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When to Pay More: Incentives, Culture and Status in Principal‐ Agent Interactions

  • Dessi, Roberta
  • Miquel-Florensa, Josepa

We study the role of status in an experimental Principal-Agent game.Status is awarded to subjects based on either talent or luck. In each randomly matched principal-agent pair, the principal chooses the agent's status-contingent piece rate for a task in which talent matters for performance (an IQ test). We perform the experiment in Cambridge (UK) and in HCMV (Vietnam). We find that in Cambridge piece rate others are significantly higher for high-status agents (only) when status signals talent. However, these higher offers are not payoff-maximizing for the principals.In contrast, Vietnam piece rate offers are significantly higher for high-status agents (only) when status is determined by luck. We explore possible explanations, and the implications for status and incentives.

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Paper provided by Toulouse School of Economics (TSE) in its series TSE Working Papers with number 13-413.

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Date of creation: May 2013
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Handle: RePEc:tse:wpaper:27275
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  1. Gary Charness & David Masclet & Marie Claire Villeval, 2010. "Competitive preferences and status as an incentive : experimental evidence," Post-Print halshs-00554791, HAL.
  2. Kosfeld, Michael & Neckermann, Susanne, 2010. "Getting More Work for Nothing? Symbolic Awards and Worker Performance," IZA Discussion Papers 5040, Institute for the Study of Labor (IZA).
  3. Timothy Besley & Maitreesh Ghatak, 2008. "Status incentives," LSE Research Online Documents on Economics 5913, London School of Economics and Political Science, LSE Library.
  4. Postlewaite, Andrew, 1998. "The social basis of interdependent preferences," European Economic Review, Elsevier, vol. 42(3-5), pages 779-800, May.
  5. Emmanuelle Auriol & Régis Renault, 2007. "Status and Incentives," THEMA Working Papers 2007-01, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  6. Yoram Weiss & Chaim Fershtman, 1997. "Social Status and Economic Performance: A Survey," University of Chicago - George G. Stigler Center for Study of Economy and State 139, Chicago - Center for Study of Economy and State.
  7. Tore Ellingsen & Magnus Johannesson, 2007. "Paying Respect," Journal of Economic Perspectives, American Economic Association, vol. 21(4), pages 135-150, Fall.
  8. Benny Moldovanu & Aner Sela & Xianwen Shi, 2007. "Contests for Status," Journal of Political Economy, University of Chicago Press, vol. 115, pages 338-363.
  9. Falk, Armin & Zehnder, Christian, 2013. "A city-wide experiment on trust discrimination," Journal of Public Economics, Elsevier, vol. 100(C), pages 15-27.
  10. Catherine Eckel & Rick Wilson, 2007. "Social learning in coordination games: does status matter?," Experimental Economics, Springer, vol. 10(3), pages 317-329, September.
  11. Andrea Patacconi & Florian Ederer, 2005. "Interpersonal Comparison, Status and Ambition in Organisations," Economics Series Working Papers 222, University of Oxford, Department of Economics.
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  13. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  14. Ball, Sheryl & Eckel, Catherine C., 1998. "The Economic Value of Status," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 24(4), pages 495-514.
  15. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
  16. Sheryl Ball & Catherine Eckel & Philip J. Grossman & William Zame, 2001. "Status in Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 161-188.
  17. repec:dau:papers:123456789/12479 is not listed on IDEAS
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