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Mediocrity and induced reciprocity

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  • Natalia Montinari
  • Antonio Nicolò
  • Regine Oexl

Abstract

We report evidence from an experiment where a principal chooses an agent out of two to perform a task for a fixed compensation. The principal's payoff depends on the agent's ex-ante ability and on a non-contractible effort that the agent has to exert once employed. We find that a significant share of principals select the mediocre agent (i.e. the one with the lower ex-ante ability). When the principal is allowed to send a message, mediocre agents exert more effort than agents with higher ability, and principals who choose mediocre agents on average have a larger payoff than principals who select agents with higher ability. This difference in effort overcompensates the difference in ability. Mediocre agents reciprocate more than agents who have ex-ante higher ability when the principals are able to make them feeling indebted.

Suggested Citation

  • Natalia Montinari & Antonio Nicolò & Regine Oexl, 2012. "Mediocrity and induced reciprocity," Working Papers 2012-19, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2012-19
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The impossibility of meritocracy
      by chris dillow in Stumbling and Mumbling on 2012-09-26 17:01:36

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    Cited by:

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    2. Carmen Thoma, 2016. "Under- versus overconfidence: an experiment on how others perceive a biased self-assessment," Experimental Economics, Springer;Economic Science Association, vol. 19(1), pages 218-239, March.

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    More about this item

    Keywords

    reciprocity; communication; incentives; mediocrity;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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