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A Folk Theorem for Repeated Elections with Adverse Selection*

Published online by Cambridge University Press:  02 June 2014

John Duggan
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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 

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Footnotes

*John Duggan is Professor Political Science Economics, W. Allen Wallis Institute of Political Economy, University of Rochester, Rochester, NY 14627 (dugg@ur.rochester.edu). 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.

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