Tuesday, May 8, 2012
Ulric B. and Evelyn L. Bray Seminar in Political Economy
Re-Election Through Division
Richard Van Weelden, Assistant Professor of Economics, University of Chicago
We provide a positive analysis of eﬀort allocation by a politician facing reelection when voters are uncertain about the politicians preferences on a divisive issue. We then use this framework to derive normative conclusions on the desirability of transparency, term limits, and independence of executive power. There is a pervasive incentive to posture by over-providing eﬀort to pursue the divisive policy, even if all voters would strictly prefer to have a consensus policy implemented. As such, the desire of politicians to convince voters that their preferences are aligned with the majority can lead them to choose strictly pareto dominated eﬀort allocations in the ﬁrst period. Transparency over the politicians eﬀort choices can either mitigate or re-enforce the distortions depending on the strength of politicians oﬃce motivation and the eﬃciency of institutions. When re-election concerns are paramount, and executive institutions are strong, transparency about eﬀort choices can be bad for both incentivizing politicians and for sorting.