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This article explores an agency model in which voters learn about both an incumbent and an opponent. They observe the incumbent's policy record and update their beliefs about his opponent via a campaign. Although the former is relatively more informative, it can be costly for the voter to learn about the incumbent from her policy record. This is because policy reforms, which allow a voter to learn an incumbent's ability, are risky and can leave the voter worse off. Then the voter may prefer the incumbent to take safer actions. The efficient level of reform – the one preferred by the voter – balances the value of learning with the expected policy costs/benefits. In a world where the opponent's campaign is uninformative, reform can be too low due to the incumbent's fear of failure. Or it can be too high: the incumbent may gamble on success. This article shows that the presence of an opponent who can reveal information via a campaign exacerbates these inefficiencies. An incumbent who anticipates the effect of an opponent's campaign on voter beliefs is more likely to make inefficient policy choices. Further, such campaigns can lead to an overall welfare loss when they reveal little about the opponent's ability and yet have an impact on the incumbent's policy choice.

Followers wish to coordinate their actions in an uncertain environment. A follower would like his action to be close to some ideal (but unknown) target; to reflect his own idiosyncratic preferences; and to be close to the actions of others. He learns about his world by listening to leaders. Followers fail to internalize the full benefits of coordination and so place insufficient emphasis on the focal views of relatively clear leaders. A leader sometimes stands back, by restricting what she says, and so creates space for others to be heard; in particular, a benevolent leader with outstanding judgement gives way to a clearer communicator in an attempt to encourage unity amongst her followers. Sometimes a leader receives no attention from followers, and sometimes she steps down (says nothing); hence a leadership elite emerges from the endogenous choices of leaders and followers.

Followers wish to coordinate their actions in an uncertain environment. A follower would like his action to be close to some ideal (but unknown) target; to reflect his own idiosyncratic preferences; and to be close to the actions of others. He learns about his world by listening to leaders. Followers fail to internalize the full benefits of coordination and so place insufficient emphasis on the focal views of relatively clear leaders. A leader sometimes stands back, by restricting what she says, and so creates space for others to be heard; in particular, a benevolent leader with outstanding judgement gives way to a clearer communicator in an attempt to encourage unity amongst her followers. Sometimes a leader receives no attention from followers, and sometimes she steps down (says nothing); hence a leadership elite emerges from the endogenous choices of leaders and followers. [Reprinted by permission of Sage Publications Ltd., copyright holder.]

We use a formal theoretical framework to explore the interplay between a government's longevity and its performance. Ministers perform well when their careers are valuable; this is so when the government's duration is expected to be long; the government's survival depends on its popularity; and, finally, that popularity depends on its ministers' performance. The feedback loop between performance and longevity means that multiple rational-expectations equilibria can arise: Ministers work hard for a popular government, but divert efforts elsewhere if they believe the government is doomed; these alternatives are both self-fulfilling prophecies. However, the presence of (perhaps small) random events that buffet the performance and popularity of a government is sufficient to pin down a unique equilibrium. We explore the dynamics that arise: A crisis of confidence involving the rapid collapse of a government's performance is sparked when a sequence of negative shocks push the popularity of the government below a unique critical threshold.

We consider a government for which success requires high performance by talented ministers. A leader provides incentives to her ministers by firing those who fail. However, the consequent turnover drains a finite talent pool of potential appointees. The severity of the optimal firing rule and ministerial performances decline over time: the lifetime of an effective government is limited. We relate this lifetime to various factors, including external shocks, the replenishment of the talent pool, and the leader's reputation. Some results are surprising: an increase in the stability of government and the exogenous imposition of stricter performance standards can both shorten the era of effective government, and an increase in the replenishment of the talent pool can reduce incumbent ministers' performance.