Asymmetric Information in the Slave – Master Relationship Model

Asymmetric Information in the Slave – Master Relationship Model

 

Critical Assessment of Journal Article

The journal that has been, selected to go forward with the study is Dar-Mattiacci, G. (2003), Slavery and Information, the Journal of Economic History, Vol.73, No.1. The essay will highlight the critical assessment of the selected journal. The critical assessment will also include the theories related to the content of the selected journal. The selected piece of information will help in comprehending the asymmetric information that has structured the slavery by establishing the possibility of manumission. There is a theoretical concept that elucidates the requirement in providing positive compensation or incentives to the slaves who are employed with occupations or jobs characterized by asymmetric information of a very high degree (Johnson, 2018).  Due to this, the slave owners or the masters rewarded the slaves who performed high-quality work. The selected article also explains the implications of the model, which were, tested against the Atlantic and Rome, where the slaves who had a high asymmetric form of information had higher chances of attaining manumission. Furthermore, the article also throws light on the choices of the slave master concerning slavery versus labor. Affranchisement or manumission is, considered as an act of the slave master in freeing their slaves. To reach the ultimate of the process, various approaches have been, developed which are dependent upon place, time, and society (Parks, 2018).

The Case Situation related with the Journal Article

Slavery was, considered one of the significant elements that led to the making of the United States. The forced slavery led the black people in bringing substantial wealth for the women and men related to the slaveholding class. These included the merchants, insurance agents, doctors, saloon owners, politicians, law enforcement, judges, sailors, farmers, bankers, traders, and others who happen to have receiving benefits due to the presence of the slaves. The accumulated wealth transformed into high political power (Collins & Wanamaker, 2017). The implementation of the manumission and its relatable consequences is present in every old or modern slavery system (Womack, 2016). However, with due time and preference the manumission can be, regulated based on the decision taken by the slave master. Some instances said where the slaves were, freed based on the preferences given by their masters. However, other explanations have highlighted the implementation of the manumission, which coexisted under the situation of purchase and harsh treatment of slaves. There was high manumission related to the slaves working in the urban areas (Gouda & Rigterink, 2017). Here the manumission was, considered as a stress reliever, get freedom from controlling their remuneration, or as an optimistic opportunity to purchase freedom from the contract of slavery with their manumitters. If the entire matter of the manumission is, perceived legally, then it can be, said that the incentive or the manumission that is needed to pay the slaves is the property of the slave master. Therefore, this has raised questions on the interest of the owners in providing high manumission or rates to get their slaves freed (Ambrus et al, 2018).

The Asymmetric Information Model

The highlighted instances in the articles elucidate only one side of the issue related to the manumission. Slavery is, regarded as the relationship, which is dependent upon the coercive power of the slave masters (Ahmad & Pan¸ 2017). The coercive power highlights the possible paradigm concerning the evaluation related to the slave – master relationship. The model related to the slave – master relationship and the asymmetric information, the slave – master association is, regarded as the principal-agent complexity where the choice between the sticks and carrots is, driven by the exogenous (agents) reservation utility. There is a model elucidated by Acemouglu and Wolitzky where it has mention that the coercion is, mostly practiced to decrease the reservation utility of the agent (Huang et al, 2018). The presence of the unobservable investments made by the agent leads to coercion in making less pleasing for the principle. The degree of the asymmetric information between the agent and the principle as the significant explanatory element for the selection of punishments and rewards. In the purely competitive market situation, all the market agents are completely aware of the traded merchandise and other related elements of the market. The markets, which are imperfectly informed, can be, regarded as the imperfect information marketplace. The imperfectly informed marketplace has one side better information is regarded as the asymmetric information marketplace (Rabadi et al, 2017). The hidden action suggests that the employees are more aware than compared to their employer concerning the work contribution. The hidden characteristics suggest that the businessperson who deals with used or old cars have higher experience in checking the purchaser’s car condition. Another example of this that the consumers are more aware of the service than the sales executive is willing to provide. The hidden actions are, considered as one of the sides of the agent (economic relationship) and the other side is, occupied by the principle who cannot observe (van Oosterhout et al, 2018). The presence of the imperfect information affects the allocation of the resources and the cost/pricing system.

The model that can be used to explain the content of the selected article highlights the interaction between the master and the slave. Here the slave decides whether he should put more effort or not. The slaves think that the work contribution or efforts are very costly so here the slave will prefer not to put more pressure. In making the slave put more effort into their work, here the master can select between stick (s) and carrot ( c ) (Abatino & Dari-Mattiacci, 2020). Here the slaves are, examined based on the signal of the master in putting more effort, the reaction of the slave towards the incentives, and the magnitude of the practice of the stick or the carrot. When the slave master is not being able to observe the effort immediately, so here the master understands it through the binary signal. The binary signal is, imperfectly correlated with the effort of the slaves. The selection of the master in sticks and carrots depends upon the advantages or the benefits that he attains from the functional activity of the slave. It is, also based on the cost that the slave master incurs every unit of stick or carrots applied.

