SSE/EFI Working Paper Series in Economics and Finance
No 407:
Scapegoats and Transparency in Organizations
Björn Segendorff
Abstract: A separating equilibrium in which competent (incompetent)
leaders choose competent (incompetent) co-workers is investigated. An
outside observer rewards the leader at good policy outcomes. The
incompetent co-worker can, at bad outcomes, be used as scapegoat. By
assumption, the leader may fail in blaming the scapegoat. Two different
assumptions on the outside observer's information set are compared. If she
cannot observe a failed attempt, the separating equilibrium exists only if
two non-mimicking constraints are met. If she can observe a failed attempt,
an additional constraint is added due to the possibility of partial
mimicking.
Keywords: Separating equilibrium; competence; transparency; co-worker; blame; (follow links to similar papers)
JEL-Codes: C72; D72; D82; J33; (follow links to similar papers)
20 pages, June 5, 2000
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