Beyond Moral Hazard: The Effect of Firm-Level Compensation Strategies on Economic Conflict

Publicado en

  • Peace Economics, Peace Science, and Public Policy

Resumen

  • In many countries governments are helpless to prevent appropriation, whatever the degree of protection promised by the law. In this context, we use a simple model where workers can either work peacefully or join a guerrilla movement that expropriates entrepreneurs. We find one low-income, low-wage equilibrium with guerrilla activiTY and one peaceful, high-income, high-wage equilibrium. We show that the peaceful equilibrium can be reached if entrepreneurs implement standard remedies for the internal principal-agent problem such as efficiency wages.

fecha de publicación

  • 2009

Líneas de investigación

  • Conflict
  • Efficiency Wages
  • Income Distribution
  • Multiple Equilibria

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