The U.S. Army as a Rational Economic Agent: The Choice of Draft Animals during the Civil War
The Army has historically been ridiculed as an inefficient institution which neither responds to incentives, nor acts as a rational economic agent. This paper argues that historically there were instances in which the army acted in ways analogous to "market driven" institutions. During the Civil War the Army tried to issue the more abuse-resistant, yet more expensive, mule to its soldiers instead of a less expensive substitute, the horse. It is argued that this practice was to mute the effects of agency problems, as was done in southern agriculture and in U.S. mining. This finding has implications for the Army today, as well as for other institutions with similar agency problems, that issue physical capital to their agents.
Volume (Year): 22 (1996)
Issue (Month): 3 (Summer)
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