Replacement and Reputation

Does electoral replacement ensure that officeholders eventually act in voters' interests?We study a reputational model of accountability.Voters observe incumbents' performance and decide whether to replace them.Politicians may be "good" types who always exert effort or opportunists who may shirk.We find that good long-run outcomes are always attainable, though the mechanism and its robustness depend on economic conditions.In environments conducive to incentive provision, some equilibria feature sustained effort, yet others exhibit some long-run shirking.In the complementary case, opportunists are never fully disciplined, but selection dominates: every equilibrium eventually settles on a good politician, yielding permanent effort.