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Free-riding and Fairness in Principal-Multi-Agent Relationships: Experimental Evidence

Claude Meidinger, Jean-Louis Rullière () and Marie Claire Villeval ()
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Claude Meidinger: TEAM - Théories et Applications en Microéconomie et Macroéconomie - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: How do intrinsic motivations such as fairness and reciprocity influence the efficiency of a principal - multi-agent relationship when joint production in a team is considered? Focusing on moral hazard in teams (Holmström, 1982), this paper reports the results of an experiment designed to determine whether principal's fairness helps in reducing free-riding amongst team members. Two treatments were run, with reshuffling (stranger treatment) and without reshuffling (partner treatment). Experimental evidence shows that i) offers of fair contracts favor team cooperation in the stranger treatment, whereas ii) repeated interactions do not necessarily improve team cooperation. All the results of the partner treatment point to the difficulty of establishing a fruitful cooperation between principals and team members unequally motivated by genuine fairness considerations.

Keywords: experimental economics; fairness; principal-agent relationship; team production; économie expérimentale; équité; production en équipe; relation principal-agent (search for similar items in EconPapers)
Date: 2001
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Published in 2001

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