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A Signalling Theory of Scapegoats

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  • Segendorff, Björn

    (Dept. of Economics, Stockholm School of Economics)

Abstract

This study investigates under what circumstances there exist a separating equilibrium in which competent leaders choose incompetent co-workers and incompetent leaders choose competent co-workers. The driving force for the competent leader is the insurance motive; if things go wrong he can blame the incompetent co-worker and remain his reputation of being competent. For the incompetent leader the expected gain from such an insurance is outweighed by its costs in terms of lower expected policy outcome. Co-workers are motivated by career opportunities allowing for conflicting interests between the leader and the co-worker.

Suggested Citation

  • Segendorff, Björn, 2000. "A Signalling Theory of Scapegoats," SSE/EFI Working Paper Series in Economics and Finance 406, Stockholm School of Economics.
    • Handle: RePEc:hhs:hastef:0406
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    References listed on IDEAS

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    8. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
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    Citations

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    Cited by:

    1. Luís Almeida Costa & Luís Vasconcelos, 2010. "Share the Fame or Share the Blame? The Reputational Implications of Partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 259-301, June.
    2. Guillermo Ordonez, 2008. "Essays on Learning and Macroeconomics," Levine's Working Paper Archive 122247000000002250, David K. Levine.
    3. Mordechai E. Schwarz, 2020. "A Master of Two Servants: The Effect of Separation of Powers on Public Accountability and Social Welfare," Proceedings of International Academic Conferences 10612466, International Institute of Social and Economic Sciences.
    4. Guillermo Ordoñez, 2013. "Reputation from nested activities," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(3), pages 915-940, April.

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    More about this item

    Keywords

    Separating equilibrium; competence; co-worker; blame; scapegoat;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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