TY  - JOUR
AU  - Landry,Craig E.
AU  - Lange,Andreas
AU  - List,John A.
AU  - Price,Michael K.
AU  - Rupp,Nicholas G.
TI  - Is There a 'Hidden Cost of Control' in Naturally-Occurring Markets? Evidence from a Natural Field Experiment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17472
PY  - 2011
Y2  - September 2011
UR  - http://www.nber.org/papers/w17472
L1  - http://www.nber.org/papers/w17472.pdf
N1  - Author contact info:
Craig Landry
East Carolina University
E-Mail: landryc@ecu.edu

Andreas Lange
University of Hamburg
Department of Economics
Von Melle Park 5
20146 Hamburg
Germany
Tel: +49-40-42838-4035
Fax: +49-40-42838-3243
E-Mail: andreas.lange@wiso.uni-hamburg.de

John List
Department of Economics
University of Chicago
1126 East 59th
Chicago, IL 60637
Tel: 301/405-1288
Fax: 301/314-9091
E-Mail: jlist@uchicago.edu

Michael Price
Department of Economics
Andrew Young School of Policy Studies
Georgia State University
P.O. Box 3992
Atlanta, GA 30302-3992
Fax: 404-413-0141
E-Mail: mprice25@gsu.edu

Nicholas G. Rupp
East Carolina University
E-Mail: ruppn@ecu.edu
AB  - Several recent laboratory experiments have shown that the use of explicit incentives—such as conditional rewards and punishment—entail considerable “hidden” costs.  The costs are hidden in the sense that they escape our attention if our reasoning is based on the assumption that people are exclusively self-interested.  This study represents a first attempt to explore whether, and to what extent, such considerations affect equilibrium outcomes in the field.  Using data gathered from nearly 3000 households, we find little support for the negative consequences of control in naturally-occurring labor markets.  In fact, even though we find evidence that workers are reciprocal, we find that worker effort is maximized when we use conditional—not unconditional—rewards to incent workers.
ER  -