There is a growing body of literature on electoral authoritarianism and hybrid regimes. The current literature focuses on ways elections enable these regimes to survive and persist. More specifically, and as indicated by Posusney (2002) and Lust and Ghandi (2009), the literature explores how controlled elections help authoritarian incumbents manage opponents, engineer institutions, reduce political violence, and improve state-society relations. Building on this literature, our paper contends that while electoral authoritarianism may strengthen hybrid regimes, it also impedes good governance and weakens the state. We examine the Islamic Republic of Iran (IRI) as a case study and show that electoral authoritarianism tends to cause regime underperformance. This paper addresses four critical issue areas: national deficit, energy policy, environmental sustainability, and pensions fund risk. Using the case of the IRI, we establish causality and address a broad research question: Why do electoral authoritarianism and hybrid regimes produce suboptimal policy and underperform economically and developmentally? The paper offers a three-fold answer to the question. First, unelected elites and institutions (e.g., the supreme leader and guardian council) create and exacerbate political gridlock because they possess less legitimacy than the elected ones (i.e., the president and parliament) and consequently veto or block their proposed policies. Second, having less power than their unelected counterparts and possessing limited purview, the elected elites and institutions generate shortsighted policies. Third, electoral authoritarianism and regime hybridity erode the accountability of both unelected and elected elites and institutions by offering them opportunities to deflect blame and responsibility for poor governance.