Can Contracts Signal Social Norms? Experimental Evidence

Anastasia Danilov and Dirk Sliwka

No 7477, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We investigate whether incentive schemes signal social norms and thus affect behavior beyond their direct economic consequences. A principal-agent experiment is studied in which prior to contract choice principals are informed about past actions of other agents and thus have more information about "norms of behavior". Compared to a setting with uninformed principals agents exert nearly 50% higher efforts under a fixed wage contract when an informed principal had chosen this contract. Apparently the informed principal's choice signals a norm not to exploit the trust which leads to more trustworthy behavior. This mechanism's robustness is explored in further experiments.

Keywords: experiments; signaling; incentives; contracts; social norms (search for similar items in EconPapers)
JEL-codes: C91 D03 D86 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2013-06
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-cta, nep-exp, nep-hrm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published - revised version published in: Management Science, 2017, 63 (2), 459–476

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