Essays on Social Preferences, Incentives, and Institutions

Abstract

This dissertation studies social preferences and institutions, and the incentives which arise from their interaction. A particular focus lies on situations involving incomplete contracts and moral hazard. Chapter 1 studies the intrapersonal relationship between trust and reciprocity. Chapter 2 deals with the role of gift-exchange in labor contracts and analyzes how the perceived fairness of a payment scheme depends on horizontal fairness concerns. Chapter 3 asks how the efficiency of online reputation systems is affected when sellers can shed a bad reputation by changing their virtual identity. Chapter 4 studies incentives provided through promotion competitions. More precisely, we compare behavior in multi-stage elimination tournaments and simple, one-stage promotion contests. All chapters share the same underlying questions. How do non-pecuniary motivations influence behavior and the performance of institutions? What are the consequences for the design of institutions? All chapters use laboratory experiments either because their respective research question requires a high degree of control or because important variables cannot be observed in field data. The results presented in this dissertation are relevant for questions regarding the nature of social preferences, but also for problems studied in personnel economics and market design.