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Third-Party vs. Second-Party Control: Disentangling the Role of Autonomy and Reciprocity

Author

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  • Burdin, Gabriel

    (Leeds University Business School)

  • Halliday, Simon

    (Smith College)

  • Landini, Fabio

    (University of Parma)

Abstract

This paper studies the role of autonomy and reciprocity in explaining control averse responses in principal-agents interactions. While most of the social psychology literature emphasizes the role of autonomy, recent economic research has provided an alternative explanation based on reciprocity. We propose a simple model and an experiment to test the relative strength of these two motives. We compare two treatments: one in which control is exerted directly by the principal (second-party control); and the other in which it is exerted by a third party enjoying no residual claimancy rights (third-party control). If control aversion is driven mainly by autonomy, then it should persist in the third-party treatment. Our results, however, suggest that this is not the case. Moreover, when a third party instead of the principal exerts control, control results in a greater expected profit for the principal. The implications of these results for organizational design are discussed.

Suggested Citation

  • Burdin, Gabriel & Halliday, Simon & Landini, Fabio, 2015. "Third-Party vs. Second-Party Control: Disentangling the Role of Autonomy and Reciprocity," IZA Discussion Papers 9251, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9251
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    Cited by:

    1. João V. Ferreira & Nobuyuki Hanaki & Benoît Tarroux, 2017. "On the Roots of the Intrinsic Value of Decision Rights: Evidence from France and Japan," Economics Working Paper Archive (University of Rennes & University of Caen) 2017-11, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    2. Ferreira, João V. & Hanaki, Nobuyuki & Tarroux, Benoît, 2020. "On the roots of the intrinsic value of decision rights: Experimental evidence," Games and Economic Behavior, Elsevier, vol. 119(C), pages 110-122.
    3. Kosfeld, Michael, 2019. "The Role of Leaders in Inducing and Maintaining Cooperation: The CC Strategy," IZA Discussion Papers 12540, Institute of Labor Economics (IZA).
    4. Strobel, Christina, 2022. "The Hidden Costs of Automation," VfS Annual Conference 2022 (Basel): Big Data in Economics 264129, Verein für Socialpolitik / German Economic Association.
    5. Feldhaus, Christoph & Lingens, Jörg & Löschel, Andreas & Zunker, Gerald, 2024. "The intrinsic value of decision rights: Field evidence from electricity contract choice automation," Resource and Energy Economics, Elsevier, vol. 78(C).

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    More about this item

    Keywords

    social preferences; principal-agent game; autonomy; control aversion; second party; third party; trust; reciprocity;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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