Fraudulent Democracy: A Dynamic Ordinal Game Approach

We propose a model of political competition and stability in nominally democratic societies characterized by fraudulent elections. In each election, an opposition leader is pitted against the leader in power. If the latter wins, he remains in power, which automatically makes him the incumbent candidate in the next election as there are no term limits. If he loses, there is an exogenously positive probability that he will steal the election. We model voter forward-looking behavior, defining a new solution concept. We then examine the existence, popularity, and welfare properties of equilibrium leaders, these being leaders who would remain in power indefinitely without stealing elections. We find that equilibrium leaders always exist. However, they are generally unpopular, and may be inefficient. We identify three types of conditions under which equilibrium leaders are efficient. First, efficiency is achieved under any constitutional arrangement if and only if there are at most four competing leaders. Second, when there are more than four competing leaders, efficiency is achieved if and only if the prevailing political system is an oligarchy, which means that political power rests with a unique minimal coalition. Third, for a very large class of preferences that strictly includes the class of single-peaked preferences, equilibrium leaders are always efficient and popular regardless of the level of political competition. The analysis implies that an excessive number of competing politicians, perhaps due to a high level of ethnic fragmentation, may lead to political failure by favoring the emergence of a ruling leader who is able to persist in power forever without stealing elections, despite being inefficient and unpopular.