Competition of Politicians for Incentive Contracts and Elections

Hans Gersbach

No 406, CESifo Working Paper Series from CESifo

Abstract: When politicians have lower discount factors than voters, democratic elections cannot sufficiently 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. Keywords: Incentive contracts, politicians, long-term policies, elections and contracts, golden parachute clause

Keywords: Incentive contracts; politicians; long-term policies; elections and contracts; golden parachute clause (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Competition of Politicians for Incentive Contracts and Elections (2004)
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