Preferences for Power
80 Pages Posted: 28 Aug 2017 Last revised: 20 Aug 2019
Date Written: August 20, 2019
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: Suggested Citation