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Good politicians' distorted incentives

Research output: Working paperDiscussion paper

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Abstract

I construct a political agency model that provides a new explanation for sub-optimal policy making decisions by incumbents. I show that electoral incentives can induce politicians to address less relevant issues, disregarding more important ones. Issue importance is defined in terms of the utility voters would receive if the issue was solved. Contrary to existing literature, sub-optimal policy making occurs even when voters are perfectly informed about issues’ characteristics and politicians are policy oriented. I provide an explanation that relies on the negative correlation between issue importance and probability of solving it: for a given effort exerted by incumbents, less relevant issues guarantee higher probability of success. In equilibrium, voters cannot commit to re-elect the incumbent if and only if the most important issue was solved. This is because solving the easy issue also constitutes a positive signal about incumbents’ type. Whenever re-election is sufficiently valuable, then, politicians will choose to address less relevant and easier issues.
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Details

Original languageEnglish
Place of PublicationSt Andrews
PublisherUniversity of St Andrews
Number of pages13
Publication statusPublished - 6 May 2017

Publication series

NameSchool of Economics and Finance Discussion Paper
PublisherUniversity of St Andrews
No.1713
ISSN (Print)0962-4031
ISSN (Electronic)2055-303X

    Research areas

  • Political agency, Elections, Incumbent behavior, Politicians' incentives

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