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Subjective performance evaluations and reciprocity in principal-agent relations

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  • Alexander Sebald

    ()

  • Markus Walzl

    ()

Abstract

We conduct a laboratory experiment with agents working on and principals benefitting from a real effort task in which the agents' performance can only be evaluated subjectively. Principals give subjective performance feedback to agents and agents have an opportunity to sanction principals. In contrast to existing models of reciprocity we find that agents tend to sanction whenever the feedback of principals is below their subjective self-evaluations even if agents' payoffs are independent of it. In turn, principals provide more positive feedback (relative to their actual performance assessment of the agent) if this does not affect their payoffs.

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File URL: http://eeecon.uibk.ac.at/wopec2/repec/inn/wpaper/2012-15.pdf
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Bibliographic Info

Paper provided by Faculty of Economics and Statistics, University of Innsbruck in its series Working Papers with number 2012-15.

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Length: 43
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:inn:wpaper:2012-15

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Related research

Keywords: Contracts; Subjective Performance Evaluations; Reciprocity;

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References

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  1. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory Of Fairness, Competition, And Cooperation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 817-868, August.
  2. Breuer, Kathrin & Nieken, Petra & Sliwka, Dirk, 2010. "Social Ties and Subjective Performance Evaluations: An Empirical Investigation," IZA Discussion Papers 4913, Institute for the Study of Labor (IZA).
  3. E. Fehr & John A. List, . "The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs," IEW - Working Papers 134, Institute for Empirical Research in Economics - University of Zurich.
  4. Uri Gneezy, 2005. "Deception: The Role of Consequences," American Economic Review, American Economic Association, vol. 95(1), pages 384-394, March.
  5. Ellingsen, Tore & Johannesson, Magnus, 2006. "Pride and Prejudice: The Human Side of Incentive Theory," CEPR Discussion Papers 5768, C.E.P.R. Discussion Papers.
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Cited by:
  1. Alexander Sebald & Markus Walzl, 2012. "Optimal contracts based on subjective evaluations and reciprocity," Working Papers 2012-16, Faculty of Economics and Statistics, University of Innsbruck.
  2. Lucia Marchegiani & Tommaso Reggiani & Matteo Rizzolli, 2013. "Severity vs. Leniency Bias in Performance Appraisal: Experimental evidence," BEMPS - Bozen Economics & Management Paper Series BEMPS01, School of Economics and Management at the Free University of Bozen.

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