Backscratching in Hierarchical Organizations
Natalia Montinari () and
Antonio Nicolo' ()
No 2015:10, Working Papers from Lund University, Department of Economics
In this paper we investigate the role of reciprocity in sustaining the emergence of implicit collusive agreements in hierarchical organizations. We conduct a laboratory experiment in which an agent hires, on behalf of the principal, one worker out of two candidates. The two candidates differ in their ability and, once employed, the worker chooses a level of non-contractible effort to exert in two tasks: one benefits the organization (that is both the principal and the agent) while the other one is less profitable, only benefits the agent and provides him with higher earnings. We provide evidence that: i) low ability workers are more likely to exert effort in the task that is exclusively beneficial to the agent; ii) as a consequence, agents distort the hiring process in favor of the low ability workers and iii) sharing a small part of the organization’s profits with the workers alleviates their effort distortion.
Keywords: Conflict of Interest; Effort Distortion; Profit Sharing; and Reciprocity (search for similar items in EconPapers)
JEL-codes: C91 J50 L14 M52 (search for similar items in EconPapers)
Pages: 33 pages
New Economics Papers: this item is included in nep-exp, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Journal Article: Backscratching in Hierarchical Organizations (2018)
Working Paper: Backscratching in Hierarchical Organizations (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2015_010
Access Statistics for this paper
More papers in Working Papers from Lund University, Department of Economics Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by David Edgerton ().