Backscratching in Hierarchical Organizations

Valeria Maggian, Natalia Montinari, Antonio Nicolo

Research output: Contribution to journalArticlepeer-review

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Abstract

We experimentally investigate the role of reciprocity in sustaining the emergence of
implicit collusive agreements in hierarchical organizations. We show that when an
agent hires, on behalf of the principal, one worker out of two candidates: i) low
ability workers, being less entitled to be selected, are more likely to exert effort in a
task that is exclusively beneficial to the agent; ii) as a consequence, agents distort
the hiring process in favor of low ability workers and iii) sharing a small part of the
organization's profits with the workers alleviates their effort distortion.
Original languageEnglish
Pages (from-to)133-161
Number of pages29
JournalJournal of Law, Economics, and Organization
Volume34
Issue number2
Early online date27 Feb 2018
DOIs
Publication statusPublished - 1 May 2018

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