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Reciprocity in the Principal Multiple Agent Model

This paper studies how incentives are affected by intention-based reciprocity preferences when the principal hires many agents. Our results describe the agents' psychological attitudes required to sustain a given strategy profile. We also show that hiring reciprocal agents to implement a first or a second-best contract will always benefit the principal if the strategy profile is symmetric. When instead the profile (first or second-best) is asymmetric the principal's best interest might be better served by self-interested agents. We conclude the paper by clarifying when symmetric profiles are most likely to arise.

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File URL: http://www.csef.it/WP/wp314.pdf
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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 314.

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Date of creation: 10 May 2012
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Handle: RePEc:sef:csefwp:314
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References listed on IDEAS
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  1. Dominique Demougin & Claude Fluet, 2003. "Group vs. Individual Performance Pay When Workers Are Envious," Cahiers de recherche 0318, CIRPEE.
  2. Pedro Rey-Biel, 2007. "Inequity Aversion and Team Incentives," Working Papers 319, Barcelona Graduate School of Economics.
  3. Charness, Gary & Rabin, Matthew, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series qt3d04q5sm, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  4. Florian Englmaier & Stephen Leider, 2012. "Contractual and Organizational Structure with Reciprocal Agents," American Economic Journal: Microeconomics, American Economic Association, vol. 4(2), pages 146-83, May.
  5. De Marco, Giuseppe & Immordino, Giovanni, 2013. "Partnership, reciprocity and team design," Research in Economics, Elsevier, vol. 67(1), pages 39-58.
  6. Netzer, Nick & Schmutzler, Armin, 2010. "Rotten Kids with Bad Intentions," CEPR Discussion Papers 7667, C.E.P.R. Discussion Papers.
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