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Mediocrity and Induced Reciprocity

Author

Listed:
  • Natalia Montinari

    (Max Planck Institute of Economics, Jena, Germany)

  • Antonio Nicolò

    (University of Padua, Italy)

  • Regine Oexl

    (University of Innsbruck, Austria)

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 the higher ability, and principals who chooses 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," Jena Economics Research Papers 2012-053, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2012-053
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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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    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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