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'I'll do it by myself as I knew it all along': On the failure of hindsight-biased principals to delegate optimally

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  • Danz, David
  • Hüber, Frank
  • Kübler, Dorothea
  • Mechtenberg, Lydia
  • Schmid, Julia

Abstract

With the help of a simple model, we show that the hindsight bias can lead to inefficient delegation decisions. This prediction is tested experimentally. In an online experiment that was conducted during the FIFA World Cup 2010 participants were asked to predict a number of outcomes of the ongoing World Cup and had to recall their assessments after the outcomes had been realized. This served as a measure of the hindsight bias for each participant. The participants also had to make choices in a delegation game. Our data confirm that hindsight-biased subjects more frequently fail to delegate optimally than subjects whom we have classified as not hindsight biased. --

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Bibliographic Info

Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Behavior with number SP II 2013-203.

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Date of creation: 2013
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Handle: RePEc:zbw:wzbmbh:spii2013203

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Keywords: hindsight bias; delegation; experiments;

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Cited by:
  1. Poeschel, Friedrich, 2012. "Assortative matching through signals," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62061, Verein für Socialpolitik / German Economic Association.

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