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Recent empirical studies have found a incumbency disadvantage in many developing democracies, in marked contrast with the well-known incumbency advantage in the US and other developed democracies. We know considerably less about incumbency disadvantage than incumbency advantage. In a simple principal-agent framework, I explore the role of a prominent feature of developing democracies – corruption. When rents are constant in incumbents' tenure – a standard assumption – the conditions for incumbency disadvantage are existent but limited; however, increasing rents, possibly due to learning, a gradual build-up of rent-extraction networks or fiscal windfalls, considerably increase the possibility of incumbency disadvantage, because voters may prefer inexperienced and unconnected challengers, even if they are of lower quality. Incumbency disadvantage becomes more likely as the pace of rent increase grows, politician quality decreases, with noise in the policy outcome, and potentially even when the pool of politicians improves. It is strictly more costly than any electoral outcome with high but constant-rents. The results highlight a novel reason for control of corruption and sensitivity to its dynamics.

An index of ethnic segregation conveys the extent of spatial mixing of ethnic groups, whereas an index of ethnic polarization and similar diversity measures show the overall balance between the groups. We present a game-theoretic model of conflict in which local success of one ethnic group encourages attacks by its co-ethnics in neighboring areas. Conditional on conflict breaking out, we find that for highly ethnically polarized societies, increasing ethnic segregation decreases the incidence and intensity of conflict. In contrast, in societies with low ethnic polarization, increasing segregation increases conflict. This is because segregation and polarization jointly determine the spread of conflict, an important channel that has been neglected previously. We find strong empirical support for model predictions in two very different conflicts: Hindu–Muslim riots in the 1980s and 1990s in India and the Bosnian Civil War from 1992 to 1995.

Academics and policymakers recognize that there are serious costs associated with systemic corruption. Stubbornly, many countries or regions remain stuck in a high-corruption equilibrium—a "corruption trap." Most existing theories concentrate on mutually reinforcing expectations of corrupt behavior among a fixed set of bureaucrats or politicians, implying that changing such expectations can lead to lower corruption. We develop models that more fully characterize thepoliticalnature of corruption traps by also analyzing the behavior of voters and entrants to politics, as well their interaction with incumbent politicians. We show that corruption traps can arise through strategic behavior of each set of actors, as well as through their interrelations. By linking politician, voter, and entrant behavior, we provide an explanation for why simply trying to change expectations among one set of actors is likely insufficient for eliminating corruption traps.