This paper argues that parties regulate competition among Hke-minded factions so as to enhance reputation building by, and voter trust in, the politicians standing for a given cause. While intra- and interparty competition contributes to keeping politicians on their toes, unbridled competition may encourage politicians to challenge good platforms and to wage competition along socially suboptimal dimensions (for example, by privileging form over content). The paper builds a simple model of intraparty competition and studies whether various hierarchical or democratic party institutions constitute an efficient form of party governance. The paper shows that intraparty disagreements, when they occur, hurt the party's position in the general election, but that their possibility enhances party image; and that parties must be able to avoid behind-the-scene allocations of portfolios and spoils in order to be credible. Last, it analyzes the impact of political polarization and interparty competition on the choice of party governance.

We consider a principal-agent contracting problem under incomplete information where some of the agent's actions are imperfectly observable. Contracts take the form of reward schedules based on the noisy observation of the agent's action. We first review situations where the principal can reach the same utility as in the absence of noise. Then we focus on the use of linear reward schedules, which allow universal implementation, i.e. implementation of a given mechanism for any unbiased noise of observation, and on quadratic reward schedules, which only require the knowledge of the variance of the noise. We exhibit sufficient conditions under which linear reward schedules implement a given mechanism. Finally, we characterize necessary conditions for a mechanism to be implementable under noisy observation by a linear schedule, and by quadratic schedules. We give the geometric intuition behind all results.

Competing Vertical Structures: Preconmitment and Renegotiation