Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/56111 
Year of Publication: 
2000
Series/Report no.: 
SSE/EFI Working Paper Series in Economics and Finance No. 406
Publisher: 
Stockholm School of Economics, The Economic Research Institute (EFI), Stockholm
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.
Subjects: 
Separating equilibrium
competence
co-worker
blame
scapegoat
JEL: 
C72
D72
D82
J33
Document Type: 
Working Paper

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