The Value of Honest Information

Abstract: I will present the design of a lab-experiment we are currently developing. The project is based on the observation that people care about maintaining a positive self-image. We investigate whether workers’ self-image concerns affect their supervisor’s subjective performance evaluation. We create a principal-agent setting where a principal is rewarded for agent’s performance in a real effort task. The principal evaluates the performance of the agent, e.g. on a five-point scale, after which the agent works again for the same principal. We manipulate the extent to which the task is ego relevant (i.e. important for the agent’s self-image) by informing participants that task performance is positively related to intelligence. We hypothesize that enhanced ego relevance makes the principal’s evaluation more lenient, as he may fear that a lower-than-expected evaluation triggers a negatively reciprocal reaction from the worker because his ego is threatened. We also investigate whether evaluations become more truthful when accurate information on ability is valuable for the agent. We expect that the agent will be more receptive to negative feedback when honest feedback is valuable. Intuitively, a low assessment still poses an ego threat, but it also shows that the supervisor cares about the worker’s material well-being, so that negative reactions to lower-than- expected evaluations are less likely.

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