Discussion Paper Details

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Title: Designing Democracies for Sustainability

Author(s): Hans Gersbach and Tobias Kleinschmidt

Publication Date: September 2004

Keyword(s): democracy, elections, incentive contracts, Q56, rejection/support rewards and sustainability

Programme Area(s): Public Economics

Abstract: Democratic processes may not take the welfare of future generations sufficiently into account and thus may not achieve sustainability. We show that the dual democratic mechanism ? rejection/support rewards (RSRs) for politicians and elections ? can achieve sustainability. RSRs stipulate that incumbents who are not re-elected, but obtain the majority support among young voters receive a particular monetary or non-monetary reward. Such rejection/support rewards induce politicians to undertake long-term beneficial policies, but may invite excessive reward-seeking. We identify optimal RSRs under different informational circumstances.

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Bibliographic Reference

Gersbach, H and Kleinschmidt, T. 2004. 'Designing Democracies for Sustainability'. London, Centre for Economic Policy Research.