Paper # Author Title  
We study a dynamic moral hazard model where the agent does not fully observe his performance. We consider the incentive effects of providing feedback to the agent: revealing to the agent how well he is doing. We show that, if the incentive scheme is exogenously given, there is a wide range of cases where the agent works harder if feedback is provided. However, the agent earns more money in this scenario. We then characterize the optimal incentive schemes in the two scenarios and we show that the principal is better off if feedback is not provided; the expected cost of inducing any given level of expected effort is lower in the no-revelation scenario. Download Paper
According to the conventional view, in politics, just as in economic markets, competition between politicians is a force that pushes towards efficiency. We provide a model that challenges this view. In the model, candidates can promise to provide a public good or to engage in redistributive politics. We show that the more intense is competition (measured by an increase in the number of candidates) the greater the inefficiency. This is because the tendency to focus on policies that provide particularistic benefits increases with the number of candidates at the expense of policies that benefit the population at large. We also examine the impact of voters’ ideology, participation, and information on the efficiency of the electoral process, by allowing for heterogeneity in voters’ responsiveness to electoral promises. The larger the fraction of non-responsive voters, the less efficient the political process. This is because electoral competition focuses on swing voters, increasing the value of policies with targetable benefits. Download Paper
We discuss a fundamental trade-off in the political process that can lead to inefficient provision of public goods: politicians may not offer to provide socially desirable public goods because the benefits of the public good cannot be targeted to voters as easily as pork barrel spending. We study how this inefficiency is affected by alternative ways of conducting elections. We first compare a winner-take-all system with a proportional system. We then contrast two different ways of electing politicians to nationwide offices: one is majority rule, the other is the system used in U.S. presidential elections: the electoral college. Download Paper