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Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship

  • John R. Hamman
  • George Loewenstein
  • Roberto A. Weber

Principal-agent relationships are typically assumed to be motivated by efficiency gains from comparative advantage. However, principals may also delegate tasks to avoid taking direct responsibility for selfish or unethical behavior. We report three laboratory experiments in which principals repeatedly either decide how much money to share with a recipient or hire agents to make sharing decisions on their behalf. Across several experimental treatments, recipients receive significantly less, and in many cases close to nothing, when allocation decisions are made by agents. (JEL D82)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.4.1826
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File URL: http://www.aeaweb.org/aer/data/sept2010/20080806_data.zip
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 100 (2010)
Issue (Month): 4 (September)
Pages: 1826-46

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Handle: RePEc:aea:aecrev:v:100:y:2010:i:4:p:1826-46
Note: DOI: 10.1257/aer.100.4.1826
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  2. Fershtman, Chaim & Gneezy, Uri, 2001. "Strategic Delegation: An Experiment," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 352-68, Summer.
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