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Dictators and Their Viziers: Agency Problems in Dictatorships

  • Georgy Egorov

    ()

    (New Economic School/CEFIR)

  • Konstantin Sonin

    ()

    (Institute for Advanced Study; New Economic School/CEFIR and CEPR)

The possibility of treason by a close associate has been a nightmare of most dictators throughout history. Better informed viziers are also better able to discriminate among potential plotters, and this makes them more risky subordinates for the dictator. To avoid this, dictators, especially those which are weak and vulnerable, sacrifice the competence of their agents, hiring mediocre but loyal subordinates. However, any use of incentive schemes by a dictator is limited by the fact that all punishments are conditional on the dictator’s own survival, and a dictator is typically unable to commit to the optimal (i.e., less than capital) punishment for those who unsuccessfully plotted against him. We endogenize loyalty and competence in a principal-agent game between a dictator and his (probably, few) viziers in both static and dynamic settings. The dynamic model allows us to focus on the succession problem that insecure dictators face.

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Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0043.

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Length: 32 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:cfr:cefirw:w0043
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