Design of Reforms with Time-Inconsistent Voters

22 Pages Posted: 30 Dec 2013 Last revised: 16 Feb 2015

See all articles by Jisoo Hwang

Jisoo Hwang

Hankuk University of Foreign Studies

Johanna Mollerstrom

George Mason University - Department of Economics; Research Institute of Industrial Economics (IFN)

Date Written: April 9, 2014

Abstract

Widespread agreement that a political reform is necessary is no guarantee that it is actually undertaken in a timely manner. There is often a delay before action is taken and reform packages that would be most efficient to implement all at once are often done only gradually. We propose a theoretical model explaining this behavior and show that when voters have present-biased, time-inconsistent preferences, gradualism can arise in equilibrium and be welfare-enhancing. This is because without the possibility for gradualism, time-inconsistent voters would delay implementing the reform even more. Using a citizen candidate model, we allow the agenda setter, who decides which reform schedule to put to vote, to be endogenously determined. We show that voters who are aware of their own time inconsistency use the election of the agenda setter as a commitment device and appoint an agent who is more patient than the median voter in order to avoid full procrastination and to achieve efficiency-maximizing gradualism.

Keywords: Reform, gradualism, procrastination, present-biased preferences, election

JEL Classification: D03, D04, D60, D72, D78

Suggested Citation

Hwang, Jisoo and Mollerstrom, Johanna, Design of Reforms with Time-Inconsistent Voters (April 9, 2014). GMU Working Paper in Economics No. 15-08, Available at SSRN: https://ssrn.com/abstract=2372818 or http://dx.doi.org/10.2139/ssrn.2372818

Jisoo Hwang

Hankuk University of Foreign Studies ( email )

107 Imun-ro
Dongdaemun-Gu
Seoul
Korea, Republic of (South Korea)

HOME PAGE: http://www.jisoohwang.com

Johanna Mollerstrom (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://https://sites.google.com/site/johannamollerstrom/

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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