Punishments for the slaves have always led to hindrances in their products that have led to the destruction of the investments and their value. This leads to the loss of the effort provided in training the slave. Slaves tend to respect their integrity from the work situation (Licht, 2017). It is necessary to note here that the value of the reward given by the master to the slave can be, perceived in different values. It might not be the same. Here the master selects between sticks and carrots depending upon the payoffs. Here for attaining the optimum results, the master needs to understand the relative cost linked with the punishment and the reward (Owusu-Manu et al, 2018). The slave masters must set the standard of the stick in such a manner that it can obtain optimum effort from the slaves. When the slave master considers a higher form of rewards than the opportunity provided to the slaves widens. The given model helps in understanding the significant relationships between the informational features and carrots (manumission) related to the tasks. The presence of the asymmetric information leads to the dilution of the incentives thus making it necessary to be, complemented by larger rewards or punishments (Liangfu, 2016).

Two factors affect the decision of the master, the sticks, and the carrots. The consequences are asymmetric only when the relative effort contribution is higher when it is, induced by incentive rewards than compared to the punishments (Karthik & Blum, 2017). Thus, theories also highlight that the higher the complexity involved in the job, the higher is the chance of being, subjected under punishments. The opposite happens when the task needs little effort or work contribution. The cost of monitoring also leads to an impact on the choice between the sticks and the carrots. Here if the slave conducts a task responsibility in the form of teamwork then it is, considered as cheap to punish or supervise them for not performing at the quality level. Here the slave masters are unable to blame it, one person (Patterson, 2018). The opposite takes place when the slave monitors a particular business thus here it is unproductive and costly to invest in the resources in assessing the hours of his work. Here, the most effective manner of assessing the work is by checking the periodical accounts, and based on it the slave master can provide the reward. The slaves who have idiosyncratic talents and human capital tend to have high value in the labor or the slave market. Thus, the slaves who are involved in the knowledge-intensive work activities such as manufacture and trading are, considered to most expensive to punish (Tumerdem, 2017). Here, other slaves can replace the other slave’s position thus increasing the scope of the carrots.

The essay has highlighted the critical assessment of the selected journal comprehensively. The essay explains the slave master relationship model. It also explains the manner in which the two factors, sticks and carrots are determined to ensure proper work contribution from the slave (Dari-Mattiacci, 2003). In the modern form of employment condition, such practice is still prevalent in the form of deductions, laying off employees, compensation, incentive, work flexibility, and others. The essay has judiciously justified the contents with the economic model and theories.

Personal Reflection Report

For doing the critical assessment, I have selected the journal “Slavery and Information, the Journal of Economic History”  which was, written by Dar-Mattiacci, G in the year o 2003. I have thoroughly read the journal so that I can relate the contents of the journal article with the economic theories and models. The journal mostly highlights the slave – master relationship and the determination of the sticks and the carrots for optimum work results from the slaves. I have also explained this concept with the principle – agent relationship model. While doing the essay, I came to know about the manumission and its relation with the labor or the slave market. Moreover, I believe that the current workforce and their work output are highly determined by the sticks (different forms of corrective measures or punishments) and the carrots (employee benefits). For doing the critical assessment, I have gathered necessary and related information from Google Scholar, peer-reviewed journal articles, and other relevant sources.

While doing the essay and its critical appreciation, I often failed to cope up with understanding. During such times, my university lecturer assisted me in explaining and giving proper details to the assessment content. I have watched several videos and heard several audio discussions to understand the various concepts of the topic.  Initially, when I received the assessment, I divided my time accordingly thus preparing myself in providing sincere work commitment. I have understood how the slave masters to attain the optimum level of work contribution from their employees or slaves use the carrots and the sticks. I have also come to know that jobs that have complex job functions are subjected to a high risk of punishments. Moreover, slave that have high talent and skills and highly valued in the slave market.

To understand the concepts of the study, I have applied Kolbe’s Reflective Cycle for a better work assessment. It has also helped in increasing my level of understanding. Kolbe’s reflective cycle or the learning cycle has various stages that define or highlight the manner in which an individual can comprehend its work. Thus, it helps in producing improved work results and increased the level of evaluation (problem solving) (Watson et al, 2016). There are four stages, which include active experimentation, abstract conceptualization, reflective observation, and concrete experience (Sudria et al, 2018). The concrete experience has helped me comprehend the feedback and the discussion provided in various journal articles. Next, I have reflected on different aspects of the topic from various perspectives thus helping to clear my work goals. By setting a proper timetable, I have been able to systematically and logically evaluate the facts and the models related to the study.  This has supported me in clearing my difficult concepts of the topic. The active experimentation section included me in absorbing the subject matter and writing in the form of the essay. Here I have been able to provide relevant and valid studies to conduct the critical assessment of the selected journal related to the asymmetric information.

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