Working Paper: CEPR ID: DP4664
Authors: Eric Le Borgne; Ben Lockwood
Abstract: This Paper studies a principal-agent model of the relationship between officeholder and an electorate, where everyone is initially uninformed about the officeholder?s ability. If office-holder effort and ability interact in the determination of performance in office, then an office-holder has an incentive to learn, i.e., raise effort so that performance becomes a more accurate signal of their ability. Elections reduce the learning effect, and the reduction in this effect may more than offset the positive ?re-election concerns? effect of elections on effort, implying higher effort with appointment. When this occurs, appointment of officials may welfare-dominate elections.
Keywords: Career concerns; Citizen-candidate; Effort; Elections; Incomplete information; Learning
JEL Codes: D72; D78; H41; J44; J45
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Elections (K16) | lower effort (D29) |
| Learning incentive (I24) | effort (D29) |
| Risk of losing office (D72) | learning incentive (G53) |
| Elections (K16) | learning incentive (G53) |
| Learning incentive + Reelection concerns (D72) | overall effort (D29) |