The Paradox of Competence

27 Pages Posted: 20 May 2004  

Hans Gersbach

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

Date Written: April 2004

Abstract

We examine a model in which the public is unsure about the competence of a politician, and whether they are concerned about the long-term consequences of their decisions (statesman) or about the public's opinion concerning their competence and preferences (populist). The main finding suggests that the public benefits by disregarding the competence of candidates and by re-electing candidates based on their beliefs about whether a politician is a statesman. This paradox of competence might explain why politicians are so concerned about being perceived as statesmen. We also provide a rationale as to why governing by polls can be detrimental for society. Moreover, our model illustrates in general that delaying irreversible project decisions is a bad signal.

Keywords: Populists, statesmen, paradox of competence, double-sided asymmetric information, polls

JEL Classification: D72, D80, D82

Suggested Citation

Gersbach, Hans, The Paradox of Competence (April 2004). CEPR Discussion Paper No. 4362. Available at SSRN: https://ssrn.com/abstract=548762

Hans Gersbach (Contact Author)

Swiss Federal Institute of Technology Zurich, (CER-ETH) ( 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)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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