Reputation and the “need for enemies”

Maxime Menuet and Patrick Villieu

Economic Theory, 2021, vol. 72, issue 4, No 2, 1049-1089

Abstract: Abstract A reputation of competence in solving a particular problem is useful only if the problem remains in the future. Hence, there is an incentive to keep the “enemy” alive: An agent may do wrong in his or her job precisely because he or she is competent. The paper develops this mechanism in a general career concerns framework and shows that a tradeoff between reputation and the need for enemies emerges. As a result, agents are induced to produce only moderate effort, and only moderately skilled agents are likely to be appointed. Implications of the analysis are discussed in a multitasking environment with incomplete transparency. Some evidence in principal–agent relationships and the political arena is presented to illustrate our theory.

Keywords: Political economy; Career concerns; Need for enemies; Transparency (search for similar items in EconPapers)
JEL-codes: C72 D72 D8 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00199-020-01289-7

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