Communication and Trust in Principal-Team Relationships: Experimental Evidence

Marco Kleine () and Sebastian Kube
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Marco Kleine: Max Planck Institute for Innovation and Competition

No 8762, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study how upward communication – from workers to managers – about individual efforts affects the effectiveness of gift exchange as a contract-enforcement device for work teams. Our findings suggest that the use of such self-assessments can be detrimental to workers' performance. In the controlled environment of a laboratory gift-exchange experiment, our workers regularly overstate their own contribution to the joint team output. Misreporting seems to spread distrust within the team of workers, as well as between managers and workers. This manifests itself in managers being less generous with workers' payments, and in workers being more sensitive to the perceived kindness of their relative wage payments. By varying the source and degree of information about individual efforts between treatments, we see that precise knowledge about workers' actual contributions to the team output is beneficial for the success of gift-exchange relationships. Yet, workers' self-assessments can be a problematic tool to gather this information.

Keywords: communication; gift exchange; incomplete contracts; reciprocity; performance appraisal; self-assessment; work team; laboratory experiment (search for similar items in EconPapers)
JEL-codes: C92 J33 M52 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2015-01
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hrm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Communication and Trust in Principal-Team Relationships: Experimental Evidence (2015)
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