Flexibility and Political Biases in Elections with Retrospective Voting

Abstract

This paper characterizes the optimal degree of flexibility in a dynamic model where two candidates compete in elections repeatedly. Giving the winner of an election some flexibility to depart from an earlier campaign promise is crucial due to new information that can arrive after the election. However, too much flexibility implies that candidates follow primarily their own biases. It is shown that first-best policies can be implemented for any realization of the state in all periods, in spite of candidates' known biases. This is achieved via retrospective voting, by adjusting the probability of reelecting the incumbent to her implemented policy.