Tying the Politicians’ Hands

We study the optimal delegation problem which arises between the median voter (the writer of the constitution) and the (future) incumbent politician under the assumption that not only the state of the world and but also the politician's type (preferred policy) are the policy-maker's private information. [...] We establish two uncertainty principles: (a) the state-uncertainty principle, which states that the greater is the uncertainty about the state of the world, the wider is the delegation interval, and (b) the bias-uncertainty principle, which states that the greater is the uncertainty about political bias, the smaller is the delegation interval. [...] The purpose of the present paper is to study the optimal constitutional limits, depending on the relative precision of voter information regarding the optimal public policies and that regarding the valence of incumbent politicians. [...] For the sake of simplicity, we suppose that the voting procedure is unbiased, in the sense that the expected representative s type is the median voter s type. [...] Our utility speci cation means that in the case of the median voter (the person whose t is zero), the most preferred policy in state is x ( ; t = 0) = B + , which implies that, on average, her ideal value of x is B. When the state of the world is = ", the most preferred policy of a voter with the extreme rightist preference, t = , is B + " + , and when the state of the world is = ", the