Abstract
We study the allocation of talent in tournaments between (political) teams. The winner-take-all nature of these contests implies that talented members may quit if the odds of winning diminish. A leader must choose between competent individuals who increase the chances of winning but may bolt at the first hint of bad news, and loyalists who have fewer outside options. The value of loyalty increases when outside options are more valuable, pre-election information (polls, primaries) is more predictive, or elections are more competitive. Monetary incentives do not negate the value of loyalty. We discuss organizational responses, such as ideological platforms and shorter campaigns, and show how leader loyalty can improve the talent-loyalty trade-off by enabling long-term relationships.