Accountability and Grand Corruption

Abstract

We propose a model of political careers and electoral accountability in an environment in which politicians may take bribes at different stages of their careers and in which politicians’ actions are only imperfectly observed by voters. We show that the expectation of promotion to higher office may motivate some politicians to behave worse at the latest stages of their careers, setting off a trade-off between providing incentives for good behavior at lower levels of office and selecting better politicians for higher office. Optimal rewards focus either on stamping out corruption at lower levels of office or on improving selection for higher office. (JEL D72, D73, K42)