Faculty of Economics and Business Administration Publications Database

Intention-based reciprocity and the hidden costs of control

Volume: 92
Pages: 55 - 65
Month: August
ISSN-Print: 0167-2681
Link External Source: Online Version
Year: 2013
Keywords: Intention-based reciprocity; Incomplete information; Hidden costs of control
Abstract: Empirical research suggests that – despite strengthening conventional incentives to put in effort – exerting control might reduce worker performance. The present paper shows that intention-based reciprocity can explain such hidden costs of control if individuals differ in their propensity for reciprocity and preferences are private information. Not being controlled might then be considered to be kind, because not everybody reciprocates not being controlled with high effort. This argument contrasts existing theoretical wisdom on the hidden costs of control that is almost exclusively based on signaling.