A classic 1993 economics paper is “A Theory of `Yes Men.’“:

This paper illustrates an incentive for workers to conform to the opinion of their supervisors when firms use subjective performance evaluation. This desire to conform arises endogenously from the firm’s need to induce the worker to exert effort.

The basic model goes as follows.  A boss needs to estimate some number X (e.g., the optimal value of a design parameter).  An employee can work to get a noisy signal S about X; the harder he works, the lower his noise.  The boss also has a noisier estimate B of X, and wants to encourage employee effort to get an accurate signal S.  If no one will ever know anything more about X than these two estimates, then the boss is forced to reward the employee based on how close that employee’s estimate S is to the boss’ estimate B.  If there are several employees, the boss can also reward each employee i based on how close his estimates Si is to other employees’ estimates Sj.

Now imagine that an employee i can work to get signals not only about X, but also about the boss signal B, or about other employee signals Sj.  Under the above incentive schemes, such efforts may be richly rewarded.  Yet from the point of view of a boss who wants a good estimate of X, such efforts are a waste.  This is the problem of  (suck up, brown noser, kiss ass) “Yes Men” (and women), who pay too much attention to what the boss thinks, or to common opinion, relative to the problem at hand.

This classic paper was insightful, but I think it missed a key feature of real yes-men: most bosses of yes-men encourage, not discourage, their employees to find out what they think.  In the above model, a boss who revealed his own estimate before the employee put in his effort would have lost all ability to encourage such effort.  So such a boss should instead try hard to hide his own opinion until the last possible moment.  Similarly, if it weren’t for the benefits of teamwork, such a boss should try to prevent multiple employees from talking to each other about their estimates  Real bosses with yes-men, however, typically make their opinions clear to subordinates, and encourage full communication between subordinates.  Why?

One explanation is that bosses must signal dominance, and show they have the full cooperation of their subordinates.  Another explanation is that most bosses have other bosses above them.  And those higher bosses are likely to judge their subordinates in the same way, by comparing subordinate opinions to their own and other employee opinions.  In particular, a boss whose opinion differs greatly from his subordinates’ opinions is probably a dufus, and should be dumped.   So a boss who expects to be judged on how well he and his subordinate agree would make sure those subordinates knew his opinions.

Of course a boss would not want to be too obvious about this.  A boss who too obviously let it be known that employee opinions must conform to boss preconceived opinions, regardless of what their efforts tell them, could look and be pretty incompetent.   So a boss wants to create the appearance to his superiors that he seeks diverse opinions formed independently from his own, while actually quietly and ruthlessly squashing dissent.

But shouldn’t the boss of this boss easily be able to tell the difference between a subordinate who really seeks dissent, versus just giving lip service to such ideals?  Sure, it probably wouldn’t take that much work.  But if this higher boss must answer to still higher bosses, he might not actually want to expose such subordinate hypocrisy.   After all, if he has an ineffective dufus for a subordinate, that might reflect badly on him, who may have hired or promoted that dufus.  As long as the hypocrisy isn’t so obvious than an outsider could easily see through it, many may want to help keep up the pretense.

You might think all this would be different for the CEO, who has no boss.   But CEOs do have bosses; they work hard to keep up appearances to impress investors, customers, and suppliers.  And once investors, customers, and suppliers are affiliated with a firm, they want others to think well of that firm as well.   Prospective not-yet-affiliated investors, customers, and supplies might be more objective, except each of them usually also has a boss with opinions to consider.

It is rare to find someone with full discression and incentives to form and act on their own best estimates of what is really going on, without needing to worry about the impressions such opinions will give observers.  Those few may have the ability and incentive to see through wider yes-men hypocrisy.  But if they see it, and call the alarm, who will confirm it?   And if few confirm, who else would admit they listen to such marginalized cynicism?