Political Reform with Time-Inconsistent Voters

Political reforms are often designed in a gradual manner, even though it would be more e ¢ cient to implement the reforms as big bang.We argue that when voters have present-biased preferences, gradualism may actually be welfare-enhancing relative to big bang.This is because time-inconsistent voters delay implement-ing reforms when reforms have front-loaded costs. Gradualism, however, o¤ers the option of spreading out the costs across time and thereby relaxes the in-tertemporal trade-o¤. Using a citizen candidate model, we allow the agenda setting politician one who decides which reform schedules to put to vote to be endogenously determined. The model shows that when voters are sophisti-cated (aware of their time-inconsistency) they elect an agenda setter who is more patient than the median voter. That is, knowing ex ante that they would procrastinate, voters delegate the agenda-setting authority to an agent who is more time-consistent. Subject to majority rule, the elected agenda setter then proposes a gradual reform schedule with minimal loss of e ¢ ciency