Spills

A new and more rational basis for ongoing choice of party leaders in a Parliamentary system.

Step one. Set a prediction market contract. "Pays $1 if the leader of the X Party is a Minister after the election." 

Step two. Set prediction market contracts: "Pays $1 if the leader of the X Party as at the date of election is {Name}."

Step three. Set conditional contracts. "Pays $1 if the leader of the X Party is a Minister after the election conditional on {Name} being Party Leader as at the date of election."

Step four. Set a decision rule. "The leader of the X Party changes to {Name} if {Name} shows a demonstrable sustained improvement in the Party Leader being a Minister after the election over the status quo, and superior to other {Name} options."

Works for both major and minor parties; their leader only becomes Minister (or Prime Minister) conditional on being in a winning coalition.

Punters from all parties could weigh in and put their money-votes on who they think would be most likely to improve each party's chances. 

A crazy ideological campaign to try to tank the other side's chances by picking a bad leader would draw in liquidity from outcomes-based traders - that's Hanson & Oprea (2009). The 'demonstrable sustained improvement' part is to give time for liquidity to come in in response to attacks - as well as guard against blips. 

No more dramas. No more press conferences. No need to try to attempt to count to whatever the required number of MPs might be to effect a spill and trust that nobody changes their mind along the way. Just watch the prices and let the leader be whoever maximises the Party's chances of being in a winning coalition. 

Probably only feasible in a country that's sensible enough to legalise prediction markets.