Competition of Politicians for Incentive Contracts and Elections

Hans Gersbach

Public Choice, 2004, vol. 121, issue 1, 157-177

Abstract: When politicians are short-term oriented or future elections do not sufficiently reflect the success of past policies, democratic elections cannot motivate politicians to undertake long-term socially beneficial projects. When politicians can offer incentive contracts which become effective upon reelection, the hierarchy of contracts and elections can alleviate such inefficient decision-making in politics. This mechanism still works if the public cannot commit itself to a reelection scheme or if the public is unsure about the politicians’ time preferences. In the non-commitment case, incentive contracts may need to include a golden parachute clause. Copyright Kluwer Academic Publishers 2004

Date: 2004
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Working Paper: Competition of Politicians for Incentive Contracts and Elections (2001)
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DOI: 10.1007/s11127-004-0555-z

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