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Doing Well by doing good - or doing better by delegating?

Author

Listed:
  • Gerald Eisenkopf

    (Department of Economics, University of Konstanz, Germany)

  • Urs Fischbacher

    (Department of Economics, University of Konstanz, Germany)

Abstract

Machiavelli advises against delegating the distribution of favors. We test this claim in an experiment, in which an investor can directly transfer money to a trustee or delegate this decision to another investor. Varying the value of the transfers of the investor and the delegate, we find that the trustee’s rewards follow a rather simple pattern. In all situations, both investors are rewarded, but the person who actually decides gets a higher reward. Delegation only pays off for the initial decision maker if the value of the delegate’s transfer is much higher than the value of the investor’s transfer.

Suggested Citation

  • Gerald Eisenkopf & Urs Fischbacher, 2011. "Doing Well by doing good - or doing better by delegating?," Working Paper Series of the Department of Economics, University of Konstanz 2011-10, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1110
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    File URL: http://www.uni-konstanz.de/FuF/wiwi/workingpaperseries/WP_Eisenkopf-10-11.pdf
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    Cited by:

    1. Hausfeld, Jan & Fischbacher, Urs & Knoch, Daria, 2020. "The value of decision-making power in social decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 898-912.

    More about this item

    Keywords

    Delegation; trusts; reciprocity; intentions; experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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