Gambling for Re-election

This paper presents novel empirical evidence that gambling style behaviour – which has been documented in many areas of economic decision-making – is important in politics. We show that politicians ‘gamble for re-election’ in the context of a political leader selection. To overcome challenges arising from secret ballots, we exploit unique access to leaked information on MPs’ individual decisions in a de facto vote for the 2021 leadership election of Germany’s centre-right parties. MPs are more likely to vote for a riskier candidate when faced with tougher re-election races in their constituency. Quantitatively, a 10 pp. decrease in the probability to be re-elected is associated with a 2.9 pp. increase in the likelihood to vote for the riskier candidate. These results match the predictions derived from our model of rational risk-taking. Gambling for re-election provides a new explanation for intra-party dissent and rationalises why parties may choose low quality leaders when better ones are available.