*** THERE IS NOTHING MISSING WITH THESE QUESTIONS. PLEASE CLICK ON LINK BECAUSE THAT IS THE ONLY WAY U CAN FIND THE ANSWERS ***

1.Ministers in Singapore are the highest paid politicians in the world, receiving a 60% salary raise in 2007 and as a result Prime Minister Lee Hsien Loong's pay jumped to S$3.1 million, five times the US$400,000 earned by former President Barack Obama. Although there was a brief public outcry regarding the high salary in comparison to the size of the country governed, the government's firm stance was that this raise was required to ensure the continued efficiency and corruption-free status of Singapore's "world-class" government.

Would paying politicians more attract better politicians?

Read:http://freakonomics.com/2012/06/21/would-paying-politicians-more-attract-better-politicians/

(a)Is there an asymmetric information problem in the market for politicians? What kind of information problem?

(b)Browse the paper by Claudio Ferraz and Frederico Finan (mostly the introduction) mentioned in the freakonomics link above - "Motivating Politicians: The Impacts of monetary incentives on quality and performance". What is the rationale for paying more to politicians? Draw a simple diagram to make your point. Based on their paper, is there any evidence that paying politicians more actually improves quality?