Politicians’ Motivation and the Quality of Government Decision Making

As moral hazard problems in political decision making abound, the quality of government decisions does not only depend on politicians’ competence, but also on their motivation. This paper develops a three-party model of electoral competition in which politicians differ in competence, in policy preferences, and in how much they care about (what they perceive as) the public interest relative to the private rents from being in office. We show that politicians’ incentive to behave opportunistically increase with politicians’ pay and with polarization of policy preferences. Moreover, politicians may have stronger incentives to behave opportunistically if they believe other politicians are more likely to behave opportunistically. A political culture may therefore be self-reinforcing. Lastly, we show that the mere probability that politicians care about the public interest enables opportunistic politicians to damage the reputation of their competitors. Efficient policies may therefore be repealed.