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A model of desertion. From a principal-agent theory perspective

Author

Listed:
  • Maria del Pilar Castillo
  • Giácomo Balbinotto N.

Abstract

This article studies the nature of the trade-off between incentives and enforcement mechanisms that an Armed Illegal Organization (AIO)'s leadership, which is the principal, offers to its operatives, who act as agents. This principal-agent model focuses on both the expected benefits and costs for those who decide to stay or defect from the armed organization, in an uncertain context in which desertion is encouraged by an external agent who is providing incentives aimed at fostering operatives’ individual desertion. Given a parameterization of the model, we find the optimal transfer system using the constrained minimization routine fmincon in MATLAB’s optimizations toolbox. Once we obtain a numerical version of the contract, we use the computational tool to simulate the behavior of agents who are facing the probability of being punished and how this could encourage agents to not make any effort. ***** Este artículo estudia la naturaleza de la relación inversa entre incentivos y mecanismos de cumplimiento que la cúpula de una organización armada o principal ofrece a sus operativos, quienes actúan como agentes. El modelo de principal-agente se centra tanto en los costos y beneficios esperados de aquellos que deciden permanecer o desertar de la organización armada, en un contexto en el que la deserción es alentada por un agente externo que provee los incentivos para fomentar la deserción individual. Dada una parametrización específica del modelo, un sistema de transferencias óptimo es hallado usando la rutina de minimización con restricciones fmincon de la caja de herramientas de MATLAB. Una vez obtenida esa versión numérica del contrato, se utiliza la herramienta computacional para simular el comportamiento de los agentes que enfrentan la probabilidad de ser castigados y cómo eso podría alentarlos a no hacer ningún tipo de esfuerzo.

Suggested Citation

  • Maria del Pilar Castillo & Giácomo Balbinotto N., 2017. "A model of desertion. From a principal-agent theory perspective," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID, vol. 36(70), pages 19-47, January.
  • Handle: RePEc:col:000093:015065
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    File URL: http://www.fce.unal.edu.co/media/files/documentos/Cuadernos/70/finales/v36n70a02.pdf
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    References listed on IDEAS

    as
    1. Unknown, 2006. "2006 Fall," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE), pages 1-16.
    2. Maria del Pilar Castillo & Giácomo Balbinotto, 2012. "Las FARC y los costos del secuestro," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 14(27), pages 147-164, July-Dece.
    3. Unknown, 2006. "2006 Spring," CWAE Newsletter, Agricultural and Applied Economics Association, Committee on Women in Agricultural Economics (CWAE), pages 1-16.
    4. Offstein Norman, 2003. "An Historical Review and Analysis of Colombian Guerrilla Movements: FARC, ELN and EPL," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, September.
    5. Steven Shavell, 1979. "Risk Sharing and Incentives in the Principal and Agent Relationship," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 55-73, Spring.
    6. Abrahms, Max & Potter, Philip B.K., 2015. "Explaining Terrorism: Leadership Deficits and Militant Group Tactics," International Organization, Cambridge University Press, vol. 69(2), pages 311-342, April.
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    Cited by:

    1. Steven Riascos Carabalí & María del Pilar Castillo Valencia, 2020. "El ajuste de cuentas como un mecanismo para corregir contratos criminales," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, vol. 28(1), pages 67-88, June.

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    More about this item

    Keywords

    Principal-agent theory; contracts; game theory;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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