The Failure of the Jagir-System: A Game-Theoretic Approach to the Fall of the Mughal Empire

Sammanfattning: In this paper, I investigate how the incentive-structures in the revenue-system of the Mughal Empire contributed to its disintegration. I develop a principal-agent model with multiple periods, to capture the situation that existed in the Mughal Empire. Using this model, I show that the Incentive-structure created by the system made it efficient for the agents to waste their resources on unproductive measures, and to refrain from investing. The deficit of state funds that comes thereof results in a weak emperor being unable to hold the empire together, and the agents will then declare themselves independent. Comparing this outcome with historical facts, I draw the conclusion that this was the primary reason for the rapid collapse of the Mughal Empire, and that if the emperors wanted to secure its integrity, they would have to make a credible commitment to reducing their power by allowing the establishment of a politically influential nobility.