SSE/EFI Working Paper Series in Economics and Finance
No 406:
A Signalling Theory of Scapegoats
Björn Segendorff
Abstract: This study investigates under what circumstances there
exist a separating equilibrium in which competent leaders choose
incompetent co-workers and incompetent leaders choose competent co-workers.
The driving force for the competent leader is the insurance motive; if
things go wrong he can blame the incompetent co-worker and remain his
reputation of being competent. For the incompetent leader the expected gain
from such an insurance is outweighed by its costs in terms of lower
expected policy outcome. Co-workers are motivated by career opportunities
allowing for conflicting interests between the leader and the co-worker.
Keywords: Separating equilibrium; competence; co-worker; blame; scapegoat; (follow links to similar papers)
JEL-Codes: C72; D72; D82; J33; (follow links to similar papers)
20 pages, May 5, 2000
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