In Latin America, the most common traditional institutions are long-standing patterns of communal landholding, which were not created by the state but which are, for the most part, now recognized by it. Leaders of these “communities” are not part of the formal structure of the state and are thus not automatically entitled to state resources. Instead, they act as key intermediaries between their often-remote communities and local governments. These leaders aggregate the demands of community members and communicate those demands to local governments. They also deliver valuable information to mayors, organize unpaid labor for public works projects, and enforce compliance with local taxation requirements. When relationships are strong between traditional authorities and state leaders, development outcomes improve as both sides leverage their respective strengths. Yet, these relationships often do not form, and instead, mayors and community leaders work separately and, frequently, at cross-purposes. This dissertation seeks to explain this variation in cooperative behavior. Drawing on evidence from interviews and experiments with community presidents and mayors in Mexico and Peru, I argue that cooperative relationships most often emerge when mayors are members of traditional communities. Shared membership in a traditional community generates a sense of trust and reciprocity that is key in dictating 1) the mayoral candidates that traditional authorities support, 2) the extent to which traditional authorities make demands of mayors, and 3) the willingness of mayors to address the demands of community presidents over other groups within the district. The research will contribute to a longstanding literature on the interaction of state and traditional institutions and will also provide insight into potential causes of within-district inequality in rural Latin America.