Discussion Paper Details

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Title: Vote-share Contracts and Democracy

Author(s): Hans Gersbach

Publication Date: September 2007

Keyword(s): elections, political contracts and vote-share thresholds

Programme Area(s): Public Economics

Abstract: In this paper we introduce vote-share contracts. Such contracts contain a vote-share threshold that incumbents must reach in order to be reelected. In a simple model, we illustrate the working of vote-share contracts. Such vote-share contracts curb socially detrimental incumbency advantages by improving the average ability level of re-elected politicians and also increase effort. We show that the socially optimal vote-share threshold for incumbents is larger than one half. Competing candidates offer vote-share contracts with socially optimal thresholds.

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Bibliographic Reference

Gersbach, H. 2007. 'Vote-share Contracts and Democracy'. London, Centre for Economic Policy Research.