Mediocrity and induced reciprocity
Natalia Montinari (),
Antonio Nicolo' () and
Regine Oexl ()
Working Papers from Faculty of Economics and Statistics, University of Innsbruck
We report evidence from an experiment where a principal chooses an agent out of two to perform a task for a fixed compensation. The principal's payoff depends on the agent's ex-ante ability and on a non-contractible effort that the agent has to exert once employed. We find that a significant share of principals select the mediocre agent (i.e. the one with the lower ex-ante ability). When the principal is allowed to send a message, mediocre agents exert more effort than agents with higher ability, and principals who choose mediocre agents on average have a larger payoff than principals who select agents with higher ability. This difference in effort overcompensates the difference in ability. Mediocre agents reciprocate more than agents who have ex-ante higher ability when the principals are able to make them feeling indebted.
Keywords: reciprocity; communication; incentives; mediocrity (search for similar items in EconPapers)
JEL-codes: C9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-cta, nep-exp, nep-hrm and nep-soc
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Working Paper: Mediocrity and Induced Reciprocity (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2012-19
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