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Social responsibility and incentives in the lab: Why do agents exert more effort when principals donate?

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  • Kajackaite, Agne
  • Sliwka, Dirk

Abstract

We test experimentally whether and why principals’ charitable giving affects agents’ efforts. We study a simple principal-agent setting in the lab, where a principal decides whether to donate a fixed amount to a charity and, in the next step, an agent chooses his effort. We argue there are three potential mechanisms that can trigger a higher effort after a donation in this setting: distributional concerns, reciprocal altruism, and shared warm glow utility. We find agents choose higher efforts when principals donate. With respect to the mechanisms, we find evidence for reciprocal altruism and distributional concerns as drivers of agents’ performance reactions in the lab.

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  • Kajackaite, Agne & Sliwka, Dirk, 2017. "Social responsibility and incentives in the lab: Why do agents exert more effort when principals donate?," Journal of Economic Behavior & Organization, Elsevier, vol. 142(C), pages 482-493.
    • Handle: RePEc:eee:jeborg:v:142:y:2017:i:c:p:482-493
    DOI: 10.1016/j.jebo.2017.08.013
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    Citations

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    Cited by:

    1. Gary Bolton & Eugen Dimant & Ulrich Schmidt, 2018. "When a Nudge Backfires. Using Observation with Social and Economic Incentives to Promote Pro-Social Behavior," PPE Working Papers 0017, Philosophy, Politics and Economics, University of Pennsylvania.
    2. Butz, Britta & Harbring, Christine, 2020. "Donations as an incentive for cooperation in public good games," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 85(C).
    3. Au, Pak Hung & Li, King King & Zhang, Qing & Zhu, Rong, 2023. "The Hidden Costs of Choice in the Labor Market," IZA Discussion Papers 16623, Institute of Labor Economics (IZA).
    4. Koppel, Hannes & Regner, Tobias, 2019. "What drives motivated agents: The ‘right’ mission or sharing it with the principal?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 83(C).
    5. Schwartz, Daniel & Keenan, Elizabeth A. & Imas, Alex & Gneezy, Ayelet, 2021. "Opting-in to prosocial incentives," Organizational Behavior and Human Decision Processes, Elsevier, vol. 163(C), pages 132-141.
    6. Jeworrek, Sabrina & Mertins, Vanessa, 2019. "Mission, motivation, and the active decision to work for a social cause," IWH Discussion Papers 10/2019, Halle Institute for Economic Research (IWH).
    7. Baker, Paul L. & Dawson, Chris, 2020. "The corporation tax elasticity of charitable donations," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 1-14.
    8. Britta Butz & Christine Harbring, 2022. "Tipping for charity: a field experiment in charitable giving on free walking tours," Journal of Business Economics, Springer, vol. 92(5), pages 781-808, July.
    9. Colleen M. Boland & Corinna Ewelt-Knauer & Julia Schneider, 2022. "The gift that keeps on giving: corporate giving and excessive risk-taking," Journal of Business Economics, Springer, vol. 92(3), pages 355-396, April.
    10. Daniel Schwartz & Elizabeth A. Keenan & Alex Imas & Ayelet Gneezy, 2017. "Opting-in to Prosocial Incentives," CESifo Working Paper Series 6840, CESifo.
    11. Briscese, Guglielmo & Feltovich, Nick & Slonim, Robert L., 2021. "Who benefits from corporate social responsibility? Reciprocity in the presence of social incentives and self-selection," Games and Economic Behavior, Elsevier, vol. 126(C), pages 288-304.
    12. Reggiani, Tommaso G. & Rilke, Rainer Michael, 2020. "When Too Good Is Too Much: Social Incentives and Job Selection," IZA Discussion Papers 12905, Institute of Labor Economics (IZA).
    13. Cassar, Lea & Meier, Stephan, 2017. "Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives," IZA Discussion Papers 11203, Institute of Labor Economics (IZA).
    14. Kajackaite, Agne & Sliwka, Dirk, 2020. "Prosocial managers, employee motivation, and the creation of shareholder value," Journal of Economic Behavior & Organization, Elsevier, vol. 172(C), pages 217-235.
    15. Briscese, Guglielmo & Slonim, Robert L. & Feltovich, Nicholas, 2019. "Who Benefits from Corporate Social Responsibility?," Working Papers 2019-18, University of Sydney, School of Economics.
    16. Kajackaite, Agne & Sliwka, Dirk, 2018. "Prosocial Managers, Employee Motivation, and the Creation of Shareholder Value," IZA Discussion Papers 11789, Institute of Labor Economics (IZA).
    17. Stein, Caroline & Untertrifaller, Anna, 2020. "The effect of ethical responsibility on performance," MPRA Paper 99176, University Library of Munich, Germany.
    18. Gary E. Bolton & Eugen Dimant & Ulrich Schmidt, 2020. "When a Nudge Backfires: Combining (Im)Plausible Deniability with Social and Economic Incentives to Promote Behavioral Change," CESifo Working Paper Series 8070, CESifo.

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    More about this item

    Keywords

    Corporate Social responsibility; Incentives; Reciprocity; Intentions; Equity; Experiment; Warm glow;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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