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Costs of Control in Groups

Author

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  • Gerhard Riener
  • Simon Wiederhold

Abstract

This paper explores the role of social groups in explaining the reaction to control. We propose a simple model with a principal using control devices and a controlled agent, which incorporates the existence of social groups. Testing experimentally the conjectures derived from the model and related literature, we find that agents in social groups (i) perform more than other (no-group) agents; (ii) expect less control than no-group agents; (iii) decrease their performance substantially when actual control exceeds their expectation, while no-group agents do not react; (iv) do not reciprocate when facing less control than expected, while no-group agents do.

Suggested Citation

  • Gerhard Riener & Simon Wiederhold, 2011. "Costs of Control in Groups," ifo Working Paper Series 113, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_113
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    File URL: http://www.cesifo-group.de/DocDL/IfoWorkingPaper-113.pdf
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    References listed on IDEAS

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    7. Wendelin Schnedler & Radovan Vadovic, 2011. "Legitimacy of Control," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 985-1009, December.
    8. von Siemens, Ferdinand A., 2013. "Intention-based reciprocity and the hidden costs of control," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 55-65.
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    Cited by:

    1. Mechtel, Mario & Hett, Florian & Kröll, Markus, 2014. "Endogenous Social Identity and Group Choice," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100307, Verein für Socialpolitik / German Economic Association.

    More about this item

    Keywords

    Identity; employee motivation; principal-agent theory; experiments;

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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