Committing to Incentives: Should the Decision to Sanctionbe Revealed or Hidden?

Sanctions are widely used to promote compliance in principal-agent-relationships.While there is ample evidence confirming the predicted positive incentive effect of sanctions,it has also been shown that imposing sanctions may in fact reduce complianceby crowding-out intrinsic motivation. We add to the literature on the hidden costs ofcontrol by showing that these costs are restricted to situations where principals ex antereveal their decision to sanction low compliance.[...]