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Agency, Benevolence and Justice

Author

Listed:
  • Prithvijit Mukherjee

    (Mount Holyoke College)

  • J. Dustin Tracy

    (Economic Science Institute, Chapman University)

Abstract
We test for social norms regarding how Agents should select between risky prospects for Principals, including norms consistent with observations by Adam Smith. We elicit norms from subjects serving as ``impartial spectator[s]" about the choice of risky prospects selected by the Agents. We find strong evidence for the existence of norms, consistent with Smith's observations. Furthermore, we find that Agents are more likely to select more normative options. In contrast, we find that Principals' allocation for bonuses depends on the realization of the risky prospect rather than whether the Agents' choice was consistent with the norm.

Suggested Citation

  • Prithvijit Mukherjee & J. Dustin Tracy, 2022. "Agency, Benevolence and Justice," Working Papers 22-03, Chapman University, Economic Science Institute.
    • Handle: RePEc:chu:wpaper:22-03
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    File URL: https://digitalcommons.chapman.edu/esi_working_papers/362/
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    More about this item

    Keywords

    Social norms; Decisions-making for others; Laboratory experiments; Principal-Agent; Decisionmaking under risk;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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