Now you must understand that player-based Governments are only meaningful if there are multiple nations or city-states or whatever, and only if the offices afford actual power. The politics of Athenes only had meaning in the context of the politics of Sparta. To be ostracized from Athenes had a very profound impact. If these apply to you then by all means do go forth and design.
Let's say you're making a science-fiction game where colonization of planets and moons is part of the game. The players are the various colonists, and corporations of players organize the various colonial efforts. You might give each planet a mayoral position or possibly sort of mayoral position to the star system. Nearby stars might be organized into a ``constellation'' with it's own governor or whatever. Ultimately these governors report to a national council or possibly comprise it. In this paradigm anyone can try to become a star mayor, and if they like it and are good at it, they might rise up to constellation governor. Perhaps with some clever wit and a silver tongue they might even rise up to the top office of the entire nation, the Star Lord.
Yes that all sounds very nice, but what authorities and powers does each position have? W/o any sort of actual power, the positions are meaningless and insulting. If their fulfillment is necessary for the provision of services which are themselves necessary, your players will hate you. They'll roll up a mule or a gimp to serve in the thankless and entirely needless position of mayor so their moon colony can get back to playing the game, and that is if they bother to stick around at all. It's possible your implementation could be so horrible it sours the rest of an otherwise excellent virtual world. At this point you should realize that politics is itself a game, or at least a minigame. Just as combat or fighting are minigames, so too is politics. To be meaningful at all, it has to be meaningful on it's own and within the context of the larger virtual world.
As a final note it should be mentioned that some players will absolutely hate the idea of another character being able to mess with their character. For example, if they attack a foreign planet's defenses, they'll absolutely hate it if it's another player, rather than some code, which flags their charcter as an enemy. They are used to situations where they can farm the mobs to ``grind faction'', and the notion that they might have to offer real applogy to a real person, possibly make reprarations, irritates them. Yes, they certainly are an immature lot, but they are serious and will likely complain bitterly about this feature all the while they play. You can safely ignore this extremely vocal lot. There is another camp, but a less vocal camp, which ought to be considered. They don't like the idea of other players having authority over them, or being able to mess with their character at all. They don't like the idea of getting fined for desecrating the High Temple. These players won't be very vocal because either they won't play long enough to realize their fears are completely unfounded, or they'll quickly come to realize their fears are completely unfounded. If you do include any sort of player-based Government, then you'll need consider your messaging to address the concerns of this sort of player. For my part, player-based Government seems like a no-brainer and a perfectly natural thing to do in any world large enough and diverse enough to support them. For example, I had a character in one Mud who solely determined the advancement within the ``hard-wired'' class-based guild. There was no appeal process. I set the criteria, I set the advancement, and I set the culture within the guild. This position is obviously not for the indecisive, and some developers have concerns about letting one player determine the rank or standing of another player, but every position must have corresponding meaning. I held that position for many years and the guild thrived under my leadership.

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