Help and Factionalism in Politics and Organizations

Abstract

Whether in electoral politics or promotions within organizations, players often face the dilemma of whether to enter the contest or to assist other candidates. This paper analyzes incentives in a rank‐order tournament when the winner, apart from earning the ‘first prize’, also has control over a ‘second prize’ that he can distribute to his supporters. Some players may then be encouraged to help others in exchange for paybacks, resulting in factionalism, with leaders, solo contestants and supporters of other candidates sorted by ability. The number and the size of factions depend on the structure of the contest, which can be manipulated to provide optimal incentives for effort coordination as required by political objectives or production technology.