Date Added: Dec 2010
Authority and power permeate political, social, and economic life but there is limited empirical knowledge about the motivational origins and consequences of authority. The authors experimentally study the motivation and incentive effects of authority in an authority-delegation game. Individuals exhibit a strong tendency to retain authority even when its delegation is in their material interest - suggesting that they value authority per se. Moreover, this tendency to hold on to authority strongly increases with individuals' degree of loss aversion, suggesting an endowment effect with regard to authority. Authority also leads to a substantial over provision of effort by the controlling party, while a large percentage of subordinates under provide effort despite pecuniary incentives to the contrary.