Preferences for Power

80 Pages Posted: 28 Aug 2017 Last revised: 20 Aug 2019

See all articles by Elena Pikulina

Elena Pikulina

University of British Columbia (UBC) - Division of Finance

Chloe Tergiman

The Pennsylvania State University

Date Written: August 20, 2019

Abstract

Power—the ability to determine the outcomes of others—usually comes with various benefits: higher compensation, public recognition, etc. We develop a new game, the Power Game, to demonstrate that a substantial fraction of individuals enjoy the intrinsic value of power: they accept lower payoffs in exchange for power over others, without any benefits to themselves. These preferences exist independently of other components of decision rights,cannot be explained by social preferences and are not driven by mistakes, confusion or signaling intentions. We further show that valuation of power (i) is higher when individuals directly determine outcomes of others; (ii) depends on how much discretion one has over those outcomes; (iii) is tied to relationships between individuals; and (iv) is likely domain dependent. We establish that ignoring preferences for power may have large welfare implications and,consequently, should be included in the study of political systems and labor contracts.

Keywords: preferences for power, private benefits of control, social preferences, other-regarding preferences, laboratory experiment

JEL Classification: C91, D01, D03, M21

Suggested Citation

Pikulina, Elena and Tergiman, Chloe, Preferences for Power (August 20, 2019). Available at SSRN: https://ssrn.com/abstract=3025621 or http://dx.doi.org/10.2139/ssrn.3025621

Elena Pikulina (Contact Author)

University of British Columbia (UBC) - Division of Finance ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
6048223314 (Phone)

Chloe Tergiman

The Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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