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We study a two-period delegation model with an uncertain future principal. In the first period, an incumbent principal decides whether to delegate policy-making authority to an agent or make policy herself. Before the second period, there is an election, and another principal with different preferences may take power. The main result is that the incumbent can exploit the uncertainty about the future principal to extract policy surplus from the agent. The agent's uncertainty about the future principal pushes him to implement a policy that both principals accept. The surplus from this compromise policy makes the incumbent better off than she would be without the possibility of turnover. We also find that when costs are low, policy stability can increase as elections become more competitive, as the agent has more incentive to implement a compromise policy. We then allow the incumbent to appoint the agent. We show that as the incumbent becomes more likely to retain office, she prefers more policy conflict with the agent.

AbstractHow does the Rule of Four affect Supreme Court decisions? We show two effects of changing a "hearing pivot" justice who is decisive for case selection. First, a court with more extreme hearing pivots will hear cases with more moderate precedents. For example, as the conservative hearing pivot becomes more extreme, the court hears a broader range of cases with liberal status quo precedents. Second, more extreme hearing pivots shrink dispositional majorities and lead to more polarized rulings. If the median justice becomes more extreme without changing the hearing pivots, then rulings are more extreme. The effect on the range of cases heard, however, is smaller than that from changing hearing pivots. Finally, we show that case selection can also depend on non-median, non-hearing-pivot justices. Replacing an extreme justice with someone even more extreme can lead to a smaller set of heard cases, as final rulings can shift away from the binding hearing pivot, making status quo precedents more appealing.