The Logic of Term Limits Pledges

This article offers a rationale for candidates who voluntarily pledge to term limits. My analysis is built on a standard political agency model to which I add an election campaign where candidates can commit not to seek a second term. Pledging to term limits allows candidates to signal their private type and insulate themselves from career concerns. By doing so, candidates leverage the fact that the representative voter endogenously prefers to elect a candidate who does not seek reelection because she either has on average more desirable attributes, distorts her decisions to a lesser extent, or both. As a result, candidates who pledge to term limits have a higher probability of being elected in the first place. I characterize the equilibria of a model specification in which politicians differ with respect to their policy preferences and uncover circumstances in which term limits pledges are informative and improve the voter's welfare.

The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings

Certification by analysts on a FinTech platform that harnesses the “wisdom of crowds” is associated with successful initial coin offerings (ICOs). We show that favorable ratings by a group of analysts with diverse backgrounds positively predict fundraising success and long-run token performance. Analysts’ ratings also help detect potential fraud ex ante. We document that analysts have career concerns and are incentivized by the platform to issue informative ratings. Overall, our results suggest that a market-based certification process that relies on a diverse group of individuals is at play in financing blockchain startups. (JEL D82, G11, G24, G32, G34, L26). Received February 25, 2021; editorial decision July 7, 2021 by Editor Andrew Ellul. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

The Impact of Career Concerns and Cognitive Dissonance on Bureaucrats’ Use of Benefit-Cost Analysis

Previous research shows that Benefit-Cost Analysis (BCA) is seldom done in Sweden, and that the results e.g., in Norway and the Netherlands do not influence the ultimate policy choice. We explain why bureaucrats may choose (not) to do a BCA with cognitive- and search costs coupled with career concerns. Given the initial policy chosen by an agenda setter, bureaucrats who stay working at an agency have policy preferences close to the initial policy; those with reservation wages above a threshold quit and therefore do not influence policy. The bureaucrats’ preferences converge to the initial policy level over time. A BCA reveals the inefficiency of the initial policy and the bureaucrats consequently have no incentive to do one, except when the policy is restricted by a binding governmental budget constraint.