Joint with Andrew T. Little.
Political leaders often find it difficult to trust their subordinates. This can hinder their ability to get honest advice. A potential solution to this problem is kompromat: the collection and threat to release compromising information about subordinates. Using a cheap talk model, we demonstrate how kompromat can mitigate a political leader’s agency problem. However, using kompromat to solve an agency problem comes at a cost since it sometimes forecloses all communication from an unbiased subordinate who would have provided truthful information in the absence of kompromat. Since kompromat works by threatening the reputation of subordinates, we analyze an extension that shows how common knowledge that an organization uses kompromat might be costly even if it is never leaked.
Selected Presentations: WPSA Conference (April 2019, San Diego) and EACES-HSE Workshop (June 2019, Moscow)