Subjective performance evaluations and reciprocity in principal-agent relations

TY - JOUR

T1 - Subjective performance evaluations and reciprocity in principal-agent relations

AU - Sebald, Alexander Christopher

AU - Walzl, Markus

N1 - JEL Classification: D01;D825;D86;J41

PY - 2014/4

Y1 - 2014/4

N2 - We conduct a laboratory experiment with agents working on, and principals benefiting from, a real effort task in which the agents' performance can only be evaluated subjectively. Principals give subjective performance feedback to agents, and agents have an opportunity to sanction principals. In contrast to existing models of reciprocity, we find that agents tend to sanction whenever the feedback of principals is below their subjective self-evaluations even if agents' pay-offs are independent of it. In turn, principals provide more positive feedback (relative to their actual performance assessment of the agent) if this does not affect their pay-off.

AB - We conduct a laboratory experiment with agents working on, and principals benefiting from, a real effort task in which the agents' performance can only be evaluated subjectively. Principals give subjective performance feedback to agents, and agents have an opportunity to sanction principals. In contrast to existing models of reciprocity, we find that agents tend to sanction whenever the feedback of principals is below their subjective self-evaluations even if agents' pay-offs are independent of it. In turn, principals provide more positive feedback (relative to their actual performance assessment of the agent) if this does not affect their pay-off.

KW - Faculty of Social Sciences

KW - contracts

KW - reciprocity

KW - subjective performance evaluations

U2 - 10.1111/sjoe.12045

DO - 10.1111/sjoe.12045

M3 - Journal article

SN - 0347-0520

VL - 116

SP - 570

EP - 590

JO - Scandinavian Journal of Economics

JF - Scandinavian Journal of Economics

IS - 2

ER -