Biased Information and Effort
Copyright policy )Biased Information and Effort
We study the impact of information manipulation by a principal on the agent's effort. In a context of asymmetric information at the principal's advantage, we test experimentally the principal's willingness to bias (overestimate or underestimate) the information she/he gives to her/his agent on her/his ability in order to motivate her/him to exert more effort. We find that (1) principals do bias information, and (2) agents trust the cheap‐talk messages they receive and adjust their effort accordingly. Therefore, biased messages improve both the agent's performance and thus the principal's profit. This, however, does not increase efficiency. We also find that overestimation occurs much more often than underestimation. Making the signal costly in an additional treatment reduces this effect.(JELD83, C92, M12)
JEL: M - Business Administration and Business Economics • Marketing • Accounting • Personnel Economics/M.M1 - Business Administration/M.M1.M12 - Personnel Management • Executives, Executive Compensation, JEL: C - Mathematical and Quantitative Methods/C.C9 - Design of Experiments/C.C9.C92 - Laboratory, bias, 330, experiment, information,feedback,bias,motivation,experiment,biais,expérience, feedback, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: D - Microeconomics/D.D8 - Information, Group Behavior, information, expérience, D.D8.D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness, M.M1.M12 - Personnel Management • Executives; Executive Compensation, Knowledge, motivation, C.C9.C92 - Laboratory, Group Behavior, and Uncertainty/D.D8.D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, biais
JEL: M - Business Administration and Business Economics • Marketing • Accounting • Personnel Economics/M.M1 - Business Administration/M.M1.M12 - Personnel Management • Executives, Executive Compensation, JEL: C - Mathematical and Quantitative Methods/C.C9 - Design of Experiments/C.C9.C92 - Laboratory, bias, 330, experiment, information,feedback,bias,motivation,experiment,biais,expérience, feedback, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: D - Microeconomics/D.D8 - Information, Group Behavior, information, expérience, D.D8.D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness, M.M1.M12 - Personnel Management • Executives; Executive Compensation, Knowledge, motivation, C.C9.C92 - Laboratory, Group Behavior, and Uncertainty/D.D8.D83 - Search • Learning • Information and Knowledge • Communication • Belief • Unawareness, [SHS.ECO] Humanities and Social Sciences/Economics and Finance, biais
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