Replacement and Reputation: Electoral Accountability and Long-Run Outcomes

This National Bureau of Economic Research working paper, authored by Navin Kartik, Elliot Lipnowski, and Harry Pei, investigates whether electoral replacement ensures that officeholders eventually act in voters’ interests. The authors develop a reputational model of accountability where voters observe incumbent performance to decide on retention or replacement. Politicians are categorized as either 'good' types, who consistently exert effort, or opportunists, who may shirk responsibilities. The study finds that favorable long-run outcomes are always achievable, although the specific mechanisms and their robustness vary based on economic conditions. In environments supportive of incentive provision, some equilibria sustain effort while others allow for long-term shirking. Conversely, in complementary scenarios where opportunists are not fully disciplined by incentives, selection effects dominate. In these cases, every equilibrium eventually results in the election of a 'good' politician, leading to permanent effort. The research contributes to the fields of microeconomics, game theory, and political economy by elucidating the dynamics between reputation, selection, and accountability in democratic systems.