Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127348
Authors: 
Nikiforakis, Nikos
Oechssler, Jörg
Shah, Anwar
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 530
Abstract: 
The power to coerce workers is important for the efficient operation of hierarchically structured organizations. However, this power can also be used by managers to exploit their subordinates for their own benefit. We examine the relationship between the power to coerce and exploitation in a laboratory experiment where a senior and a junior player interact repeatedly for a finite number of periods. We find that senior players try repeatedly to use their power to exploit junior workers. These attempts are successful only when junior workers have incomplete information about how their effort impacts on the earnings of senior players, but not when they have complete information. Evidence from an incentive-compatible questionnaire indicates that the social acceptability of exploitation depends on whether the junior worker can detect she is being exploited. We also show how a history of exploitation affects future interactions.
Subjects: 
coercion
exploitation
disobedience
hierarchy
social norms
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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