Biased Information and Effort
We study the impact of information manipulation by a principal on the agent's effort. In a context of asymmetric information at the principal's advantage, we test experimentally the principal's willingness to bias (overestimate or under-estimate) the information she gives to her agent on his ability in order to motivate him to exert more effort. We find that i) principals do bias information, ii) agents trust the cheap-talk messages they receive and adjust their effort accordingly. Therefore, biased messages improve both the agent's performance and thus the principal's proﬁt. This, however, does not increase efficiency. We also ﬁnd that over-estimation occurs much more often than under-estimation. Making the signal costly in an additional treatment reduces this effect.
|Date of creation:||2012|
|Date of revision:|
|Publication status:||Published in Economic Inquiry, Wiley, 2012, 50 (2), pp. 484-501|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00527563|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Santiago Sánchez-Pagés & Marc Vorsatz, 2009.
"Enjoy the silence: an experiment on truth-telling,"
Springer, vol. 12(2), pages 220-241, June.
When requesting a correction, please mention this item's handle: RePEc:hal:journl:halshs-00527563. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD)
If references are entirely missing, you can add them using this form.