute clause.
Physical Description:Online Resource
Format:Systemvoraussetzungen: PDF Reader.

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