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A Folk Theorem for Repeated Elections with Adverse Selection

Author

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  • John Duggan

    (W. Allen Wallis Institute of Political Economy, 107 Harkness Hall, University of Rochester, Rochester, NY 14627-0158)

Abstract
I establish a folk theorem for a model of repeated elections with adverse selection: when citizens 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.

Suggested Citation

  • John Duggan, 2013. "A Folk Theorem for Repeated Elections with Adverse Selection," Wallis Working Papers WP64, University of Rochester - Wallis Institute of Political Economy.
    • Handle: RePEc:roc:wallis:wp64
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    References listed on IDEAS

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    Cited by:

    1. Jean Guillaume Forand & John Duggan, 2013. "Markovian Elections," Working Papers 1305, University of Waterloo, Department of Economics, revised Oct 2013.

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