Elections, Contracts and Markets
As the performance of long-term projects is not observable in the short run politicians may pander to public opinion. To solve this problem, we propose a triple mechanism involving political information markets, reelection threshold contracts, and democratic elections. An information market is used to predict the long-term performance of a policy, while threshold contracts stipulate a price level on the political information market that a politician must reach to have the right to stand for reelection. Reelection thresholds are offered by politicians during campaigns. We show that, on balance, the triple mechanism increases social welfare.
|Date of creation:||May 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Zürichbergstrasse 18, ZUE, CH-8092 Zürich|
Phone: +41 44 632 03 87
Fax: +41 44 632 13 62
Web page: http://www.cer.ethz.ch
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gersbach, Hans & Liessem, Verena, 2005.
"Re-election Threshold Contracts in Politics,"
CEPR Discussion Papers
5175, C.E.P.R. Discussion Papers.
- Justin Wolfers & Eric Zitzewitz, 2004.
03-025, Stanford Institute for Economic Policy Research.
- Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-37, July.
- William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39.
- Torsten Persson & Gerard Roland & Guido Tabellini, .
"Separation of Powers and Political Accountability,"
100, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
- Gersbach, Hans & Schneider, Maik, 2012.
"Tax Contracts and Elections,"
CEPR Discussion Papers
9054, C.E.P.R. Discussion Papers.
- repec:reg:rpubli:259 is not listed on IDEAS
- David Romer, 2003.
"Misconceptions and Political Outcomes,"
Royal Economic Society, vol. 113(484), pages 1-20, January.
- Eric Maskin, 2003.
"The Politician and the Judge: Accountability in Government,"
Theory workshop papers
505798000000000076, UCLA Department of Economics.
- Eric Maskin & Jean Tirole, 2004. "The Politician and the Judge: Accountability in Government," American Economic Review, American Economic Association, vol. 94(4), pages 1034-1054, September.
- Eric Maskin & Jean Tirole, 2004. "The Politician and the Judge: Accountability in Government," Economics Working Papers 0020, Institute for Advanced Study, School of Social Science.
- Berlemann, Michael & Schmidt, Carsten, 2001.
"Predictive accuracy of political stock markets: Empirical evidence from a European perspective,"
SFB 373 Discussion Papers
2001,57, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Berlemann, Michael & Schmidt, Carsten, 2001. "Predictive accuracy of political stock markets: Empirical evidence from an European perspective," Dresden Discussion Paper Series in Economics 05/01, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
- Hahn, Volker, 2009. "Reciprocity and voting," Games and Economic Behavior, Elsevier, vol. 67(2), pages 467-480, November.
When requesting a correction, please mention this item's handle: RePEc:eth:wpswif:06-56. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.