Do Autocrats Break Their Promises? A Principal-Agent Problem with Limited Commitment

Abstract

An autocrat equipped with the absolute power dominates over the subordinates, meanwhile a class of aristocrats usually existed in any autocratic regime. This paper considers a principal-agent model with no third-party enforcement. An innovative setting that allows the principal to design the agents’ expected vacancy value explains how granting privilege to the agents could optimize the principal’s expected profit.

Andong Yan
Andong Yan
PhD Candidate in Economics

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