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Incentives and group identity
journal contribution
posted on 2023-06-08, 17:03 authored by Paolo Masella, Stephan Meier, Philipp ZahnThis 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.
History
Publication status
- Published
File Version
- Published version
Journal
Games and Economic BehaviorISSN
0899-8256Publisher
ElsevierExternal DOI
Volume
86Page range
12-25Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2014-04-15First Compliant Deposit (FCD) Date
2014-04-14Usage metrics
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