Simon Halliday (Smith College)
Abstract. The presentation based on joint work with Fabio Landini and Gabriel Burdin, considers the roles of autonomy and reciprocity in principal-agent interactions, such as interactions between workers (agents) and bosses (principals). Most of the social psychology literature emphasizes the role of autonomy, where workers value autonomy for its own sake: a worker’s control over her own actions provides her intrinsic benefits and she will work harder if granted more autonomy. But, recent economic research has provided an alternative explanation based on reciprocity (Falk and Kosfeld, 2006): the worker would reciprocate trust with trust (less control with greater effort) and distrust with distrust (great control with less effort). We propose a simple model and an experiment to test the relative strength of these two motives. In particular, we compare two experimental treatments: one in which control is exerted directly by the principal who benefits from the worker’s effort (second-party control); and the other in which it is exerted by a third party with no claim on the results of the agent’s effort (third-party control). If control aversion is driven mainly by autonomy, then it should obtain in the third-party treatment. Our results, however, suggest that this does not occur. Moreover, when a third party instead of the principal exerts control, control results in a greater expected profit for the principal. The implications of these results for organizational design are discussed.