Intention-Based Reciprocity and the Hidden Costs of Control

Empirical research suggests that - rather than improving incentives - exerting controlcan reduce workers' performance by eroding motivation. The present paper shows thatintention-based reciprocity can cause such motivational crowding-out if individuals differin their propensity for reciprocity and preferences are private information. Not beingcontrolled might then be considered to be kind, because not everybody reciprocates notbeing controlled with high effort. This argument stands in contrast to existing theoreticalwisdom on motivational crowding-out that is primarily based on signaling models.