Incentivizing Brokers in Clientelist Parties

Local brokers are essential in the implementation of clientelist politics, but their efforts on parties’ behalf are not fully observable. A growing literature studies how parties address this agency problem, highlighting two distinct reward schemes:allocating promotions or prizes based on observed vote shares, or doing so based on inferred effort allocations. This paper develops a formal model to examine the conditions under which one or the other of these reward schemes is optimal forminimizing brokers’ rent-seeking. Intuitively, the effort-based reward mechanism is optimal when broker effort is inferred with relative precision. Less intuitively, the vote-based mechanism will tend to be optimal when a party’s supporters are evenly distributed across regions, and when the prize ß adopts intermediate values, which together lead to high levels of inter-broker competition. When brokers must compete with one another over valued prizes, parties can often minimize rent seeking without directly monitoring broker effort.