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  5. Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship

  • John R. Hamman
  • George Loewenstein
  • Roberto A. Weber
American Economic Review
vol. 100, no. 4, September 2010
(pp. 1826–46)
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Abstract

Principal-agent relationships are typically assumed to be motivated by efficiency gains from comparative advantage. However, principals may also delegate tasks to avoid taking direct responsibility for selfish or unethical behavior. We report three laboratory experiments in which principals repeatedly either decide how much money to share with a recipient or hire agents to make sharing decisions on their behalf. Across several experimental treatments, recipients receive significantly less, and in many cases close to nothing, when allocation decisions are made by agents. (JEL D82)

Citation

Hamman, John R., George Loewenstein, and Roberto A. Weber. 2010. "Self-Interest through Delegation: An Additional Rationale for the Principal-Agent Relationship." American Economic Review, 100 (4): 1826–46. DOI: 10.1257/aer.100.4.1826

Additional Materials

JEL Classification

  • D82 Asymmetric and Private Information