Evidence on the political principal-agent problem from voting on public finance for concert halls

Potrafke, Niklas (2013): Evidence on the political principal-agent problem from voting on public finance for concert halls. In: Constitutional Political Economy, Vol. 24, No. 3: pp. 215-238

Abstract

Principal-agent problems can arise when preferences of voters are not aligned with preferences of political representatives. Often the consequence of the political principal-agent problem is political catering to special interests. In this paper I provide examples of principal-agent problems regarding public spending. The examples concern construction or extension of concert halls in two German cities. Resistance to public funding for the concert halls was particularly strong in electoral districts with large constituencies on the left. The evidence indicates that political representatives were more bourgeois than their constituencies. In the cases studied asymmetric information did not prevail and voters were able to discipline their representatives through referenda that countered the results of voting by political representatives.

• Item Type: Journal article
• Faculties: Economics; Economics > Chairs > CESifo-Professorship for Public Finance
• Subjects: 300 Social sciences > 330 Economics
• Language: English