We investigate the use of high-powered incentives for the Colombian military and show that this practice produced perverse side effects. Innocent civilians were killed and misrepresented as guerillas (a phenomenon known in Colombia as "false positives"). There were significantly more false positives during the period of high-powered incentives in municipalities with weaker judicial institutions and where a higher share of brigades were commanded by colonels, who have stronger career concerns than generals. In municipalities with a higher share of colonels, the high-powered incentives period also coincided with a worsening of local judicial institutions and no discernible improvement in overall security.
Acemoglu, Daron, Leopoldo Fergusson, James Robinson, Dario Romero, and Juan F. Vargas.
"The Perils of High-Powered Incentives: Evidence from Colombia's False Positives."
American Economic Journal: Economic Policy,
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
Conflict; Conflict Resolution; Alliances; Revolutions
Asymmetric and Private Information; Mechanism Design
Illegal Behavior and the Enforcement of Law
Formal and Informal Sectors; Shadow Economy; Institutional Arrangements