The role of verifiability and privacy in the strategic provision of performance feedback: Theory and experimental evidence

Abstract

We theoretically and experimentally analyze the role of verifiability and privacy in strategic performance feedback using a "one principal-two agent" context with real effort. We confirm the theoretical prediction that information transmission occurs only in verifiable feedback mechanisms and private-verifiable feedback is the most informative mechanism. Yet, subjects also exhibit some behavior that cannot be explained by our baseline model, such as telling the truth even when this will definitely hurt them, interpreting "no feedback" more optimistically than they should, and being influenced by feedback given to the other agent. We show that a model with individual-specific lying costs and naive agents can account for some, but not all, of these findings. We conclude that in addition to being naive, some agents also suffer from self-serving biases and engage in non-Bayesian social comparisons in their interpretation of performance feedback.

Strategic feedback in teams: Theory and experimental evidence

“…agents' efforts. As in Ertac et al [2016], this makes the principal's payoff monotonic in agents' beliefs, which constitutes a crucial difference from our work. To reiterate, this is important because the team technology may render the principal's payoff non-monotonic and feedback uninformative, which implies that it may play a role in determining the effect of feedback on performance.…”

“…A major focus in this literature is how much information is transmitted in equilibrium. A recent example is Ertac et al [2016], who study the informativeness of different types of feedback (private vs.…”

“…First of all, our main focus is the effect of feedback on team performance, while they study the informativeness of different types of feedback. 10 Second, our setup is designed to compare the effects of feedback under different team technologies, i.e., weakest-link and best-shot, while Ertac et al [2016] uses a single technology. Third, in our model the other agent's type is relevant for effort incentives while it is irrelevant in their paper.…”

Performance Feedback and Peer Effects

“…By contrast (but in a dynamic tournament setting), Ederer and Fehr (2007) find that biased feedback decreases performance compared to treatments with either no feedback or truthful feedback. Using a real-effort weak-link game with one principal and two agents, Ertac et al (2016) compare verifiable and unverifiable strategic feedback. Verifiable messages are more informative than unverifiable ones.…”

Do Gender‐variant Preferences for Competition Persist in the Absence of Performance?

“…A few studies, however, find that beliefs explain all of the gender gap (Cadsby, Servátka, and Song ; Dreber, von Essen, and Ranehill ; Kamas and Preston ). Researchers have also manipulated beliefs by presenting information about other subjects' performance (e.g., Cason, Masters, and Sheremeta ; Dreber, von Essen, and Ranehill ; Ertac and Szentes ; Wozniak, Harbaugh, and Mayr ), and by using real‐effort tasks that are less stereotypically male (e.g., Grosse and Riener ; Kamas and Preston ; Shurchkov ; Wozniak, Harbaugh, and Mayr ) . These modifications reduce, and sometimes eliminate, the gender difference in the willingness to compete.…”