nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒03‒04
five papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. What you don’t know... Can’t hurt you? A natural field experiment on relative performance feedback in higher education By Ghazala Azmat; Manuel Bagues; Antonio Cabrales; Nagore Iriberri
  2. Strategically delusional By Alice Solda; Changxia Ke; Lionel Page; William von Hippel
  3. A Field Experiment on Labor Market Speeddates for Unemployed Workers By van der Klaauw, Bas; Ziegler, Lennart
  4. Birds of a feather stick together: How overlapping group affiliations shape altruistic behavior By Bauer, Kevin
  5. The impact of stock options on risk-taking: Founder-CEOs and innovation By Hickfang, Michael; Holder, Ulrike

  1. By: Ghazala Azmat (Département d'économie); Manuel Bagues (Aalto University); Antonio Cabrales (University College of London); Nagore Iriberri (Universidad del País Vasco)
    Abstract: This paper studies the effect of providing feedback to college students on their position in the grade distribution by using a natural field experiment. This information was updated every six months during a three-year period. We find that greater grades transparency decreases educational performance, as measured by the number of exams passed and GPA. However self-reported satisfaction, as measured by surveys conducted after feedback is provided but before students take their exams, increases. We provide a theoretical framework to understand these results, focusing on the role of prior beliefs, and using out-of-trial surveys to test the model. In the absence of treatment, a majority of students underestimate their position in the grade distribution, suggesting that the updated information is “good news” for many students. Moreover, the negative effect on performance is driven by those students who underestimate their position in the absence of feedback. Students who overestimate initially their position, if anything, respond positively. The performance effects are short lived - by the time students graduate, they have similar accumulated GPA and graduation rates.
    Keywords: Relative performance feedback; Ranking; Natural field experiment; School performance
    Date: 2018
  2. By: Alice Solda; Changxia Ke; Lionel Page; William von Hippel
    Abstract: We aim to test the hypothesis that overconfidence arises as a strategy to influence others in social interactions. We design an experiment in which participants are incentivised either to form accurate beliefs about their performance at a test, or to convince a group of other participants that they performed well. We also vary participants’ ability to gather information about their performance. Our results provide, the different empirical links of von Hippel and Trivers’ (2011) theory of strategic overconfidence. First, we find that participants are more likely to overestimate their performance when they anticipate that they will try to persuade others. Second, when offered the possibility to gather information about their performance, they bias their information search in a manner conducive to receiving more positive feedback. Third, the increase in confidence generated by this motivated reasoning has a positive effect on their persuasiveness.
    Keywords: Overconfidence, motivated cognition, self-deception, persuasion, information sampling, experiment.
    JEL: C91 D03 D83
    Date: 2019–02–21
  3. By: van der Klaauw, Bas (Vrije Universiteit Amsterdam); Ziegler, Lennart
    Abstract: We conduct a field experiment to evaluate the effectiveness of labor market speeddates where unemployed workers meet temporary employment agencies. Our analysis shows that participation in such events increases immediate job finding by 6-7 percentage points. In the subsequent months, employment effects diminish again, suggesting that vacancies mediated through temporary employment agencies have no long-lasting effect on employment prospects. While the intervention is cost effective for the UI administration, higher labor earnings of treated job seekers do not fully compensate for the decline in benefit payments. Additional survey evidence shows that speeddate participation increases job search motivation and reduces reservation wages.
    Keywords: matching events, active labor market policies, randomized experiment, temporary work, job search behavior
    JEL: J64 J65 C21 C93
    Date: 2019–02
  4. By: Bauer, Kevin
    Abstract: In the current paper, I deploy a novel laboratory experiment to answer the following questions: Does people’s other-regarding behavior change with the number of group memberships they have in common with others? Can uncertainty about others’ group memberships weaken in-group favoritism and lead to more selfish behavior? There are two main findings. First, on average pro-social concerns increase monotonically with the number of joint group affiliations. On the individual level, however, I document a considerable heterogeneity. Second, in situations where participants have only in- complete information on others’ group affiliations, they do not behave more selfishly. It seems as if the awareness of one joint group affiliation in combination with ignorance about the nature of other group memberships is sufficient to elicit maximum other-regarding concerns. My results highlight the importance of carefully navigating workers perceptions on complex and overlapping group affiliations as a task of diversity management within organizations where a high degree of social diversity characterizes the workforce.
    Keywords: Social groups, Behavioral Heterogeneity, Moral Wiggle Room
    JEL: C91 C92 D03 D83
    Date: 2019–01–09
  5. By: Hickfang, Michael; Holder, Ulrike
    Abstract: This paper investigates whether and how founder-CEOs' risk incentives (VEGA) are related to firm innovation. We exploit a change in the accounting treatment of stock-based compensation under FAS 123R in 2005 to show a relationship between founders' risk-taking incentive and innovation. Using a sample of 226 firm-year observations between 2002 and 2008, we first show that stock options are incentives that encourage founder-CEOs to engage in risk-taking behaviour and that these were significantly reduced as a result of FAS 123R. Secondly, we find that innovation activities of the observed firms are significantly declining due to the reduction of the option compensation and the associated reduction in VEGA of founder-CEOs. Finally, our difference-in-differences approach provides strong evidence that there is a relationship between CEOs risk-taking and innovation output. Our results imply that even in founder-led firms it is important to incentivise founders' risk-taking behaviour in order that firms continue to innovate and remain competitive.
    JEL: G30 G32 G38 D80 O31
    Date: 2018

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