Mediocrity and Induced Reciprocity
AbstractWe report evidence from an experiment where a principal chooses an agent out of two to perform a task for a fixed compensation. The principal's payoff depends on the agent's ex-ante ability and on a non-contractible effort that the agent has to exert once employed. We find that a significant share of principals select the mediocre agent (i.e. the one with the lower ex-ante ability). When the principal is allowed to send a message, mediocre agents exert more effort than agents with the higher ability, and principals who chooses mediocre agents on average have a larger payoff than principals who select agents with higher ability. This difference in effort overcompensates the difference in ability. Mediocre agents reciprocate more than agents who have ex-ante higher ability when the principals are able to make them feeling indebted.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2012-053.
Date of creation: 12 Sep 2012
Date of revision:
reciprocity; communication; incentives; mediocrity;
Other versions of this item:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-BEC-2012-09-22 (Business Economics)
- NEP-CBE-2012-09-22 (Cognitive & Behavioural Economics)
- NEP-CTA-2012-09-22 (Contract Theory & Applications)
- NEP-EXP-2012-09-22 (Experimental Economics)
- NEP-HRM-2012-09-22 (Human Capital & Human Resource Management)
- NEP-SOC-2012-09-22 (Social Norms & Social Capital)
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