Hierarchies and Promotions in Political Institutions: Accountability and Selection

Abstract

Hierarchies are pervasive in political settings. From judges to elected politicians, from activists to bureaucrats, political agents compete to be promoted to higher positions. This paper studies political tournaments and their impact on key aspects of political performance: accountability and selection. While greater tournament size discourages effort, it improves selection. We also discuss the optimal design of tournament as a function of the principal’s objectives and features of the environment. We find that tournaments of size two (such as two-candidate elections) are generally suboptimal. Our analysis also highlights that more desirable promotion always increases effort, but reduces the optimal tournament size under some conditions. Our paper provides a host of other comparative statics.

Keywords: Tournaments, Optimal Hierarchies, Promotion, Selection, Effort

JEL Classification: D70, D71, D73, D02, D23, D86