Research

Fear of Failure: Career Concerns and Policy Experimentation in the Lab

Abstract

When political agents worry about losing their jobs, they may prioritize job protection over job performance. Experimenting with new, possibly beneficial, policy choices can be squelched because keeping the status quo is proof against firing. Or it can be pursued despite knowing the policy will fail, as low quality agents mimic high quality ones in the hopes that managers will not discern the difference. We conduct a test of policy-making with career concerns, evaluating the predictions of a formal model in a laboratory setting. Our results indicate that, while subjects do perform as the theory suggests and respond to information about the correct policy choice, career concerns distort these choices in less expected ways. Subjects appear to be motivated by avoiding policy failure, even when their strategic incentive would indicate ignoring it. These findings suggest that perverse incentives in principal-agent relationships may not be as severe as theory suggests.

Author: Ian Palmer Cook, University of Pittsburgh; Ian R. Turner, Washington University in St. Louis; Jonathan Woon, University of Pittsburgh

Working Papers   :   July 31, 2014 4:32 PM  :  read more »


About the Author

Ian P. Cook is a Ph.D. student at the University of Pittsburgh, studying American Politics. He has also been a researcher with the RAND Corporation. No material on this site implies endorsement by either institution.