A Folk Theorem for Repeated Elections with Adverse Selection
AbstractI establish a folk theorem for a model of repeated elections with adverse selection: when citizens are sufficiently patient, arbitrary policy paths through arbitrarily large regions of the policy space can be supported by a refinement of perfect Bayesian equilibrium. Politicians are policy-motivated (so office benefits cannot be used to incentivize policy choices), the policy space is one-dimensional (limiting the dimensionality of the set of utility imputations), and politicians’ preferences are private information (so punishments cannot be targeted to a specific type). The equilibrium construction relies critically on differentiability and strict concavity of citizens’ utility functions. An extension of the arguments allows policy paths to depend on the office holder’s type, subject to incentive compatibility constraints.
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Bibliographic InfoPaper provided by University of Rochester - Wallis Institute of Political Economy in its series Wallis Working Papers with number WP63.
Length: 36 pages
Date of creation: May 2013
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-16 (All new papers)
- NEP-CDM-2013-06-16 (Collective Decision-Making)
- NEP-CTA-2013-06-16 (Contract Theory & Applications)
- NEP-MIC-2013-06-16 (Microeconomics)
- NEP-POL-2013-06-16 (Positive Political Economics)
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