A Folk Theorem for Repeated Elections with Adverse Selection

John Duggan ()
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John Duggan: W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158, http://www.johnduggan.net/

No WP64, Wallis Working Papers from University of Rochester - Wallis Institute of Political Economy

Abstract: I 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.

Pages: 36 pages
Date: 2013-05
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-mic and nep-pol
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Citations: View citations in EconPapers (2)

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