Proceedings of the 54th International Academic Virtual Conference, Prague

A MASTER OF TWO SERVANTS: THE EFFECT OF SEPARATION OF POWERS ON PUBLIC ACCOUNTABILITY AND SOCIAL WELFARE

MORDECHAI E. SCHWARZ

Abstract:

While history is abundant with authoritarian rulers who reluctantly delegated governance powers to other institutions, the intriguing question is why would democratic powerful rulers delegate powers voluntarily to (probably) contrarian institutions, and tolerate activism that impedes the implementation of their elections commitments. Based on Fiorina (1982) blame-deflection hypothesis, which postulates that politicians use the separation of powers principle as a shield against public criticism and accountability, I develop a principal-agent model that addresses Stephenson (2003) criticism and show that in subgame-perfect stationary equilibrium the principal is usually manipulated. I extend the model to embed memory, learning, and objective judiciary and show that the equilibria are preserved but social welfare is lower.

Keywords: Constitution, Separation of Powers, Collusion, Asymmetric Information

DOI: 10.20472/IAC.2020.054.023

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