Reelection Threshold Contracts in Politics

Gersbach, Hans; Liessem, Verena

doi:10.2139/ssrn.296129

Download This Paper

Open PDF in Browser

Add Paper to My Library

Reelection Threshold Contracts in Politics

33 Pages Posted: 15 Jan 2002

See all articles by Hans Gersbach

Hans Gersbach

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

Verena Liessem

Heidelberg University - Faculty of Economics and Social Studies

Date Written: January 2004

Abstract

When politicians are provided with insufficient incentives by the democratic election mechanism, we show that social welfare can be improved by threshold contracts. A threshold incentive contract stipulates a performance level which a politician must reach in order to have the right to stand for reelection. Read my lips would turn into read my contracts. Reelection thresholds can be offered by politicians during campaigns and do not impair the liberal principle of free and anonymous elections in democracies.

Keywords: Elections, Incentive Contracts, Democracy

JEL Classification: D72, D82

Suggested Citation: Suggested Citation

Gersbach, Hans and Liessem, Verena, Reelection Threshold Contracts in Politics (January 2004). Available at SSRN: https://ssrn.com/abstract=296129 or http://dx.doi.org/10.2139/ssrn.296129