Barro (1973) - The Control Of Politicians An Economic Model

Reference(s)

Barro, R. (1973), The Control of Politicians: An Economic Model, Public Choice 14 (September), 19-42. pdf

Abstract

This paper applies economic theory to an analysis of behavior in the public sector. The model focuses on the division of interest between the public and its political representatives. The division of interest arises because the public officeholder is assumed to act to advance his own interests, and these interests do not coincide automatically with those of his constituents. The electoral process and some elements of the political structure are then analyzed as mechanisms which can be used to move the officeholder toward a position where the advancement of self-interest approximates the advancement of the interests of his constituents

Model

• The players in the model are citizens and a competitive supply of politicians.
• All live indefinitely.
• All voters are ideologically homogenous and can coordinate to discipline the executive. All voters can essentially be treated as a single coherent actor.
• There are elections in every period.
• Citizen's utility is equal to [math]1-x[/math]

Timing of game:

1. Politician is elected.
2. Voter commits to reelection rule.
3. Politician chooses [math]x\in[0,1][/math].
4. Voter decides whether to reelect or not according to rule.

Paper's question: What's the optimal voting rule?

Notice: If the voters fire iff [math]x\gt 0[/math], all politicians will choose [math]x=1[/math] forever and gets voted out the next round. If voters never fire, politician always takes everything.

As such, the voter wants to choose x� as low as possible while not inducing him to steal 1 now and lose office.