{"title":"Agent Motivation and Principal Anticipation: Non-Monotonicity, Intentions, and Other Factors","authors":"Timothy Flannery, S. Roberts","doi":"10.1080/13571516.2021.1893570","DOIUrl":null,"url":null,"abstract":"Abstract We design an experiment to test what motivates agents to choose higher effort and how well principals anticipate agent responses. Principals rank five contracts where a higher ranking increases the likelihood of a contract's implementation. In one treatment, those rankings remain hidden from agents; in the other, agents view the rankings. Agent response to contract structure and monetary incentives largely conforms to our predictions: agents demonstrate a preference for monotonic contracts over non-monotonic contracts, and the vast majority responds favorably to contracts where high effort is a best response. Surprisingly, offering a flat contract that exactly compensates agents for effort performs no better than offering nothing. Principals, however, poorly anticipate agent response to contracts, regardless of the observability of rankings. Additionally, although differences in observable rankings only affect agent behavior in minor ways, principals' rankings between the two treatments indicate principals believed different rankings would significantly influence agents when observable.","PeriodicalId":45470,"journal":{"name":"International Journal of the Economics of Business","volume":"14 1","pages":"335 - 361"},"PeriodicalIF":1.9000,"publicationDate":"2021-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of the Economics of Business","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1080/13571516.2021.1893570","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"BUSINESS","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract We design an experiment to test what motivates agents to choose higher effort and how well principals anticipate agent responses. Principals rank five contracts where a higher ranking increases the likelihood of a contract's implementation. In one treatment, those rankings remain hidden from agents; in the other, agents view the rankings. Agent response to contract structure and monetary incentives largely conforms to our predictions: agents demonstrate a preference for monotonic contracts over non-monotonic contracts, and the vast majority responds favorably to contracts where high effort is a best response. Surprisingly, offering a flat contract that exactly compensates agents for effort performs no better than offering nothing. Principals, however, poorly anticipate agent response to contracts, regardless of the observability of rankings. Additionally, although differences in observable rankings only affect agent behavior in minor ways, principals' rankings between the two treatments indicate principals believed different rankings would significantly influence agents when observable.
期刊介绍:
International Journal of the Economics of Business presents original, peer reviewed research in economics that is clearly applicable to business or related public policy problems or issues. The term "business" is used in its widest sense to encompass both public and private sector—governmental, private non-profit and cooperative organizations, as well as profit-seeking enterprises. International Journal of the Economics of Business carries papers relating to three main spheres: The organization—to analyse and aid decision making and the internal organization of the business; The industry—to analyse how businesses interact and evolve within and across industries.