Incentives and group identity
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 r...
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| Veröffentlicht in: | Games and economic behavior 2014-07, Vol.86, p.12-25 |
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| container_title | Games and economic behavior |
| container_volume | 86 |
| creator | Masella, Paolo Meier, Stephan Zahn, Philipp |
| description | 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.
•We investigate the effect of group membership on the effectiveness of incentives.•Does group membership affect whether incentives have “hidden costs”, i.e., are detrimental?•Evidence comes from a principal–agent experiment.•In both, in-group and between-group interactions, control mechanisms have hidden costs.•The reasons for the hidden costs are group specific. |
| doi_str_mv | 10.1016/j.geb.2014.02.013 |
| format | Article |
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| ispartof | Games and economic behavior, 2014-07, Vol.86, p.12-25 |
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| language | eng |
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| source | Elsevier ScienceDirect Journals |
| subjects | Agency theory Control theory Crowding out Economic incentives Economic psychology Economic theory Experiment Group dynamics Group membership Incentives Motivation Organizational behavior Organizational behaviour Principal-agent theory Psychological aspects Social identity Social preferences Studies Trust |
| title | Incentives and group identity |
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