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Mediocrity and induced reciprocity

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Listed:
  • Natalia Montinari

    ()

  • Antonio Nicolo

    ()

  • 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 Nicolo & Regine Oexl, 2012. "Mediocrity and induced reciprocity," Working Papers 2012-19, Faculty of Economics and Statistics, University of Innsbruck.
  • Handle: RePEc:inn:wpaper:2012-19
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    Cited by:

    1. Thoma, Carmen, 2013. "Is Underconfidence Favored over Overconfidence? An Experiment on the Perception of a Biased Self-Assessment," Discussion Papers in Economics 17460, University of Munich, Department of Economics.
    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.

    More about this item

    Keywords

    reciprocity; communication; incentives; mediocrity;

    JEL classification:

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

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