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.
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 language | English |
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Pages (from-to) | 133-161 |
Number of pages | 29 |
Journal | Journal of Law, Economics, and Organization |
Volume | 34 |
Issue number | 2 |
Early online date | 27 Feb 2018 |
DOIs | |
Publication status | Published - 1 May 2018 |