Institutional arrangements influence the type of policies that leaders pursue. We examine twoinstitutional variables: size of the selectorate (S) – the set of people who have an institutional sayin choosing leaders – and the size of the winning coalition (W) – the minimal set of people whosesupport the incumbent needs in order to remain in power. The larger the winning coalition, thegreater the emphasis leaders place on effective public policy. When W is small, leaders focus onproviding private goods to their small group of supporters at the expense of the provision of publicgoods. The size of the selectorate influences how hard leaders work on behalf of their supporters.The greater the size of the selectorate, the more current supporters fear exclusion from futurecoalitions. This induces a norm of loyalty that enables leaders to reduce their effort and stillsurvive. As a first step towards a theory of endogenous selection of institutions, we characterizethe institutional preferences of the different segments of society based on the consequences ofthese institutions for individual welfare. We conclude by examining the implication of the modelfor the tenure of leaders, public policy, economic growth, corruption, taxation and ethnic politics.