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The Dictator’s Dilemma: to Punish or to Assist? Plan Failures and Interventions under Stalin

Andrei Markevich ()

No w0107, Working Papers from Center for Economic and Financial Research (CEFIR)

Abstract: A dictator issues an order, but the order is not carried out. The dictator does not know whether the order failed because the agent behaved opportunistically, or because his order contained some mistake. Imperfect information creates his dilemma: whether to punish the agent, or assist her or both. This paper models the dictator’s intervention when an order fails. The analysis links the dictator’s coercive policy with the softness of budget constraints. The model is verified against the history of Stalin’s dictatorship, using statistical evidence extracted from the formerly secret records of the Communist Party's "control commission".

Keywords: dictatorship; principal-agent problem; soft budget constraints; USSR (search for similar items in EconPapers)
JEL-codes: D73 P26 N44 (search for similar items in EconPapers)
Date: 2007-09
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