Supervisor’s Reward Power Mitigates Lying in Teammates’ Self-Reports
24 Pages Posted: 25 Jul 2014 Last revised: 12 Feb 2015
Date Written: February 10, 2015
We experimentally investigate the effects of a supervisor’s reward power on teammates’ self-reported effort information and on team performance. When reporting, teammates exaggerate their own efforts, i.e., they lie. However, they do so less if the supervisor has the power to allocate individual payments at her own discretion than when the supervisor is forced to distribute rewards according to an exogenous allocation rule. The exaggerations in self-reports have detrimental effects on team performance; these effects, however, are less pronounced if the supervisor has reward power. The supervisor’s ability to allocate incentive-compatible rewards does not depend on whether she can monitor subordinates’ true efforts or whether she receives self-reports.
Keywords: self-report; effort information; performance payment; lying; team performance; reward power; social dilemmas; experiment
JEL Classification: M5, C91, D23
Suggested Citation: Suggested Citation