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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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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Markus Müller, 2007. "Motivation of politicians and long-term policies," Public Choice, Springer, vol. 132(3), pages 273-289, September.
    2. Gersbach, Hans, 2007. "Vote-share Contracts and Democracy," CEPR Discussion Papers 6497, C.E.P.R. Discussion Papers.
    3. Panu Poutvaara & Tuomas Takalo, 2007. "Candidate quality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 7-27, February.
    4. Iconio Garrì, 2010. "Political short-termism: a possible explanation," Public Choice, Springer, vol. 145(1), pages 197-211, October.
    5. Hans Gersbach, 2009. "Competition of politicians for wages and office," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(4), pages 533-553, May.
    6. Hans Gersbach & Markus Müller, 2011. "Information Markets, Elections and Contracts," CESifo Working Paper Series 3327, CESifo Group Munich.
    7. Gersbach Hans, 2012. "Contractual Democracy," Review of Law & Economics, De Gruyter, vol. 8(3), pages 823-851, December.
    8. Schäfer, Andreas & Schneider, Maik T., 2015. "Endogenous Enforcement Of Intellectual Property, North–South Trade, And Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 19(05), pages 1074-1115, July.
    9. Mejía Cubillos, Javier, 2012. "Libertad y desempeño económico
      [Freedom and economic performance]
      ," MPRA Paper 37939, University Library of Munich, Germany.
    10. Otto Swank & Bauke Visser, 2006. "Do elections lead to informed public decisions?," Public Choice, Springer, vol. 129(3), pages 435-460, December.
    11. Hans Gersbach & Markus Müller, 2010. "Flexible pensions for politicians," Public Choice, Springer, vol. 145(1), pages 103-124, October.
    12. Candel-Sanchez, Francisco, 2007. "Incentives for budget discipline in the presence of elections," European Journal of Political Economy, Elsevier, vol. 23(4), pages 863-884, December.
    13. Silke Friedrich, 2013. "Policy persistence and rent extraction," Public Choice, Springer, vol. 157(1), pages 287-304, October.
    14. Panu Poutvaara & Tuomas Takalo & Andreas Wagener, 2017. "The Optimal Duration of Contracts," CESifo Working Paper Series 6808, CESifo Group Munich.
    15. 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.
    16. Carlos Seixas & António Brandão & Manuel Luís Costa, 2013. "Policy Choices by an Incumbent - A Case with Down-Up Problem, Bias Beliefs and Retrospective Voting," FEP Working Papers 485, Universidade do Porto, Faculdade de Economia do Porto.
    17. Aidt, Toke S. & Dutta, Jayasri, 2007. "Policy myopia and economic growth," European Journal of Political Economy, Elsevier, vol. 23(3), pages 734-753, September.
    18. Nigar Hashimzade & George Davis, 2006. "Human capital and growth under political uncertainty," Economics Bulletin, AccessEcon, vol. 15(1), pages 1-7.
    19. repec:ebl:ecbull:v:15:y:2006:i:1:p:1-7 is not listed on IDEAS
    20. Ivo Bischoff & Lars-H. Siemers, 2013. "Biased beliefs and retrospective voting: why democracies choose mediocre policies," Public Choice, Springer, vol. 156(1), pages 163-180, July.
    21. Naqvi, Nadeem & Neumärker, Bernhard & Pech, Gerald, 2018. "Consolidated democracy, constitutional stability, and the rule of law," MPRA Paper 86316, University Library of Munich, Germany.

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