The Lure of Authority: Motivation and Incentive Effects of Power*

Fehr, Ernst, Holger Herz, and Tom Wilkening. 2013. “The Lure of Authority: Motivation and Incentive Effects of Power." American Economic Review, 103(4): 1325-59. DOI: 10.1257/aer.103.4.1325; ******;

Supplementary Materials:
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==實驗設計==

共玩10回合 (先玩 7 回合的 sigle-player; 再玩正式的 10 回合)

0.1. 配對 principal 和 agent

0.2. 兩者看到36張牌, 代表36個projects; 其中有一張牌翻開, 代表 outside option (很小的報酬); 其餘 35 張牌看不到, 但其中有一張紅色牌 Project 1代表 principal 最偏好的, 而另一張藍色 project 2 代表 agent 最偏好的; 其它 33張牌報酬皆 = 0. 這個報酬設計是讓 subject 兩者會選 outside option, 相對於隨機選 project。

stage

1.  principal 決定是否授權 (但 agent 尚不知道)

2. 雙方 “各自" 選擇努力水準 E/e (in a quadratic cost function, E/e ~ {0,5,10,… 95, 100}) , 努力水準和得知 project 的結果成正比

努力成本: gP(E)=25(E/100)^2;   gA(e)=25(e/100)^2

得知結果機率 pr(E)/pr(e); 不知結果: 1-pr(E/e)

3. 問雙方對對方努力水準之預期

principal 依授權決定, 先被問不授權 (授權) 下之 “預期 agent" 之努力水準, 再問授權 (不授權) 下之 “預期 agent" 之努力水準

agent 則被同時問; (預期對和錯與 payoff 無關)

4. agent 得知是否被授權; 並且 subject 依其努力水準, 隨機得知所有 project 的 payoffs (但還不知對手的努力和是否知道 project 之結果)

5. principal/agent 建議一個 project (但如果 agent/principal 是否知道 payoff, 取決於上一個 stage 4)

6. principal/agent 做出 project 的選擇, 並計算雙方的 payoffs

==notes by yinung==

這篇是討論 principal 對保留權力 (power) 的實驗, 也算是 group behavior 的創意研究。終於有人進行和我之前研究想法很類似的實驗研究了….

主要結論:

principal 願意犧牲一些利得,以保留決策權

… the principals are willing to sacrifice some of their earnings to keep authority suggests a preference for the decision right.

principal 在 “被知會但沒有決定權" 和 “未被知會" 兩種情況, 理論上效用應該無差異

Conditional on effort, an expected utility maximizing principal who is the subordinate of an informed agent should thus be indifferent between the case where she is informed and overruled by the agent and the case where she remains uninformed.

H0: 若 principal 對於被 overruled 有負效用, 則下一次會保留授權

… If, however, a principal experiences a nonpecuniary disutility from being overruled, her behavior after these two outcomes may differ: the principal may be less willing to delegate in the next period if overruled.

…an individual may maintain control in order to mitigate the potential for regret. (subjects want to avoid ex post regret about their choices—a hypothesis that was introduced by Loomes and Sugden (1982)… Regret aversion is a form of reference dependent utility and is based on the idea that subjects derive disutility from regret that arises by comparing their actual ex post outcomes with those the subject could have had by choosing a different action.

和過去文獻之差異:

… these papers (含 Bartling and Fischbacher 2012, Coffman 2011) study the assignment of punishment in response to the allocation choices of either a principal or a delegate, our article studies the willingness of the principal to delegate and the willingness of a principal and an agent to invest effort in response to the assignment of decision rights.

this literature (指 the literature on the hidden costs of control by Fehr and Rockenbach 2003; Fehr and List 2004; Falk and Kosfeld 2006; Charness et al. 2012) shows that the exercise of control reduces an individual’s positive reciprocity towards the principal, our article shows that lack of control has demotivating consequences on subordinates that induce them to act against their material self-interest.

Abstract

Authority and power permeate political, social, and economic life, but empirical knowledge about the motivational origins and consequences of authority is limited. We study the motivation and incentive effects of authority experimentally in an authority-delegation game. Individuals often retain authority even when its delegation is in their material interest—suggesting that authority has nonpecuniary consequences for utility. Authority also leads to overprovision of effort by the controlling parties, while a large percentage of subordinates underprovide effort despite pecuniary incentives to the contrary. Authority thus has important motivational consequences that exacerbate the inefficiencies arising from suboptimal delegation choices.
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