Hostname: page-component-cd9895bd7-8ctnn Total loading time: 0 Render date: 2024-12-27T06:55:54.708Z Has data issue: false hasContentIssue false
  • English
  • Français

A Folk Theorem for Repeated Elections with Adverse Selection*

Published online by Cambridge University Press:  02 June 2014

John Duggan
Get access Rights & Permissions [Opens in a new window]

Abstract

This article establishes a folk theorem for a model of repeated elections with adverse selection: when citizens (voters and politicians) are sufficiently patient, arbitrary policy paths through arbitrarily large regions of the policy space can be supported by a refinement of perfect Bayesian equilibrium. Politicians are policy motivated (so office benefits cannot be used to incentivize policy choices), the policy space is one-dimensional (limiting the dimensionality of the set of utility imputations), and politicians’ preferences are private information (so punishments cannot be targeted to a specific type). The equilibrium construction relies critically on differentiability and strict concavity of citizens’ utility functions. An extension of the arguments allows policy paths to depend on the office holder's type, subject to incentive compatibility constraints.

Type
Original Articles
Information
Political Science Research and Methods , Volume 2 , Issue 2 , October 2014 , pp. 213 - 242
Copyright
Copyright © The European Political Science Association 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*John Duggan is Professor Political Science Economics, W. Allen Wallis Institute of Political Economy, University of Rochester, Rochester, NY 14627 ([email protected]). This article was presented at the Second Warwick Political Economy Conference in Venice, 2013. I am grateful for discussions with Paulo Barelli and Adam Meirowitz and to two anonymous referees for extremely helpful comments.

References

Aumann, R.Maschler, M.. 1995. Repeated Games with Incomplete Information. Cambridge, MA: MIT Press.Google Scholar
Banks, J.Duggan, J.. 2008. ‘A Dynamic Model of Democratic Elections in Multidimensional Policy Spaces’. Quarterly Journal of Political Science 3:269–299.Google Scholar
Banks, J.Sundaram, R.. 1993. ‘Adverse Selection and Moral Hazard in a Repeated Election Model’. In Political Economy: Institutions, Information, Competition, and Representation, edited by William Barnett et al. Cambridge University Press.Google Scholar
Banks, J.Sundaram, R.. 1998. ‘Optimal Retention in Agency Problems’. Journal of Economic Theory 82:293–323.CrossRefGoogle Scholar
Bernhardt, D., Camara, O.Squintani, F.. 2011. ‘Competence and Ideology’. Review of Economic Studies 78:487–522.Google Scholar
Bernhardt, D., Campuzano, L., Squintani, F.Camara, O.. 2009. ‘On the Benefits of Party Competition’. Games and Economic Behavior 66:685–707.Google Scholar
Bernhardt, D., Dubey, S.Hughson, E.. 2004. ‘Term Limits and Pork Barrel Politics’. Journal of Public Economics 88:2383–2422.Google Scholar
Besley, T.Coate, S.. 1997. ‘An Economic Model of Representative Democracy’. Quarterly Journal of Economics 112:85–114.Google Scholar
Camaro, O. 2012. ‘Economic Policies of Heterogeneous Politicians’. Working paper, Marshall School of Business, University of Southern California, available at http://www-bcf.usc.edu/~ocamara/taxes.pdf, accessed 6 May 2014.Google Scholar
Duggan, J. 2000. ‘Repeated Elections with Asymmetric Information’. Economics and Politics 12:109–136.Google Scholar
Duggan, J.Fey, M.. 2006. ‘Repeated Downsian Electoral Competition’. International Journal of Game Theory 35:39–69.Google Scholar
Dutta, P. 1995. ‘A Folk Theorem for Stochastic Games’. Journal of Economic Theory 66:1–32.Google Scholar
Ferejohn, J. 1986. ‘Incumbent Performance and Electoral Control’. Public Choice 50:5–25.Google Scholar
Fudenberg, D., Levine, D.Maskin, E.. 1994. ‘The Folk Theorem with Imperfect Public Information’. Econometrica 62:997–1040.CrossRefGoogle Scholar
Fudenberg, D.Maskin, E.. 1986. ‘The Folk Theorem for Repeated Games with Discounting or with Incomplete Information’. Econometrica 54:533–554.Google Scholar
Fudenberg, D.Yamamoto, Y.. 2011. ‘The Folk Theorem for Irreducible Stochastic Games with Imperfect Public Monitoring’. Journal of Economic Theory 146:1664–1683.Google Scholar
Horner, J., Sugaya, T., Takahashi, S.Vieille, N.. 2011. ‘Recursive Methods in Discounted Stochastic Games: An Algorithm for δ →1 and a Folk Theorem’. Econometrica 79:1277–1318.Google Scholar
McKelvey, R. 1976. ‘Intransitivities in Multidimensional Voting Models and some Implications for Agenda Control’. Journal of Economic Theory 12:472–482.Google Scholar
McKelvey, R.. 1979. ‘General Conditions for Global Intransitivities in Formal Voting Models’. Econometrica 47:1085–1112.Google Scholar
Meirowitz, A. 2007. ‘Probabilistic Voting and Accountability in Elections with Uncertain Policy Constraints’. Journal of Public Economic Theory 9:41–68.Google Scholar
Osborne, M.Slivinski, A.. 1996. ‘A Model of Competition with Citizen Candidates’. Quarterly Journal of Economics 111:65–96.Google Scholar
Plott, C. 1967. ‘A Notion of Equilibrium and its Possibility under Majority Rule’. American Economic Review 57:787–806.Google Scholar
Schofield, N. 1978. ‘Instability of Simple Dynamic Games’. Review of Economic Studies 45:575–594.Google Scholar
Schofield, N.. 1983. ‘Generic Instability of Majority Rule. Review of Economic Studies 50:695–705.Google Scholar
Wen, Q. 2002. ‘A Folk Theorem for Repeated Sequential Games’. Review of Economic Studies 69:493–512.Google Scholar