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Re-election Threshold Contracts in Politics

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  • Gersbach, Hans
  • Liessem, Verena

Abstract

When politicians are provided with insufficient incentives by the democratic election mechanism, social welfare can be improved by threshold contracts. A threshold contract stipulates the performance level that a politician must reach in order to obtain the right to stand for re-election. 'Read my lips' turns into 'read my contract'. Politicians can offer the threshold contracts during their campaign. These threshold contracts do not violate the liberal principle of free and anonymous elections in democracies.

Suggested Citation

  • Gersbach, Hans & Liessem, Verena, 2005. "Re-election Threshold Contracts in Politics," CEPR Discussion Papers 5175, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5175
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    Citations

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    Cited by:

    1. Hans Gersbach, 2007. "Anreize für Weitsicht und Wiederwahlschwellen: Wege zur besseren Demokratie," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(4), pages 389-397, November.
    2. Hans Gersbach, 2014. "Government Debt-Threshold Contracts," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 444-458, January.
    3. Gersbach, Hans & Becker, Johannes Gerd, 2017. "Threshold Contracts," CEPR Discussion Papers 11766, C.E.P.R. Discussion Papers.
    4. Panu Poutvaara & Tuomas Takalo, 2007. "Candidate quality," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 7-27, February.
    5. Markus Müller, 2009. "Vote-Share Contracts and Learning-by-Doing," CER-ETH Economics working paper series 09/114, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    6. Gersbach, Hans & Müller, Markus, 2006. "Elections, Contracts and Markets," CEPR Discussion Papers 5717, C.E.P.R. Discussion Papers.
    7. Markus Müller, 2007. "Motivation of politicians and long-term policies," Public Choice, Springer, vol. 132(3), pages 273-289, September.
    8. Johannes Gerd Becker & Hans Gersbach, 2013. "A Theory of Threshold Contracts," CER-ETH Economics working paper series 13/182, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
    9. Verena Liessem, 2008. "Electoral competition, incentive contracts for politicians and unknown preferences," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 30(1), pages 13-41, January.
    10. Hans Gersbach & Markus Müller, 2011. "Information Markets, Elections and Contracts," CESifo Working Paper Series 3327, CESifo.
    11. Bugarin, Mauricio S., 2009. "Vote Splitting, Reelection and Electoral Control: Political Gridlocks, Ideology and the War on Terror," Insper Working Papers wpe_199, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.

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    More about this item

    Keywords

    Elections; Threshold contract; Democracy;
    All these keywords.

    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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