The Lure of Authority: Motivation and Incentive Effects of Power

Fehr, Ernst; Herz, Holger; Wilkening, Tom

doi:10.2139/ssrn.2786963

Cited by 32 publications

(39 citation statements)

References 43 publications

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“…"Integration" is used in the complete contract literature only for cases in which departments are merged: one agent is made manager while the other agent is eliminated from the management process. The complete contract approach proffers different predictions from the incomplete contract approach, and therefore it may be interesting to test their predictions through laboratory experimentation, as was done by Fehr et al (2010). It would be also interesting to study the interplay of richer organizational structures and bargaining protocols and its implications for optimal organizational design.…”

Section: Discussionmentioning

confidence: 99%

Incomplete contract, bargaining and optimal divisional structure

Bao

Wang

2011

J. Econ.

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When complete contracting is not possible, allocating control structure becomes the second-best arrangement. This paper analyzes the design of optimal divisional structure within an organization where ex post bargaining between the potential divisional managers is possible. In much the same light as Aghion and Tirole (J Political Econ 105(1):1-29, 1997), we study the control problem in the context of search for projects. Our model shows that when the managers cannot bargain with one another, internal integration is preferred to internal separation. Where bargaining is possible, formal divisional structure defines both the ex post bargaining position of the two managers and their incentive to search ex ante. When the managers tend to arrive at a more favorable project to the principal via bargaining, the general leader of a firm may want to choose separation instead to increase the probability of bargaining, as the symmetrical incentive requires both managers to search and get informed.

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Section: Discussionmentioning

confidence: 99%

Incomplete contract, bargaining and optimal divisional structure

Bao

Wang

2011

J. Econ.

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“…They show that recipients receive significantly less when hired agents make allocation decisions. Fehr, Herz and Wilkening (2013) study the motivation and incentive effects of authority in an authority-delegation game, suggesting that authority has a value per se. Finally, Gneezy, Gneezy, Nelson and Brow (2010) allow people in a field experiment at a theme park and on a boat cruise to pay what they wished for the services received.…”

Section: Literature Reviewmentioning

confidence: 99%

Social comparisons in wage delegation: experimental evidence

et al. 2015

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We make two contributions in this article. First, we examine whether social comparisons have behavioral effects on workers' performance when a firm can choose workers' wages or let them choose their own. Firms can delegate the wage decision to neither, one or both workers in the firm. We vary the information workers receive, finding that social comparisons concerning both wages and decision rights affect workers' performance. In fact, the relative effect of discrimination in relation to decision rights is larger than in relation to wage. Our second contribution is methodological. We find that our treatment effects are present with both stated effort and a real-effort task, suggesting that both approaches may yield similar results in labor experiments.

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“…However, when union activism allows workers to increase their own pay, conditions, and autonomy on the job, monitoring by management becomes less necessary for enforcing high workforce performance (DiNardo, Hallock, and Pischke 2000; Acemoglu and Newman 2002). Extensive laboratory evidence (Bartling, Fehr, and Schmidt 2012;Fehr, Herz, and Wilkening 2013) shows that higher worker autonomy and pay are complementary in raising workforce motivation and performance, a finding also echoed by the knowledge-intensive employment literature (Arundel et al 2007;Lundvall and Lorenz 2011). In turn, as Garicano and Rossi-Hansberg (2006) prove formally, higher worker performance leads Huber,Huo,and Stephens 14 to a flatter firm hierarchy, where managers comprise a smaller fraction of the workforce, and pay at the top is less steep.…”

Section: Consistent With This Implication Gomez and Tzioumismentioning

confidence: 99%

Power, Markets, and Top Income Shares

Huber¹,

Huo

Stephens³

2015

SSRN Journal

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The Kellogg Institute for International Studies at the University of Notre Dame has built an international reputation by bringing the best of interdisciplinary scholarly inquiry to bear on democratization, human development, and other research themes relevant to contemporary societies around the world.Together, more than 100 faculty and visiting fellows as well as both graduate and undergraduate students make up the Kellogg community of scholars. Founded in 1982, the Institute promotes research, provides students with exceptional educational opportunities, and builds linkages across campus and around the world. The Kellogg Working Paper Series:! Shares work-in-progress in a timely way before final publication in scholarly books and journals ABSTRACTThe rise of the super-rich has attracted much political and academic attention in recent years. However, to date there have been few attempts to explain the cross-national variation in the recent rise of very top incomes. Drawing on the World Top Incomes Database, we study the income share of the top 1% in almost all current postindustrial democracies from 1975 to 2012. We find that extreme income concentration at the very top is a predominantly political phenomenon, not the outcome of economic changes. Top income shares are largely unrelated to economic growth, increased knowledge-intensive production, export competitiveness, market size, financialization, and wealth accumulation. Instead, they are driven by various political and policy changes that reflect a decline in the relative power and resources of labor, such as union density and centralization, secular-right governments, and cuts in top marginal income tax rates as well as in public spending on education. RESUMENEn los últimos años, el ascenso de los super-ricos atrajo mucha atención política y académica. Sin embargo, hasta el momento se hicieron pocos intentos de explicar la variación internacional en el crecimiento reciente de los ingresos más altos. Tomando información de la Base Mundial de Datos sobre los Ingresos más Altos (World Top Incomes Database) estudiamos la porción del ingreso del 1% superior en casi todas las democracias postindustriales actuales desde 1975 hasta 2012. Encontramos que la extrema concentración del ingreso en la cúspide es un fenómeno predominantemente político y no resulta de cambios económicos. La participación de los ingresos superiores no está relacionada en ninguna medida significativa con el crecimiento económico, un aumento en la producción que hace un uso intensivo del conocimiento, la competitividad de las exportaciones, el tamaño de los mercados, el desarrollo del sector financiero o la acumulación de riqueza. En cambio, está guiada por varios cambios en la política y en las políticas que reflejan una declinación en el poder relativo y en los recursos de los trabajadores, tales como la densidad sindical y la centralización, los gobiernos seculares de derechas y las reducciones tanto en las tasas marginales superiores de impuestos sobre los ingresos como en el gasto púb...

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The Lure of Authority: Motivation and Incentive Effects of Power

Cited by 32 publications

References 43 publications

Incomplete contract, bargaining and optimal divisional structure

Incomplete contract, bargaining and optimal divisional structure

Social comparisons in wage delegation: experimental evidence

Power, Markets, and Top Income Shares

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