Maxime Menuet (CERDI)

Reputation and the "Need for Enemies"

Summary

Reputation to be competent in solving some problem is useful only if the problem remains in the future. Hence, the incentive to keep the “enemy” alive: an agent may do wrong in his job precisely because he is competent. The paper develops this
mechanism in a general career concerns framework, and shows that a tradeoff between reputation and the need for enemies emerges. As a result, agents are induced to produce only moderate effort and only moderately-skilled agents are likely to be
appointed. Implications of the analysis are discussed in a multitasking environment with incomplete transparency. Some evidences in principal-agent relationships and political arena are presented to illustrate our theory.

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