Contestable leadership: Party leaders as principals and agents

This paper examines the institutional determinants of discipline in legislative parties. The model formalizes the tradeoff between resources at the leader's discretion, and the leader's need to maintain a minimum level of support to continue leading. The value of the leader's promises of future benefits is here endogenously determined by the backbenchers' beliefs about the extent of support to the leader among other party legislators. Rewards that can be distributed publicly and on the spot are effective tools to coordinate beliefs about the stability of the leader, and thus also increase the value of the leader's promises of future benefits. These spot resources are in fact necessary for the leader to be powerful: without them, the leader can use promises of future benefits to sway members' behavior only if a majority of the party agrees (ex ante) with the leader's preferred position in the first place.