Incentives and group identity

Masella, Paolo, Meier, Stephan and Zahn, Philipp (2014) Incentives and group identity. Games and Economic Behavior, 86. pp. 12-25. ISSN 0899-8256

[img] PDF - Published Version
Restricted to SRO admin only

Download (278kB)

Abstract

This paper investigates in a principal–agent environment whether and how group membership influences the effectiveness of incentives and when incentives can have “hidden costs”, i.e., a detrimental effect. We show experimentally that in all interactions control mechanisms can have hidden costs for reasons specific to group membership. In within-group interactions control has detrimental effects because the agent does not expect to be controlled and reacts negatively when being controlled. In between-group interactions, agents perceive control more hostile once we condition on their beliefs about principals' behavior. Our finding contributes to the micro-foundation of psychological effects of incentives.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > H Social Sciences (General)
Depositing User: Paolo Masella
Date Deposited: 15 Apr 2014 13:32
Last Modified: 13 Mar 2017 10:47
URI: http://sro.sussex.ac.uk/id/eprint/48224

View download statistics for this item

📧 Request an update