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This paper examines the incentives for a party leader in office and for a parties' rank-and-file to replace a sitting member of parliament. As to the leader's decision, we show that the leader prefers to replace a critical member of parliament who votes against the leader's policy. A competent leader designing efficient policies replaces a critical member since the member is unable to evaluate policies. A critical member may also have discovered a policy failure if the leader designs inefficient policies. In that case, the leader infers that the critical member has the ability to learn the quality of policies. An incompetent leader who cares about his reputation rather prefers that the member of parliament is incompetent. To reduce the risk that a future policy failure is discovered, an incompetent leader therefore replaces a critical member and keeps a member who supports the inefficient policy.

In representative democracies, citizens give politicians the authority to decide on the implementation of a variety of policies. Delegation has clear advantages in terms of benefits of specialization. However, delegation may create agency problems between citizens and their politicians. Politicians may exert too little effort, implement inefficient policies, extract rents, or otherwise perform badly. In this thesis, principal-agent problems between citizens and politicians are central to the analysis. The main objective is to explain several institutional arrangements, observed in governments, in the light of the agency problems. The agency problems between voters and politicians are characterized by two essential ingredients. First, politicians are often better informed about the effects of public policies than the electorate. Second, the preferences of politicians are not necessarily aligned with the preferences of the electorate. We examine how the selection of politicians as well as some regulations governing politicians' actions helps to reduce the incidence of policy failures. Each chapter focuses on a different component of the political decision making process. In the first chapter, we consider the interaction between different types of politicians in electoral competition. We show why a political culture may be self-reinforcing. The second chapter shows why there is a strong incentive for a leader in office to replace a critical member of parliament. The third chapter tries to provide an explanation for the observed variety in the composition of committees in U.S. Congress. Finally, the last chapter provides a rationale for the sequential nature of information collection in advocacy systems.

We study electoral competition among politicians who are heterogeneous both in competence and in how much they care about (what they perceive as) the public interest relative to the private rents from being in office. We show that politicians' incentives to behave opportunistically increase with politicians' pay and with polarization of policy preferences. Moreover, politicians may have stronger incentives to behave opportunistically if other politicians are more likely to behave opportunistically. A political culture may therefore be self-reinforcing and multiple equilibria may arise. Lastly, we show that the mere probability that politicians care about the public interest enables opportunistic politicians to damage the reputation of their competitors. Consequently, efficient policies may be reversed.

Trade unions tend to reduce the dispersion of wages among their members. Skilled workers may therefore have an incentive to separate from an encompassing union and organize into a separate craft union. In this paper, we examine a theoretical model to gain insight into the determinants of the number of trade unions at a firm. We show that imperfect competition in the product market may drive skilled and unskilled workers together, even though unskilled workers use their political power in the trade union to extract rents from the skilled workers. Additionally, we examine the influence of several features of production technology on trade union structure.