Biaised Information and Effort
AbstractWe study the impact of information manipulation by a principal on the agent’s effort. In a context of asymmetric information at the principal’s advantage, we test experimentally the principal’s willingness to bias (overestimate or under-estimate) the information she gives to her agent on his ability in order to motivate him to exert more effort. We find that i) principals do bias information, ii) agents trust the cheap-talk messages they receive and adjust their effort accordingly. Therefore, biased messages improve both the agent’s performance and thus the principal’s profit. This, however, does not increase efficiency. We also find that over-estimation occurs much more often than under-estimation. Making the signal costly in an additional treatment reduces this effect.
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Bibliographic InfoPaper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 1025.
Length: 38 pages
Date of creation: 2010
Date of revision:
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information; feedback; bias; motivation; experiment;
Other versions of this item:
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executive Compensation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-30 (All new papers)
- NEP-CBE-2010-10-30 (Cognitive & Behavioural Economics)
- NEP-CTA-2010-10-30 (Contract Theory & Applications)
- NEP-MIC-2010-10-30 (Microeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Santiago Sánchez-Pagés & Marc Vorsatz, 2009.
"Enjoy the silence: an experiment on truth-telling,"
Springer, vol. 12(2), pages 220-241, June.
- Uwe Dulleck & Jonas Fooken & Yumei He, 2012. "Public Policy and Individual Labor Market Discrimination: An Artefactual Field Experiment in China," QuBE Working Papers 002, QUT Business School.
- Julie Rosaz & Marie-Claire Villeval, 2012.
"Lies and Biased Evaluation: A Real-Effort Experiment,"
- Rosaz, Julie & Villeval, Marie Claire, 2012. "Lies and biased evaluation: A real-effort experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 537-549.
- Rosaz, Julie & Villeval, Marie Claire, 2011. "Lies and Biased Evaluation: A Real-Effort Experiment," IZA Discussion Papers 5884, Institute for the Study of Labor (IZA).
- Julie Rosaz & Marie-Claire Villeval, 2011. "Lies and Biased Evaluation : A Real-Effort Experiment," Working Papers 1124, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
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