Состоялось очередное заседание научного семинара "Политическая экономика"

Speaker: Alexei V. Zakharov (NRU HSE)   
Topic: "The loyalty-competence tradeoff in dictatorships and  outside options for subordinates"

Dictators rely on loyalty of their subordinates to remain in power, and being loyal often  involves taking costly actions on behalf of the dictator. In turn, a subordinate’s decision is affected by his payoff in case the dictator is removed from power. This provides the incentive for a dictator to hire a subordinate who has a small value of outside option. It is especially true if the dictator cares little about the subordinate’s competence — that is, performance at other tasks, such as carrying out economic policy. Starting with these assumptions, I propose a theory of subordinate recruitment by dictators. In a dynamic setting, I endogenize the value of the outside option for a subordinate as his subsequent payoff in case he is hired by the dictator’s successor. I show that, as long as dictators differ in how they value the competence of their subordinates, a less competent subordinate will be more loyal solely because his probability of being hired by the dictator’s successor will be smaller. As a result, dictators who value economic performance will hire more competent subortdinates and will have shorter tenures. Incompetent subordinates will be hired more often (and will be less loyal) if the dictators discount future payoffs less heavily. At the same time, the discount rate of the subordinates has a nonmonotonic effect on the probability that an incompetent subordinate is hired.

“Those people think that the Soviet authority will not dare to touch them because of their past achievements. [they] think that they are irreplaceable, and thus can violate the directions of the upper-level organs with impunity.  What should we do about them?  Such people should be dismissed immediately from high-level positions regardless of their past achievements... This is necessary in order to break down the pride of such arrogant bureaucrats and show them their place.”

- Joseph Stalin, spoken at XVII Communist Party Congress, 20.01-10.02.1934

The loyalty-competence tradeoff in dictatorships and outside options for subordinates

Заседание состоялось 14.10.2014 в   18.15   по  адресу: г. Москва, улица Шаболовка, дом 26, корпус 4, аудитория 4322.