Identity, incentives and the value of information

We examine the impact of identity preferences on the interrelation between incentives and performance measurement. In our model, a manager identifies with an organization and loses utility to the extent that his actions conflict with effort-standards issued by the principal. Contrary to prior arguments in the literature, we find conditions under which a manager who identifies strongly with the organization receives stronger incentives and faces more performance evaluation reports than a manager who does not identify with the organization. Our theory predicts that managers who experience events that boost their identification with the firm can decrease their effort in short-term value creation. We also find that firms are more likely to employ less precise but more congruent performance measures, such as stock prices, when contracting with managers who identify little with the organization. In contrast, they use more precise but less congruent measures, such as accounting earnings, when contracting with managers who identify strongly with the firm.

An Unscathed Past in the Face of Death: Mortality Salience Reduces Individuals’ Regrets

Folk wisdom and popular literature hold that, in the face of death, individuals tend to regret things in their lives that they have done or failed to do. Terror Management Theory (TMT), in contrast, allows for the prediction that individuals who are confronted with death try to minimize the experience of regret in order to retain a positive self-esteem. Three experiments put these competing perspectives to test. Drawing on TMT, we hypothesized and found that participants primed with their own death regret fewer things than control-group participants. This pattern of results cannot be attributed to differing types of regrets (Study 1). Furthermore, we provide evidence suggesting that the effect is not purely a product of cognitive mechanisms such as differing levels of construal (Study 2), cognitive contrast, or deficits (Study 3). Rather, the reported results are best explained in terms of a motivational coping mechanism: When death is salient, individuals strive to bolster as well as protect their self-esteem and accordingly try to minimize the experience of regret. The results add to our conceptual understanding of regret and TMT, and suggest that a multitude of lifestyle guidebooks need updating.

Principal-Agent Theory and the World Trade Organization: Complex Agency and ‘Missing Delegation’

This paper analyses the World Trade Organization within a principal-agent framework. The concept of complex agency is introduced to focus on the variety of actors that comprise an international organization. Special attention is paid to the relationship between contracting parties’ representatives and the Secretariat. In the empirical part, the paper analyses the role of the Secretariat in assisting negotiations and presents evidence of declining influence. It is shown how principal-agent theory can contribute to addressing this ‘puzzle of missing delegation’. The paper concludes with a cautionary note as to the ‘location’ of international organizations’ emerging pathologies and calls for additional research to address the relationship between material and social sources to explain behaviour of the key actors within the complex agency.