The hidden advantage of delegation: pareto-improvements in a gift-exchange game

Article

Charness, G., Cobo-Reyes, R., Jimenez Jimenez, N., Lacomba, J. and Lagos, F. 2012. The hidden advantage of delegation: pareto-improvements in a gift-exchange game. American Economic Review. 102 (5), pp. 2358-2379. https://doi.org/10.1257/aer.102.5.2358
TypeArticle
TitleThe hidden advantage of delegation: pareto-improvements in a gift-exchange game
AuthorsCharness, G., Cobo-Reyes, R., Jimenez Jimenez, N., Lacomba, J. and Lagos, F.
Abstract

This paper analyzes the effect on performance and earnings of delegating the wage choice to employees. Our results how that such delegation significantly increases effort levels.
Moreover, we observe a Pareto-improvement, as the earnings of both employers and employees increase when employers delegate than when they do not. Interestingly, we also find that the employees’ performance under delegation is higher than under non-delegation, even for similar wages. While there is strong evidence that behavior reflects strategic considerations, this result also holds for one-shot interactions. A possible non-strategic motivation explaining the positive reaction to delegation is a sense of enhanced responsibility.

PublisherAmerican Economic Association (AEA)
JournalAmerican Economic Review
ISSN0002-8282
Publication dates
PrintAug 2012
Publication process dates
Deposited14 Feb 2014
Output statusPublished
Digital Object Identifier (DOI)https://doi.org/10.1257/aer.102.5.2358
Web of Science identifierWOS:000307471600021
LanguageEnglish
First submitted version
Permalink -

https://repository.mdx.ac.uk/item/84q06

Log in to edit

Download files

  • 59
    total views
  • 39
    total downloads
  • 3
    views this month
  • 1
    downloads this month

Export as

Related outputs

Social influence and position effects
Hidalgo-Hidalgo, M., Jimenez Jimenez, N. and Lopez-Pintado, D. 2021. Social influence and position effects. Journal of Economic Behavior and Organization. 182, pp. 113-131. https://doi.org/10.1016/j.jebo.2020.11.031
The effect of initial inequality on meritocracy: a voting experiment on tax redistribution
Jimenez Jimenez, N., Molis Bañales, E. and Solano García, Á. 2020. The effect of initial inequality on meritocracy: a voting experiment on tax redistribution. Journal of Economic Behavior and Organization. 175, pp. 380-394. https://doi.org/10.1016/j.jebo.2018.09.019
Thinking fast, thinking badly
Jimenez Jimenez, N., Rodriguez-Lara, I., Tyran, J. and Wengstrom, E. 2018. Thinking fast, thinking badly. Economics Letters. 162, pp. 41-44. https://doi.org/10.1016/j.econlet.2017.10.018
Eliciting real-life social networks: a guided tour
Branas-Garza, P., Jimenez Jimenez, N. and Ponti, G. 2017. Eliciting real-life social networks: a guided tour. Journal of Behavioral Economics for Policy. 1 (1), pp. 33-39.
Job security and long-term investment: an experimental analysis
Charness, G., Cobo-Reyes, R., Jimenez Jimenez, N., Lacomba, J. and Lagos, F. 2017. Job security and long-term investment: an experimental analysis. European Economic Review. 95, pp. 195-214. https://doi.org/10.1016/j.euroecorev.2017.03.014
Inequality aversion among Spanish gypsies: an experimental approach [Aversión a la desigualdad entre gitanos Españoles: un enfoque experimental]
Cobo Reyes, R., Jimenez Jimenez, N. and Solano García, Á. 2008. Inequality aversion among Spanish gypsies: an experimental approach [Aversión a la desigualdad entre gitanos Españoles: un enfoque experimental]. Revista Internacional de Sociología. LXVI (49), pp. 47-60. https://doi.org/10.3989/ris.2008.i49.82
Preferencias sobre los demás
Branas-Garza, P. and Jimenez Jimenez, N. 2009. Preferencias sobre los demás. in: Garcia-Bermejo, J. (ed.) Sobre la Economía y sus métodos. Enciclopedia Iberoamericana de Filosofía Madrid Editorial Trotta.
Identities, selection, and contributions in a public-goods game
Charness, G., Cobo-Reyes, R. and Jimenez Jimenez, N. 2014. Identities, selection, and contributions in a public-goods game. Games and Economic Behavior. 87, pp. 322-338. https://doi.org/10.1016/j.geb.2014.05.002
Prosocial norms and degree heterogeneity in social networks
Kovářík, J., Branas-Garza, P., Cobo-Reyes, R., Espinosa, M., Jimenez Jimenez, N. and Ponti, G. 2012. Prosocial norms and degree heterogeneity in social networks. Physica A: Statistical Mechanics and its Applications. 391 (3), pp. 849-853. https://doi.org/10.1016/j.physa.2011.08.040
The dark side of friendship: 'envy'
Cobo-Reyes, R. and Jimenez Jimenez, N. 2012. The dark side of friendship: 'envy'. Experimental Economics: A Journal of the Economic Science Association. 15 (4), pp. 547-570. https://doi.org/10.1007/s10683-012-9313-0
Altruism and social integration
Branas-Garza, P., Cobo-Reyes, R., Espinosa, M., Jimenez Jimenez, N., Kovářík, J. and Ponti, G. 2010. Altruism and social integration. Games and Economic Behavior. 69 (10), pp. 249-257. https://doi.org/10.1016/j.geb.2009.10.014
Are women expected to be more generous?
Aguiar, F., Branas-Garza, P., Cobo-Reyes, R., Jimenez Jimenez, N. and Miller, L. 2009. Are women expected to be more generous? Experimental Economics: A Journal of the Economic Science Association. 12 (1), pp. 93-98. https://doi.org/10.1007/s10683-008-9199-z
An investment game with third-party intervention
Charness, G., Cobo-Reyes, R. and Jimenez Jimenez, N. 2008. An investment game with third-party intervention. Journal of Economic Behavior and Organization. 68 (1), pp. 18-28. https://doi.org/10.1016/j.jebo.2008.02.006