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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, Munich

No 2015_06, Discussion Paper Series of the Max Planck Institute for Research on Collective Goods from Max Planck Institute for Research on Collective Goods

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.

JEL-codes: J33 C92 M52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hrm and nep-soc
Date: 2015-03
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