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Vote-share Contracts and Democracy

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  • Gersbach, Hans

Abstract

In this paper we introduce vote-share contracts. Such contracts contain a vote-share threshold that incumbents must reach in order to be reelected. In a simple model, we illustrate the working of vote-share contracts. Such vote-share contracts curb socially detrimental incumbency advantages by improving the average ability level of re-elected politicians and also increase effort. We show that the socially optimal vote-share threshold for incumbents is larger than one half. Competing candidates offer vote-share contracts with socially optimal thresholds.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6497.

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Date of creation: Sep 2007
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Handle: RePEc:cpr:ceprdp:6497

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Keywords: elections; political contracts; vote-share thresholds;

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References

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  1. Alberto Alesina & Guido Tabellini, 2007. "Bureaucrats or Politicians? Part I: A Single Policy Task," Levine's Working Paper Archive 321307000000000870, David K. Levine.
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  7. Gregory D. Hess & Athanasios Orphanides, 2001. "War and Democracy," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 776-810, August.
  8. Gersbach, Hans & Muller, Markus, 2006. "Elections, Contracts and Markets," CEPR Discussion Papers 5717, C.E.P.R. Discussion Papers.
  9. Cukierman, Alex & Alesina, Alberto, 1990. "The Politics of Ambiguity," Scholarly Articles 4552530, Harvard University Department of Economics.
  10. Hans Gersbach, 2004. "Competition of Politicians for Incentive Contracts and Elections," Public Choice, Springer, vol. 121(1), pages 157-177, October.
  11. Anderson, Simon P & Glomm, Gerhard, 1992. " Incumbency Effects in Political Campaigns," Public Choice, Springer, vol. 74(2), pages 207-19, September.
  12. Gersbach, Hans, 1992. "Allocation of information by majority decisions," Journal of Public Economics, Elsevier, vol. 48(2), pages 259-268, July.
  13. Hess, Gregory D & Orphanides, Athanasios, 1995. "War Politics: An Economic, Rational-Voter Framework," American Economic Review, American Economic Association, vol. 85(4), pages 828-46, September.
  14. Scott Ashworth, 2005. "Reputational Dynamics and Political Careers," Journal of Law, Economics and Organization, Oxford University Press, vol. 21(2), pages 441-466, October.
  15. Banks, Jeffrey S. & Sundaram, Rangarajan K., 1998. "Optimal Retention in Agency Problems," Journal of Economic Theory, Elsevier, vol. 82(2), pages 293-323, October.
  16. Bernhardt, M. Daniel & Ingerman, Daniel E., 1985. "Candidate reputations and the `incumbency effect'," Journal of Public Economics, Elsevier, vol. 27(1), pages 47-67, June.
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Cited by:
  1. Hans Gersbach & Verena Liessem, 2001. "Reelection Threshold Contracts in Politics," CESifo Working Paper Series 622, CESifo Group Munich.
  2. Gersbach, Hans, 2009. "Higher Vote Thresholds for Incumbents, Effort and Selection," CEPR Discussion Papers 7320, C.E.P.R. Discussion Papers.
  3. Francesco Caselli & Thomas E. Cunningham & Massimo Morelli & Inés Moreno de Barreda, 2012. "Signalling, Incumbency Advantage, and Optimal Reelection Thresholds," NBER Working Papers 17833, National Bureau of Economic Research, Inc.
  4. Francesco Caselli & Tom Cunningham & Massimo Morelli & Inés Moreno de Barreda, 2012. "Signalling, Incumbency Advantage, and Optimal Reelection Rules," CEP Discussion Papers dp1122, Centre for Economic Performance, LSE.
  5. Markus Müller, 2009. "Vote-Share Contracts and Learning-by-Doing," CER-ETH Economics working paper series 09/114, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.

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