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Düsseldorf Institute for Competition Economics (DICE), University of Düsseldorf >
DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE) >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/64547
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| Title: | | Team building and hidden costs of control  |
| Authors: | | Riener, Gerhard Wiederhold, Simon |
| Issue Date: | | 2012 |
| Series/Report no.: | | DICE Discussion Paper 66 |
| Abstract: | | This paper investigates the interaction of intrinsic and extrinsic incentives. We propose a simple principal-agent model with control that incorporates the existence of social groups resulting from common experiences in the past. Our laboratory experiment shows that agents with previous common experiences with their principals (CE agents) perform better than agents without such experiences (NCE agents). However, as soon as actual control exceeds their expectation, CE agents decrease their performance substantially, which has no equivalent for NCE agents. This pronounced decrease in effort when control is perceived as excessive represents a novel channel through which hidden costs of control materialize. Our results have important implications for firms' strategies to motivate employees. |
| Subjects: | | Employee motivation Principal-agent theory Experiments |
| JEL: | | C92 M54 D03 J22 |
| ISBN: | | 978-3-86304-065-9 |
| Document Type: | | Working Paper |
| Appears in Collections: | | DICE Discussion Paper, Düsseldorf Institute for Competition Economics (DICE)
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