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When to Pay More: Incentives, Culture and Status in Principal‐ Agent Interactions

Roberta Dessi and Josepa Miquel-Florensa

No 781, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: We study the role of status in an experimental Principal-Agent game.Status is awarded to subjects based on either talent or luck. In each randomly matched principal-agent pair, the principal chooses the agent's status-contingent piece rate for a task in which talent matters for performance (an IQ test). We perform the experiment in Cambridge (UK) and in HCMV (Vietnam). We find that in Cambridge piece rate others are significantly higher for high-status agents (only) when status signals talent. However, these higher offers are not payoff-maximizing for the principals.In contrast, Vietnam piece rate offers are significantly higher for high-status agents (only) when status is determined by luck. We explore possible explanations, and the implications for status and incentives.

Keywords: incentives; status; identity; piece rate; principal-agent; signaling; culture (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-cta, nep-exp, nep-lab and nep-sea
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