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

Maria del Pilar Castillo () and Giácomo Balbinotto N. ()

Revista Cuadernos de Economia, 2017, vol. 36, issue 70, 19-47

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.

Keywords: Principal-agent theory; contracts; game theory (search for similar items in EconPapers)
JEL-codes: D82 D86 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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