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 article develops a formal model to examine the conditions under which one or the other of these reward schemes is optimal for minimizing 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 β adopts intermediate values, which together lead to high levels of interbroker competition. When brokers must compete with one another over valued prizes, parties can often minimize rent seeking without directly monitoring broker effort.