Competition of Politicians for Incentive Contracts and Elections

Arbeitspapier

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

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 406

Classification and Topics

• Classification: Wirtschaft
• Subject: Incentive contracts ; politicians ; long-term policies ; elections and contracts ; golden parachute clause

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gersbach, Hans
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/75843
• Last update: 10.03.2025, 11:44 AM CET