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A Reputational Model of Authority

  • Nabil I. Al-Najjar
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    : The paper provides a model where authority relationships are founded on reputation. The viability of authority is the result of subordinates' free-riding on each other challenges, reducing the frequency of challenges, and making reputations worth defending. The party with authority secures subordinates' compliance through the payment of rents to influence the extent of their failure to act collectively and exacerbate the free-rider problem they face. The model provides a framework to explain how the magnitude and form of these rents depend on the primitives of the environment and on the authority's design of its reputation. Applications to efficiency wages, dictatorships, and the notion of legitimacy are considered.

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    File URL: http://www.kellogg.northwestern.edu/research/math/papers/1223.pdf
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    Paper provided by Northwestern University, Center for Mathematical Studies in Economics and Management Science in its series Discussion Papers with number 1223.

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    Date of creation: May 1998
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    Handle: RePEc:nwu:cmsems:1223
    Contact details of provider: Postal: Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014
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    Web page: http://www.kellogg.northwestern.edu/research/math/
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    1. repec:cup:cbooks:9780521583299 is not listed on IDEAS
    2. Akerlof, George A, 1984. "Gift Exchange and Efficiency-Wage Theory: Four Views," American Economic Review, American Economic Association, vol. 74(2), pages 79-83, May.
    3. Nabil I. Al-Najjar & Rann Smorodinsky, 1996. "Pivotal Players and the Characterization of Influence," Discussion Papers 1174R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    4. Nabil Al-Najjar & Rann Smorodinsky, 1996. "Pivotal Players and the Characterization of Influence," Discussion Papers 1174, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Milgrom, Paul R., 1987. "employment contracts, influence activities and efficient organization design," Department of Economics, Working Paper Series qt6pf6c5j6, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Bernheim, B Douglas, 1984. "Rationalizable Strategic Behavior," Econometrica, Econometric Society, vol. 52(4), pages 1007-28, July.
    7. Cole, Harold L. & Mailath, George J. & Postlewaite, Andrew, 1998. "Class systems and the enforcement of social norms," Journal of Public Economics, Elsevier, vol. 70(1), pages 5-35, October.
    8. Paul Milgrom & John Roberts, 1980. "Predation, Reputation, and Entry Deterrence," Discussion Papers 427, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    9. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Scholarly Articles 4554125, Harvard University Department of Economics.
    10. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
    11. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-50, July.
    12. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November.
    13. Sanford Grossman & Oliver Hart, . "An Analysis of the Principal-Agent Problem," Rodney L. White Center for Financial Research Working Papers 15-80, Wharton School Rodney L. White Center for Financial Research.
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