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Inefficient policies and incumbency advantage

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  • Hodler, Roland
  • Loertscher, Simon
  • Rohner, Dominic

Abstract

We present a model of (re)elections in which an incumbency advantage arises because the incumbent can manipulate issue salience by choosing inefficient policies in the policy dimension in which he is the stronger candidate. The voters are uncertain about the state of the world and the incumbent's choice of policy. Under complete information they would reelect the incumbent if and only if the state is sufficiently high. Undesirable policy outcomes may be due to either a bad state or the incumbent's choice of inefficient policies. The incumbent uses inefficient policies in intermediate states, whereby he creates uncertainty about the true state in such a way that voters are better off in expectation reelecting him. Hence the equilibrium exhibits an incumbency advantage that stems from asymmetric information and the use of inefficient policies.

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  • Hodler, Roland & Loertscher, Simon & Rohner, Dominic, 2010. "Inefficient policies and incumbency advantage," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 761-767, October.
    • Handle: RePEc:eee:pubeco:v:94:y:2010:i:9-10:p:761-767
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    Cited by:

    1. Anders Gustafsson, 2019. "Busy doing nothing: why politicians implement inefficient policies," Constitutional Political Economy, Springer, vol. 30(3), pages 282-299, September.
    2. Roland Hodler, 2011. "Elections and the strategic use of budget deficits," Public Choice, Springer, vol. 148(1), pages 149-161, July.
    3. Jo Thori Lind & Dominic Rohner, 2017. "Knowledge is Power: A Theory of Information, Income and Welfare Spending," Economica, London School of Economics and Political Science, vol. 84(336), pages 611-646, October.
    4. Margarita Katsimi & Vassilis Sarantides, 2015. "Public investment and reelection prospects in developed countries," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 471-500, October.
    5. Luciana Moscoso Boedo, 2010. "Who Runs Against the Incumbent? Candidate Entry Decisions," Working Papers DTE 494, CIDE, División de Economía.
    6. Cécile Aubert & Huihui Ding, 2022. "Voter conformism and inefficient policies," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 59(1), pages 207-249, July.
    7. Schelker, Mark, 2018. "Lame ducks and divided government: How voters control the unaccountable," Journal of Comparative Economics, Elsevier, vol. 46(1), pages 131-144.
    8. Roland Hodler & Simon Loertscher & Dominic Rohner, 2010. "Biased experts, costly lies, and binary decisions," IEW - Working Papers 496, Institute for Empirical Research in Economics - University of Zurich.
    9. Elena Manzoni & Stefan P. Penczynski, 2018. "Last Minute Policies and the Incumbency Advantage," German Economic Review, Verein für Socialpolitik, vol. 19(3), pages 280-308, August.
    10. Hans Gersbach & Markus Müller, 2017. "Higher bars for incumbents and experience," Journal of Theoretical Politics, , vol. 29(3), pages 492-513, July.
    11. Yazaki, Yukihiro, 2018. "The effects of bureaucracy on political accountability and electoral selection," European Journal of Political Economy, Elsevier, vol. 51(C), pages 57-68.
    12. Stephan Schneider & Sven Kunze, 2021. "Disastrous Discretion: Ambiguous Decision Situations Foster Political Favoritism," KOF Working papers 21-491, KOF Swiss Economic Institute, ETH Zurich.
    13. Hodler, Roland & Loertscher, Simon & Rohner, Dominic, 2014. "Persuasion, binary choice, and the costs of dishonesty," Economics Letters, Elsevier, vol. 124(2), pages 195-198.
    14. Lauriane Gorce (ed.), 2017. "Parameters influencing the choice of durability of a public infrastructure - a literature review," Rapports, Polytechnique Montreal, Groupe de recherche en Gestion et mondialisation de la technologie, number 2017-02, January.
    15. Roland Hodler & Simon Loertscher & Dominic Rohner, 2007. "False Alarm? Terror Alerts and Reelection," Department of Economics - Working Papers Series 995, The University of Melbourne.
    16. Patrick Hummel, 2013. "Resource allocation when different candidates are stronger on different issues," Journal of Theoretical Politics, , vol. 25(1), pages 128-149, January.

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    More about this item

    Keywords

    Elections Incumbency advantage Political economics;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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