ICES Experimental Economics Brown Bag Lecture
Principals’ Power, Decision Frames and Delegation: An Experiment
Tuesday, October 24, 2023 12:00 PM to 1:00 PM EDT
Vernon Smith Hall (formerly Metropolitan Building), Room 5075
The Interdisciplinary Center for Economic Science (ICES) presents an ICES Brown Bag Lecture featuring:
Central South University
Principals’ Power, Decision Frames and Delegation: An Experiment
Abstract
Principals frequently delegate decisions regarding the treatment of third parties. An important open question is whether and why delegates accommodate principals’ selfishness when principals hold only imperfect power over them. We develop a theory and predict that if a principal holds any power, then delegates fully accommodate the principal’s selfish preferences. Delegates are predicted to pursue equality in outcomes only when principals have zero power. We test our hypotheses using a modified dictator game where principals delegate decisions over amounts to allocate to recipients. Consistent with our theory, we find delegates' allocation decisions do not significantly differ, and favor principals’ selfish preferences, whenever principals hold any power over delegates. Absent principals’ power, delegates’ decisions favor equity. Further, we find delegates’ decision frames mediate power’s effect on delegates’ allocations. Our results offer new insights on the design of delegation systems, and are of particular importance in ensuring independent delegate decision making.
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