Rent-Seeking Versus Productive Activities in a Multi-Task Experiment

TI Discussion Paper No. 06-083/1

37 Pages Posted: 14 Oct 2006

See all articles by Hessel Oosterbeek

Hessel Oosterbeek

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM); Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB); Tinbergen Institute

J. H. Sonnemans

University of Amsterdam - Faculty of Social and Behavioral Sciences; Tinbergen Institute

Date Written: September 2006

Abstract

Incentive instruments like asset ownership and performance pay often have to strike a balance between the productive incentives and the rent-seeking incentives they provide. Standard theory predicts that a given instrument becomes less attractive when the effectiveness of rent-seeking activities increases. More recent theories that emphasize the importance of reciprocity, however, suggest that this relationship may go the other way around. In this paper we test these predictions by means of a laboratory experiment. By and large our findings confirm standard theory. Incentive instruments typically become less attractive when the scope for rent-seeking activities increases. However, reciprocity motivations do seem to mitigate the adverse effects of rent-seeking opportunities to a considerable extent.

Keywords: multi-task experiment, rent-seeking, reciprocity

JEL Classification: C91, M52

Suggested Citation

Oosterbeek, Hessel and Sloof, Randolph and Sonnemans, J. H., Rent-Seeking Versus Productive Activities in a Multi-Task Experiment (September 2006). TI Discussion Paper No. 06-083/1, Available at SSRN: https://ssrn.com/abstract=937253 or http://dx.doi.org/10.2139/ssrn.937253

Hessel Oosterbeek (Contact Author)

University of Amsterdam - Research Institute in Economics & Econometrics (RESAM) ( email )

Roetersstraat 11
Amsterdam
Netherlands
+31 20 525 4242 (Phone)
+31 20 525 5283 (Fax)

HOME PAGE: http://www.fee.uva.nl/scholar/oosterbeek/

Tinbergen Institute Amsterdam (TIA)

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Randolph Sloof

University of Amsterdam - Faculty of Economics & Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands
+31 20 525 5241 (Phone)
+31 20 525 4310 (Fax)

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

J. H. Sonnemans

University of Amsterdam - Faculty of Social and Behavioral Sciences ( email )

Kloveniersburgwal 48
Amsterdam, 1012 CX
Netherlands
+31 20 525-4249 (Phone)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
64
Abstract Views
715
rank
374,952
PlumX Metrics