Why genius leads to adversity: Experimental evidence on the reputational effects of task difficulty choices

Elena Katok, Enno Siemsen

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

We use a behavioral laboratory experiment to study how agents with reputation concerns select the difficulty of their tasks. Drawing upon existing theory, we subjected participants in our study to a context in which they had to convince a principal of their capability to reap financial benefits. Our results show that participants tended to increase the difficulty of their task to enhance their reputation. In addition, we provide evidence that performance rewards reduce a less capable agent's tendency to choose a more difficult task, whereas a highly capable agent's pattern of choices is unaffected by performance rewards. Although the productivity of agents in our experiment therefore decreased if they had to convince a principal of their capability, we show that these detrimental performance implications can to some degree be overcome for less capable agents through performance rewards or by ensuring that the principal can interpret the agent's choice.

Original languageEnglish (US)
Pages (from-to)1042-1054
Number of pages13
JournalManagement Science
Volume57
Issue number6
DOIs
StatePublished - Jun 1 2011

Keywords

  • Behavioral operations
  • Career concerns
  • Decentralization
  • Incentives in R&D

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