Machiavellian Denigration and the Shifting Base of Organisational Power

Abstract

A game-theoretic model of reputation destruction (denigration) engineered by one party to serve empire-building of another is presented and subgame perfect Nash equilibria (SPE) established. Player 1 can acquire power by denigrating the reputation of player 3 and acquiring his followers. Players 2 may or may not join him in this enterprise, being initially unaware of whether 1 is telling the truth. If they join 1, and the latter is lying, to prevent ultimate denunciation he will offer each a commitment action that promises a bonus over non-commitment but which also gives them a lower payoff in the event of denunciation, once the truth is revealed. 2's can learn the truth only by performing this action. Denunciation by 2's is possible even in the absence of such knowledge but lacks force. It is shown that the primary SPE equilibrium of this game involves certain lying by 1 with no denunciation. Agent 1 eventually takes over the organisation by locking the unwitting 2's into his corrupt empire. However, if agents 2 have dispersed preferences for denunciation independently of prison sentences flowing from revealed commitment actions, the best strategy for 1 is to always tell the truth since sooner or later he will be exposed. This finding suggests that lying might well dominate truth-telling in situations where the cost of arranging commitment action is not too high and preferences of coalition partners are closely aligned with those of the empire-builder.