Le Borgne, Eric and Lockwood, Ben (2004) Do elections always motivate incumbents? : learning vs. re-election concerns. Discussion Paper. London: Centre for Economic Policy Research. (Discussion paper (Centre for Economic Policy Research).

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Abstract

This paper studies a principal-agent model of the relationship between office-holder and an electorate, where everyone is initially uninformed about the office-holder’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 her 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.

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