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Competition of Politicians for Incentive Contracts and Elections

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  • Hans Gersbach

Abstract

When politicians are short-term oriented or future elections do not sufficiently reflect the success of past policies, democratic elections cannot 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. Copyright Kluwer Academic Publishers 2004

Suggested Citation

  • Hans Gersbach, 2004. "Competition of Politicians for Incentive Contracts and Elections," Public Choice, Springer, vol. 121(1), pages 157-177, October.
  • Handle: RePEc:kap:pubcho:v:121:y:2004:i:1:p:157-177
    DOI: 10.1007/s11127-004-0555-z
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