Tolerance for Shirking in Exchange for Loyalty

Abstract

We develop a model that captures the basic characteristics of a competitively authoritarian regime. An incumbent (government) faces a challenge from a rival (opposition). There is also an agent (bureaucracy) that can interfere in this contest. In addition, the agent can also shirk, which is costly to the incumbent. Before the contest the incumbent and the rival offer the agent certain payoffs contingent on the agent's strategy and the outcome of the contest. Based on these offers, the agent determines his optimal strategy. This, in turn, determines each contestant's winning probability. We calculate this probability for every possible strategy combination of the contestants. The result is a two-player (incumbent-rival) constant sum game matrix. We numerically find Nash Equilibria for several interesting scenarios and analyze the results. A major conclusion is that equilibria can exist where the incumbent tolerates the agent's shirking in exchange for loyalty. In addition, this tolerance can increase as the rival's challenge becomes more serious.