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The Lure of Authority: Motivation and Incentive E ects of Power

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  • Ernst Fehr
  • Holger Herz
  • Tom Wilkening

Abstract

Authority and power permeate political, social, and economic life but there is limited empirical knowledge about the motivational origins and consequences of authority. We experimentally study the motivation and incentive eff ects of authority in an authority-delegation game. Individuals exhibit a strong tendency to retain authority even when its delegation is in their material interest | suggesting that they value authority per se. Moreover, this tendency to hold on to authority strongly increases with individuals' degree of loss aversion, suggesting an endowment e ect with regard to au- thority. Authority also leads to a substantial over provision of e ort by the controlling party, while a large percentage of subordinates under provide e ort despite pecuniary incentives to the contrary. Thus, authority has important motivational consequences that exacerbate the inefeciencies arising from suboptimal delegation choices.

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Bibliographic Info

Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 1115.

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Length: 48 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:mlb:wpaper:1115

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Keywords: Organizational Behavior; Incentives; Experiments; Contracts;

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References

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  1. Mariana Blanco & Dirk Engelmann & Alexander Koch & Hans-Theo Normann, 2010. "Belief elicitation in experiments: is there a hedging problem?," Experimental Economics, Springer, vol. 13(4), pages 412-438, December.
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  4. Sliwka, Dirk, 1999. "On the Costs and Benefits of Delegation in Organizations," Discussion Paper Serie A 600, University of Bonn, Germany.
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  19. Gary Charness & Ramon Cobo-Reyes & Natalia Jimenez & Juan A. Lacomba & Francisco Lagos, 2012. "The Hidden Advantage of Delegation: Pareto Improvements in a Gift Exchange Game," American Economic Review, American Economic Association, vol. 102(5), pages 2358-79, August.
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