Bribery’s role in securing loyalty: analyzing inner circle dynamics through global games

Abstract

This thesis examines how autocratic regimes construct their inner circles through bribery and oppression, while the inner circle decides whether to remain loyal or revolt against the regime. We show that there exists a unique rationalizable action in which the probability of the autocrat’s survival increases with the cost of revolt and the share of loyalists within the inner circle, and decreases with the benefits of a successful revolt. To support our theory, we present empirical evidence showing that an increase in the resources of the regime, proxied by the price of oil in autocracies, leads to an increase in the size of support groups, while a larger support group size is associated with a decrease in the number of successful revolts.