Incentive Contracts and Elections for Politicians with Multi-Task Problems

32 Pages Posted: 14 Nov 2000

See all articles by Verena Liessem

Verena Liessem

Heidelberg University - Faculty of Economics and Social Studies

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2003

Abstract

We consider a model with a politician facing a multi-task problem while in office. The reelection mechanism distorts the allocation of effort in favor of tasks whose outcomes can be measured more precisely than others. We show that a hierarchy of elections and incentive contracts can alleviate this inefficiency, although the incentive contracts need to be based on the same information available to the voters at reelection date.

JEL Classification: D72, D82

Suggested Citation

Liessem, Verena and Gersbach, Hans, Incentive Contracts and Elections for Politicians with Multi-Task Problems (September 2003). Available at SSRN: https://ssrn.com/abstract=243518 or http://dx.doi.org/10.2139/ssrn.243518

Verena Liessem (Contact Author)

Heidelberg University - Faculty of Economics and Social Studies ( email )

Grabengasse 14
Heidelberg, D-69117
Germany
+49-6221-543172 (Phone)
+49-6221-543578 (Fax)

Hans Gersbach

ETH Zurich - CER-ETH -Center of Economic Reseaarch ( email )

Zürichbergstrasse 18
Zurich, 8092
Switzerland
+41 44 632 82 80 (Phone)
+41 44 632 18 30 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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