Reputation and the “need for enemies”

Maxime Menuet and Patrick Villieu

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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.

Date: 2020-06-17
Note: View the original document on HAL open archive server: https://uca.hal.science/hal-02876593v1
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Published in Economic Theory, 2020, 72, pp.1049-1089. ⟨10.1007/s00199-020-01289-7⟩

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Journal Article: Reputation and the “need for enemies” (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02876593

DOI: 10.1007/s00199-020-01289-7

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