ISBN: 3540224025
AUTHOR: Gersbach
TITLE: Designing Democracy
TOC:

Part I. Incentive Contracts and Elections
1. Overview 3
1.1 TheIdeas 3
1.2 The Theme 7
2. Unobservability and Short-Termism in Long-Term Policies 11
2.1 Introduction 11
2.2 The Model 14
2.3 Fixed and Conditional Reelection Probabilities 18
2.4 Incentive Contracts at the Reelection Stage 21
2.5 Other Sources of Inefficiencies 24
2.6 Practical Issues 25
2.7 Conclusion 27
3. Short-Termism and Competition for Incentive Contracts 29
3.1 Introduction 29
3.2 The Model 33
3.3 Elections 38
3.4 Competition for the Incentive Contracts 41
3.5 Competition Without Commitment 44
3.6 Asymmetric Information 47
3.7 Conclusion 49
3.8 Appendix 50
4. Reelection Thresholds 53
4.1 Introduction 53
4.2 The Model 55
4.3 First-Best Solution 58
4.4 The Reelection Mechanism 59
4.5 Threshold Incentive Contracts 62
4.6 Conclusion 66
5. Effort Incentives and Monetary Rewards 67
5.1 Introduction 67
5.2 The Model 70
5.3 First-Best Solution 74
5.4 The Reelection Mechanism 76
5.5 Self-Financing Incentive Contracts 80
5.6 Robustness and Non-commitment 85
5.7 Conclusion 87
5.8 Appendix 88
6. Limits to Incentive Contracts in Politics 97
6.1 Introduction 97
6.2 The Model 99
6.3 Fixed Wages 101
6.4 Competition for Wage Contracts 102
6.5 Welfare Comparisons 106
6.6 Conclusion 110
Epilogue to Part I 111
References to Part I 112
Part II. Rules for Decision-Making and Agenda Setting
7. Overview 119
7.1 The Ideas 119
7.2 The Theme 122
8. Examples for Agenda Rules 125
8.1 Introduction 125
8.2 Model and Treatment Rules 127
8.2.1 The Model 127
8.2.2 The Game 129
8.2.3 Constitutional Principles 130
8.2.4 Socially Efficient Solutions 135
8.3 Examples of Constitutions 136
8.3.1 Constitutions for Socially Efficient Projects 137
8.3.2 The Curse of Equal Treatment 142
8.3.3 Constitutions for Socially Inefficient Projects 143
8.4 Discussion 144
8.4.1 General Constitutions 144
8.4.2 Amendments 146
8.4.3 Secret Ballots 149
8.5 Conclusions 150
8.6 Appendix 150
9. Flexible Majority Rules 157
9.1 Introduction 157
9.2 Model and Constitutional Rules 162
9.2.1 The Model 162
9.2.2 Socially Efficient Solutions 163
9.2.3 The Game 165
9.2.4 Constitutional Principles 168
9.3 First-Best Constitutions 171
9.3.1 No Negative Utility 172
9.3.2 Uncertainty Regarding p 176
9.3.3 Uncertainty Regarding p and (1 + lambda)k 178
9.3.4 Uncertainty Regarding p, V_h, and (1 + lambda)k 179
9.4 Conclusion 180
9.5 Appendix 183
9.5.1 Formalization of the Implementation Requirement 183
9.5.2 Proofs 185
10. Democratic Mechanisms 191
10.1 Introduction 191
10.2 Motivation and Approach 194
10.3 Model and Treatment Rules 197
10.3.1 The Model 197
10.3.2 Socially Efficient Solutions 198
10.3.3 The Game 200
10.3.4 Constitutional Principles 203
10.4 First-Best Constitutions 207
10.4.1 Uncertainty About Winners and Losers 208
10.4.2 Uncertainty Regarding V_h 210
10.4.3 Uncertainty Regarding p 211
10.4.4 Higher Dimensional Uncertainty 213
10.5 Discussion and Alternative Democratic Mechanisms 213
10.5.1 Dictatorial Agenda Setting 213
10.5.2 Equal Treatment Rules 215
10.5.3 Only Project-Winners 216
10.6 Conclusions 217
11. Fair Division 219
11.1 Introduction 219
11.2 The Model 223
11.3 A Finite Number of Periods 226
11.3.1 Random Recognition 226
11.3.2 Agenda Rules and Equal Distribution 228
11.3.3 Uncertainty About Discount Factors 230
11.4 Division of Resources with Infinite Periods 233
11.5 Discussion and Conclusions 234
11.6 Appendix 235
Epilogue to Part II 238
References to Part II 239
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