Vote-Share Contracts and Learning-by-Doing

CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 09/114

44 Pages Posted: 18 Jul 2009

See all articles by Markus Müller

Markus Müller

ETH Zürich - Center for Economic Research

Date Written: July 2009

Abstract

We examine the interaction between vote-share contracts and learning-by-doing. Candidates for a political office are allowed to offer vote-share thresholds. The elected politician has to achieve at least this threshold value in his reelection result to remain in office for a second term. We assume there are learning by-doing effects for incumbents and show that competition leads to vote-share contracts implementing the socially optimal threshold, which is above one-half. Vote-share contracts improve the average ability level of a reelected politician and increase effort in the first term of an incumbent. On the other hand, vote-share contracts reduce the probability that learning-by-doing takes place. However, the overall effect of vote-share contracts is welfare-enhancing, even under the assumption of learning-by-doing.

Keywords: elections, political contracts, vote-share thresholds, learning-bydoing effects, incumbency advantage

JEL Classification: D7, D82, H4

Suggested Citation

Müller, Markus, Vote-Share Contracts and Learning-by-Doing (July 2009). CER-ETH - Center of Economic Research at ETH Zurich, Working Paper No. 09/114. Available at SSRN: https://ssrn.com/abstract=1434389 or http://dx.doi.org/10.2139/ssrn.1434389

Markus Müller (Contact Author)

ETH Zürich - Center for Economic Research ( email )

Zürichbergstrasse 18
Zurich 8092
Switzerland

Register to save articles to
your library

Register

Paper statistics

Downloads
19
Abstract Views
248
PlumX Metrics