Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75843 
Authors: 
Year of Publication: 
2001
Series/Report no.: 
CESifo Working Paper No. 406
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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
Subjects: 
Incentive contracts
politicians
long-term policies
elections and contracts
golden parachute clause
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.