Hiring Intrinsically Motivated Agents: A Principal's Dilemma

TL;DR

This study introduces an experimental framework to analyze how employers balance ability and prosocial behavior when ranking workers, revealing a preference for ability but also highlighting the influence of managers' own prosocial tendencies.

Contribution

It presents a novel experimental setup to examine trade-offs between ability and prosocial behavior in hiring decisions, with insights into field-specific preferences and homophily effects.

Findings

Managers prefer ability over prosocial behavior on average.

STEM managers prioritize ability more than others.

Highly prosocial managers value prosocial behavior more, sometimes over ability.

Abstract

Employers are concerned not only with a prospective worker's ability, but also their propensity to avoid shirking. This paper proposes a new experimental framework to study how Principals trade-off measures of ability and prosocial behavior when ranking Agents for independent jobs. Subjects participate in a simulated, incentivized job market. In an initial session, subjects are Workers and generate a database of signals and job results. Managers in subsequent sessions observe the signals of Worker behavior and ability and job details before a rank-and-value task, ranking and reporting a value for each Worker for two distinct jobs. Results highlight Managers' preference for ability over prosocial behavior on average, especially for Managers in STEM fields. There is evidence of homophily: the relative value of prosocial behavior is higher for highly prosocial Managers, compensating for ability or even surpassing it in value.