2013/03/04 by Eva I. Hoppe, Patrick W. Schmitz · 1 citation
Social Sciences · Decision Sciences · Economics, Econometrics and Finance · Psychology · #Experimental Behavioral Economics Studies #Auction Theory and Applications #Law, Economics, and Judicial Systems #Ultimatum game #Affect (linguistics) #Principal–agent problem #Social preferences #Private information retrieval #Microeconomics #Economics #Agency (philosophy) #Cornerstone #Contract theory #Principal (computer security) #Experimental economics #Control (management) #Complete information #Social comparison theory #Social psychology #Psychology #Computer science
paper · doi:10.1093/restud/rdt010
openalex publication_date 2013/03/04 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
Principal--agent models in which the agent has access to private information before a contract is signed are a cornerstone of contract theory. We have conducted an experiment with 720 participants to explore whether the theoretical insights are reflected by the behaviour of subjects in the laboratory and to what extent deviations from standard theory can be explained by social preferences. Investigating settings with both exogenous and endogenous information structures, we find that agency theory is indeed useful to qualitatively predict how variations in the degree of uncertainty affect subjects' behaviour. Regarding the quantitative deviations from standard predictions, our analysis based on several control treatments and quantal response estimations shows that agents' behaviour can be explained by social preferences that are less pronounced than in conventional ultimatum games. Principals' own social preferences are not an important determinant of their behaviour. However, when the principals make contract offers, they anticipate that social preferences affect agents' behaviour. Copyright 2013, Oxford University Press.