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Third-Party vs. Second-Party Control: Disentangling the role of Autonomy and Reciprocity

Gabriel Burdín (), Simon Halliday () and Fabio Landini
Additional contact information
Simon Halliday: Smith College (United States). Department of Economics
Fabio Landini: Bocconi University (Italy). Department of Political Science

No 15-12, Documentos de Trabajo (working papers) from Instituto de Economia - IECON

Abstract: This paper studies the role of autonomy and reciprocity in explaining control averse responses in principal-agents interactions. While most of the social psychology literature emphasizes the role of autonomy, recent economic research has provided an alternative explanation based on reciprocity. We propose a simple model and an experiment to test the relative strength of these two motives. We compare two treatments: one in which control is exerted directly by the principal (second-party control); and the other in which it is exerted by a third party enjoying no residual claimancy rights (third-party control). If control aversion is driven mainly by autonomy, then it should persist in the third-party treatment. Our results, however, suggest that this is not the case. Moreover, when a third party instead of the principal exerts control, control results in a greater expected profit for the principal. The implications of these results for organizational design are discussed.

Keywords: third-party; second-party; control aversion; autonomy; principal-agent game; social preferences; trust; reciprocity (search for similar items in EconPapers)
JEL-codes: C72 C91 D23 M54 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-09
New Economics Papers: this item is included in nep-exp, nep-gth, nep-hrm and nep-soc
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Citations: View citations in EconPapers (3) Track citations by RSS feed

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