The Impact of Re-election Concerns on Truth-telling in a Cheap-Talk Model of a Bureaucrat's Advice

Atsuo Tomori ()
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Atsuo Tomori: Faculty of Education and Integrated Arts and Sciences, Waseda University

Economics Bulletin, 2013, vol. 33, issue 2, 1594-1605

Abstract: This paper analyzes the impact of a politician's re-election concerns on the truthfulness of a bureaucrat's advice in a two-period cheap-talk model of information transmission under the merit system. I demonstrate that the politician follows the bureaucrat's advice when his re-election concerns are strong, but he does not necessarily follow the bureaucrat's advice when his concerns are weak. I also demonstrate that when the politician has strong re-election concerns, the bureaucrat's advice is affected by the politician's initial reputation and the discount factor. Specifically, the region with an informative equilibrium expands when the politician's initial reputation improves or the discount factor increases. In contrast, when the politician has weak re-election concerns, the bureaucrat's advice is affected only by the discount factor. The region with an informative equilibrium expands only when the discount factor increases. Finally, I explore the implication for the voter's welfare in the equilibrium when re-election concerns are strong and when the concerns are weak.

Keywords: re-election concerns; cheap talk; merit system; retrospective voting; principal-agent problem (search for similar items in EconPapers)
JEL-codes: D8 H8 (search for similar items in EconPapers)
Date: 2013-06-24
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