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Preventive Repression: Two Types of Moral Hazard

  • TIBERIU DRAGU (a1) and ADAM PRZEWORSKI (a1)
Abstract

Authoritarian leaders maintain their grip on power primarily through preventive repression, routinely exercised by specialized security agencies with the aim of preventing any opponents from organizing and threatening their power. We develop a formal model to analyze the moral hazard problems inherent in the principal-agent relationship between rulers and their security agents in charge of preventive repression. The model distinguishes two types of moral hazard: “politics,” through which the security agents can exert political influence to increase their payoff by decreasing the ruler’s rents from power, and “corruption,” through which the agents can increase their payoff by engaging in rent-seeking activities that do not decrease the ruler’s rents from power. The surprising conclusion is that both the ruler and the security agent are better off when the only moral hazard problem available is politics rather than when the agent can choose between politics and corruption. We also show that the equilibrium probability of ruler’s survival in power is higher when politics is the only moral hazard available to the agent. These findings lead to our central conclusion that opportunities for corruption undermine authoritarian rule by distorting the incentives of the security agencies tasked with preventing potential threats to an authoritarian ruler’s grip on power.

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Corresponding author
*Tiberiu Dragu, Associate Professor of Politics, New York University, tiberiu.dragu@nyu.edu.
Adam Przeworski, Carroll and Milton Petrie Professor of Politics and Economics, New York University, adam.przeworski@nyu.edu.
Footnotes
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We thank Xiaochen Fan, Jennifer Gandhi, Barbara Geddes, William Godel, Pablo Montagnes, Pia Raffler, Arturas Rozenas, Jakob Schneebacher, Ken Shotts, and seminar participants at New York University and 2016 Priorat Workshop in Theoretical Political Science for helpful comments and suggestions. All errors are ours.

Footnotes
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