Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84185
Authors: 
Potrafke, Niklas
Year of Publication: 
2013
Series/Report no.: 
Ifo Working Paper 164
Abstract: 
Principal-agent problems can arise when preferences of voters are not aligned with preferences of political representatives. Often the consequence of the political principalagentproblem is political catering to special interests. In this paper I provide examples of principal-agent problems regarding public spending. The examples concern construction or extension of concert halls in two German cities. Resistance to public funding for the concert halls was particularly strong in electoral districts with large constituencieson the left. The evidence indicates that political representatives were more bourgeois than their constituencies. In the cases studied asymmetric information did not prevailand voters were able to discipline their representatives through referenda that countered the results of voting by political representatives.
Subjects: 
Principal-agent problem
referendum
direct democracy
political representation
political ideology
cultural policy
JEL: 
D72
D78
H72
Z10
Document Type: 
Working Paper

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