Incentive pay for policy-makers
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Author / Producer
Date
2018-12
Publication Type
Working Paper
ETH Bibliography
yes
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Abstract
We study how to efficiently motivate policy-makers to solve political multitask
problems. Political multi-task problems typically have outcomes that
are difficult to measure. Moreover, there are conflicts among citizens about
optimal policies and the agents have the power to tax the citizens to invest
in better outcomes of some tasks. We develop a political agency model
with two tasks and only one measurable outcome. In such an environment,
policy-makers choose socially inefficient public good levels and expropriate
minorities. A judicious combination of constitutional limits on taxation and
incentive pay for policy-makers is second-best. Incentive pay is conditional
on the public good level.
Permanent link
Publication status
published
External links
Editor
Book title
Journal / series
Economics Working Paper Series
Volume
18/307
Pages / Article No.
Publisher
CER-ETH – Center of Economic Research at ETH Zurich
Event
Edition / version
Methods
Software
Geographic location
Date collected
Date created
Subject
Incentive contracts; Politicians; Multi-task problems
Organisational unit
02120 - Dep. Management, Technologie und Ökon. / Dep. of Management, Technology, and Ec.