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

Author

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

Abstract

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)

Suggested Citation

  • John R. Hamman & George Loewenstein & Roberto A. Weber, 2010. "Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship," American Economic Review, American Economic Association, vol. 100(4), pages 1826-1846, September.
    • 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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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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