Hiring Intrinsically Motivated Agents: A Principal's Dilemma

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.