Incentives and group identity

Arbeitspapier

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 principal's behavior. Our finding contributes to the micro-foundation of psychological effects of incentives.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6815

Classification and Topics

• Classification: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
• Subject: social identity ; social preferences ; incentives ; motivation ; crowding out ; trust ; experiment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Masella, Paolo ; Meier, Stephan ; Zahn, Philipp
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/62419
• Last update: 10.03.2025, 11:42 AM CET