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Co-employment of permanently and temporarily employed agents
Authors:Vera Angelova  Werner Güth  Martin G Kocher
Institution:
  • a Max Planck Institute of Economics, Kahlaische Str. 10, D-07745 Jena, Germany
  • b University of Munich, Department of Economics, Geschwister-Scholl-Platz 1, D-80539 Munich, Germany
  • c University of Gothenburg, Department of Economics, Box 640, SE-40530 Gothenburg, Sweden
  • Abstract:One-shot interaction and repeated interaction often co-exist in the real world. We study possible behavioral effects of this co-existence in a principal-agent setting, in which a principal simultaneously employs a permanent and a temporary agent. Our experimental results indicate that there is “discrimination” between the two agents and that the available information for agents determines the extent of this discrimination, even though the theoretical solution of the game implies equal treatment of agents. Discrimination is, thus, a consequence of reciprocity. Agents that are discriminated against react negatively by withholding effort.
    Keywords:C72  C91  D21  J31
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