Electoral Accountability and Responsive Democracy

We consider a canonical two-period model of elections with adverse selection (hidden preferences) and moral hazard (hidden actions), in which neither voters nor politicians can commit to future choices. We prove existence of electoral equilibria, and we show that in response to electoral incentives, office holders mix between “taking it easy” and “going for broke” in the first period. Even in the presence of a finite horizon, we establish that increasing office motivation leads to arbitrarily high expected policy outcomes in the first period. We conclude that the mechanism of electoral accountability has the potential to achieve responsiveness of democratic politics when electoral incentives are sufficiently large.