Designing Democracies for Sustainability
29 Pages Posted: 9 Nov 2004
Date Written: September 2004
Abstract
Democratic processes may not take the welfare of future generations sufficiently into account and thus may not achieve sustainability. We show that the dual democratic mechanism - rejection/support rewards (RSRs) for politicians and elections - can achieve sustainability. RSRs stipulate that incumbents who are not re-elected, but obtain the majority support among young voters receive a particular monetary or non-monetary reward. Such rejection/support rewards induce politicians to undertake long-term beneficial policies, but may invite excessive reward-seeking. We identify optimal RSRs under different informational circumstances.
Keywords: Democracy, elections, incentive contracts, sustainability, rejection/support rewards
JEL Classification: D72, D82, H55, Q56
Suggested Citation: Suggested Citation
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