TY - UNPB

T1 - Subjective Performance Evaluations, Self-esteem, and Ego-threats in Principal-agent Relations

AU - Sebald, Alexander Christopher

AU - Walzl, Markus

N1 - JEL classifications: D01, D02, D82, D86, J41

PY - 2010

Y1 - 2010

N2 - We conduct a laboratory experiment with agents working on and principals benefiting from a real effort task in which the agents' effort/performance can only be evaluated subjectively. Principals give subjective performance feedback to agents and agents have an opportunity to sanction principals. We find that agents sanction whenever the feedback of principals is below their subjective self-evaluations even if the agents' payoff is independent of the principals' feedback. Based on our experimental analysis we propose a principal-agent model with subjective performance evaluations that accommodates this finding. We analyze the agents' (optimal) behavior, optimal contracts, and social welfare in this environment.

AB - We conduct a laboratory experiment with agents working on and principals benefiting from a real effort task in which the agents' effort/performance can only be evaluated subjectively. Principals give subjective performance feedback to agents and agents have an opportunity to sanction principals. We find that agents sanction whenever the feedback of principals is below their subjective self-evaluations even if the agents' payoff is independent of the principals' feedback. Based on our experimental analysis we propose a principal-agent model with subjective performance evaluations that accommodates this finding. We analyze the agents' (optimal) behavior, optimal contracts, and social welfare in this environment.

KW - Faculty of Social Sciences

KW - contracts

KW - subjective performance evaluations

KW - self-esteem

KW - ego-threats

M3 - Working paper

BT - Subjective Performance Evaluations, Self-esteem, and Ego-threats in Principal-agent Relations

PB - Department of Economics, University of Copenhagen

ER -