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Incentive pay for policy‐makers?

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  • Volker Britz
  • Afsoon Ebrahimi
  • Hans Gersbach

Abstract

We study how to efficiently motivate policy‐makers to solve political multitask problems. Political multitask problems typically have some outcomes that are difficult to measure. Moreover, there are conflicts among citizens about optimal policies and policy‐makers have the power to tax the citizens to invest in better outcomes for some tasks. We develop a political agency model with two tasks and only one measurable outcome. In such an environment, policy‐makers choose socially inefficient public good levels and expropriate minorities. A judicious combination of constitutional limits on taxation and incentive pay for policy‐makers is second‐best. Incentive pay is conditional on the public good level.

Suggested Citation

  • Volker Britz & Afsoon Ebrahimi & Hans Gersbach, 2022. "Incentive pay for policy‐makers?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(2), pages 259-275, April.
    • Handle: RePEc:bla:jpbect:v:24:y:2022:i:2:p:259-275
    DOI: 10.1111/jpet.12553
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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