When to Pay More: Incentives, Culture and Status in Principal‐ Agent Interactions
AbstractWe study the role of status in an experimental Principal-Agent game.Status is awarded to subjects based on either talent or luck. In each randomly matched principal-agent pair, the principal chooses the agent's status-contingent piece rate for a task in which talent matters for performance (an IQ test). We perform the experiment in Cambridge (UK) and in HCMV (Vietnam). We find that in Cambridge piece rate others are significantly higher for high-status agents (only) when status signals talent. However, these higher offers are not payoff-maximizing for the principals.In contrast, Vietnam piece rate offers are significantly higher for high-status agents (only) when status is determined by luck. We explore possible explanations, and the implications for status and incentives.
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Bibliographic InfoPaper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 13-413.
Date of creation: May 2013
Date of revision:
incentives; status; identity; piece rate; principal-agent; signaling; culture.;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-05 (All new papers)
- NEP-BEC-2013-07-05 (Business Economics)
- NEP-CBE-2013-07-05 (Cognitive & Behavioural Economics)
- NEP-CTA-2013-07-05 (Contract Theory & Applications)
- NEP-EXP-2013-07-05 (Experimental Economics)
- NEP-HRM-2013-07-05 (Human Capital & Human Resource Management)
- NEP-LAB-2013-07-05 (Labour Economics)
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