Elections, Contracts and Markets

Arbeitspapier

As the performance of long-term projects is not observable in the short run politicians may pander to public opinion. To solve this problem, we propose a triple mechanism involving political information markets, reelection threshold contracts, and democratic elections. An information market is used to predict the long-term performance of a policy, while threshold contracts stipulate a price level on the political information market that a politician must reach to have the right to stand for reelection. Reelection thresholds are offered by politicians during campaigns. We show that, on balance, the triple mechanism increases social welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Working Paper Series ; No. 06/56

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Asymmetric and Private Information; Mechanism Design
• Subject: elections ; threshold contracts ; democracy ; information markets ; triple mechanism ; Politiker ; Politisches Ziel ; Wahl ; Wahl ; Öffentliche Meinung ; Informationsmarkt ; Wohlfahrtsanalyse ; Spieltheorie

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Gersbach, Hans ; Müller, Markus
• Event: Veröffentlichung
• (who): ETH Zurich, CER-ETH - Center of Economic Research
• (where): Zurich
• (when): 2006

Further information

• DOI: doi:10.3929/ethz-a-005273019
• Handle: http://hdl.handle.net/10419/171500
• Last update: 20.09.2024, 8:20 AM CEST