Affiliation:
1. Department of Economics and Management, University of Luxembourg (email: )
2. Department of Government, Harvard University (email: )
Abstract
We study the limits of dynamic electoral accountability when voters are uncertain about politicians’ characteristics (adverse selection) and their actions (moral hazard). Existing work argues that voters cannot achieve their first-best payoff. This is attributed to inherent deficiencies of the electoral contract, including voters’ inability to precommit, and the restriction to a binary retention-replacement decision. We provide conditions under which voters can, despite these constraints, obtain arbitrarily close to the first-best payoff in an equilibrium of the electoral interaction. Our paper resolves that there need not be a trade-off between selection and control. (JEL D72, D82)
Publisher
American Economic Association
Subject
General Economics, Econometrics and Finance