Do Elections Always Motivate Incumbents? Learning versus Re-election Concerns

This Paper studies a principal-agent model of the relationship between officeholder and an electorate, where everyone is initially uninformed about the officeholder’s ability. If office-holder effort and ability interact in the determination of performance in office, then an office-holder has an incentive to learn, i.e., raise effort so that performance becomes a more accurate signal of their ability. Elections reduce the learning effect, and the reduction in this effect may more than offset the positive ‘re-election concerns’ effect of elections on effort, implying higher effort with appointment. When this occurs, appointment of officials may welfare-dominate elections.