The Intrinsic Value of Decision Rights and Reciprocity

Abstract

This study examines how the intrinsic value of owning decision rights changes in a reciprocal and social image environment. In recent years, the allocation of decision rights in firms has become an important issue in organizational management. Previous experimental studies on principal-agent model demonstrates that reciprocal relationships can lead to decreased productivity, as agents tend to be averse to being controlled. However, the effects of reciprocity on principals’ owning decision rights have not yet been clarified. Thus, we conducted an experiment to test whether a reciprocal and social image environment affects intrinsic value regarding decision rights. Our findings indicate that those assigned to our reciprocal plus social image condition decreased their intrinsic value of owning decision rights.