Authority and power permeate political, social, and economic life but there is limited empirical knowledge about the motivational origins and consequences of authority. We experimentally study the motivation and incentive effects of authority in an authority-delegation game. Individuals exhibit...

We explore experimentally a cognitive-effort channel through which defaults might influence behavior in an environment where the choice architect has misaligned incentives. Our experimental setting is an insurance market where the firm is better informed about the aggregate statistical risk...

We show experimentally that fairness concerns may have a decisive impact on the actual and optimal choice of contracts in a moral hazard context. Bonus contracts that offer a voluntary and unenforceable bonus for satisfactory performance provide powerful incentives and are superior to explicit...

Chapter written for the Handbook of Reciprocity, Gift-Giving and Altruism

Most economic models are based on the self-interest hypothesis that assumes that all people are exclusively motivated by their material self-interest. In recent years experimental economists have gathered overwhelming evidence that systematically refutes the self-interest hypothesis and suggests...

We show experimentally that fairness concerns may have a decisive impact on both the actual and the optimal choice of contracts in a moral hazard context. Explicit incentive contracts that are optimal according to self-interest theory become inferior when some agents value fairness. Conversely,...

This paper reports on a two-task principal-agent experiment in which only one task is contractible. The principal can either offer a piece-rate contract or a (voluntary) bonus to the agent. Bonus contracts strongly outperform piece rate contracts. Many principals reward high efforts on both...

This paper surveys recent experimental and field evidence on the impact of concerns for fairness, reciprocity and altruism on economic decision making. It also reviews some new theoretical attempts to model the observed behavior.