The relationship of managerial bonuses and profit maximization is interesting both from an economic and a managerial viewpoint. Our contribution to this literature is showing that progressive managerial bonuses can increase profits in a spatial Bertrand competition, and furthermore they can help collusion.
In this paper we sketch a theory about the role of supernatural beliefs in incentivizing “good” behavior among children by parents. We present a simple theory on the production and the use of certain supernatural beliefs by parents to influence their children’s behavior. A prime example of this is the idea of Santa Claus and the idea that Santa Claus rewards children according to how well they have behaved during the year. We show that under standard conditions parents face a time inconsistency problem when trying to incentivize their offspring. We claim that the production of beliefs in certain supernatural or quasi-supernatural persons who allegedly have infinite lives can help parents discipline their children. Finally, we extend this logic to a community and its ruler or rulers. We show that rulers can have incentives to influence the beliefs of their subjects. This incentive is greater whenever the ruler is a monopolist and when he or she expects to rule for a long period. Rulers with limited ability and/or superior technology for producing beliefs will also supply more supernatural stories to enforce their rule.