Incentives and group identity

Paolo Masella, Stephan Meier and Philipp Zahn

Games and Economic Behavior, 2014, vol. 86, issue C, 12-25

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.

Keywords: Social identity; Social preferences; Incentives; Motivation; Crowding out; Trust; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D03 Z13 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

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Working Paper: Incentives and Group Identity (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:86:y:2014:i:c:p:12-25

DOI: 10.1016/j.geb.2014.02.013

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