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Designing Democracies for Sustainability

Author

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  • Gersbach, Hans
  • Kleinschmidt, Tobias

Abstract

Democratic processes may not take the welfare of future generations sufficiently into account and thus may not achieve sustainability. We show that the dual democratic mechanism – rejection/support rewards (RSRs) for politicians and elections – can achieve sustainability. RSRs stipulate that incumbents who are not re-elected, but obtain the majority support among young voters receive a particular monetary or non-monetary reward. Such rejection/support rewards induce politicians to undertake long-term beneficial policies, but may invite excessive reward-seeking. We identify optimal RSRs under different informational circumstances.

Suggested Citation

  • Gersbach, Hans & Kleinschmidt, Tobias, 2004. "Designing Democracies for Sustainability," CEPR Discussion Papers 4623, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4623
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    Cited by:

    1. Nigar Hashimzade & George Davis, 2006. "Human capital and growth under political uncertainty," Economics Bulletin, AccessEcon, vol. 15(1), pages 1-7.
    2. Gersbach, Hans & Kleinschmidt, Tobias, 2009. "Power to youth: Designing democracy for long-term well-being," Mathematical Social Sciences, Elsevier, vol. 58(2), pages 158-172, September.

    More about this item

    Keywords

    democracy; elections; incentive contracts; Q56; rejection/support rewards; sustainability;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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