Can Citizens Affect the Performance of Their Elected Representatives? A Principal–Agent Model of Strategic Interaction in Democratic Systems

Giuseppe Lanza, Dario Maimone Ansaldo Patti and Pietro Navarra
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Giuseppe Lanza: Department of Economics, University of Messina, Piazza Pugliatti 1, 98122 Messina, Italy
Dario Maimone Ansaldo Patti: Department of Economics, University of Messina, Piazza Pugliatti 1, 98122 Messina, Italy
Pietro Navarra: Department of Economics, University of Messina, Piazza Pugliatti 1, 98122 Messina, Italy

Mathematics, 2020, vol. 8, issue 7, 1-14

Abstract: According to standard economic theory, human beings are expected to work more and better when benefits in the form of lower costs or higher reward increase. Principal–agent theory applied to the theory of the firm relies on this relationship and states that employees should be paid according to how well they perform their tasks. In this framework, monitoring devices are introduced to control employees’ performance and determine salaries. In this paper we construct a principal–agent model to describe the relationship between citizens/voters and elected representatives in which monitoring devices are introduced to control the performance of the latter. We demonstrate that tighter controls may produce better performance but also may produce a reduction in the intrinsic motivations of elected representatives, resulting in a reduction of their work effort. These results are interpreted in the light of the motivation crowding theory.

Keywords: principal–agent theory; monitoring; intrinsic motivation; crowding out (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2020
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