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Illusion of control and the pursuit of authority

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Abstract

We measure participants’ willingness to pay for transparently useless authority—the right to make a completely uninformed task decision. We further elicit participants’ beliefs about receiving their preferred outcome if they make the decision themselves, and if another participant makes the decision for them. We find that participants pay more to make the decision themselves if they also believe that they can thus increase the probability of getting their preferred outcome. Illusion of control therefore exists in a controlled laboratory environment with monetary incentives and is connected to peoples’ pursuit of authority.

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Notes

  1. Numerous articles study the allocation of decision rights in organizations. For very useful surveys of the economics literature, see Bolton and Dewatripont (2013), and Gibbons et al. (2013).

  2. See, for example, Langer (1975), Thompson (1999), Fast et al. (2009), and Fenton-O’Creevy et al. (2003).

  3. Since we do not exogenously vary illusion of control, we cannot identify a causal link between illusion of control and the pursuit of authority. This holds because our measure of illusion of control can of course be correlated with some unobservable characteristic, which in turn affects the decision to seek authority.

  4. We studied the same research questions with two previous experiments based on slightly different designs. The main differences to the current design were the labeling of task choices, what beliefs were measured, and whether and how belief elicitation was incentivized. Other changes included location (now Frankfurt, before Amsterdam), stake size, and the set of personal traits considered in the ex-post questionnaire. All versions of the design led to the same conclusions.

  5. This corresponds to 78.42 eurocents. The small amounts involved in our experiment may suggest that preferences for authority and illusion of control are negligible in practice. We discuss this important argument in our conclusion.

  6. Owens et al. (2014) estimate an authority premium of 8–15 % of average earnings. Based on the subjects with fully rational beliefs, we find an authority premium of 8 % of average earnings if only the activity in the third part was payoff relevant. Our findings are thus consistent with Owens et al. (2014) but seem to suggest that the authority premium is closer to the lower bound they infer.

  7. The results are almost the same when excluding the three outliers apparent in Fig. 3. These are the observations with Belief-Own-Minus-Belief-Other of −55, 75, and 100. The only difference to the above results is that the positive Spearman rank and Pearson correlations between Willingness-To-Pay and Belief-Other are now statistically significant (p-values of 0.09 and 0.03). Regression analysis reported later shows that the link between Belief-Other and Willingness-To-Pay becomes negative and statistically significant once controlling for Belief-Own.

  8. More intelligent people gain more from getting their preferred activity. They could therefore—wrongly—assign authority higher instrumental value. This might explain why the link between reported beliefs and willingness to pay is stronger for subjects with higher mathematical ability.

  9. Results are essentially the same for two-sided Tobit regressions. The only difference is that in the Tobit regression corresponding to the simple linear regression reported in column (3) the negative coefficient on Belief-Other is no longer statistically significant. Results are also essentially same when we drop three outliers as seen in Fig. 3. The only difference is that in the regression corresponding to the regression reported in column (6) the coefficient on Entrepreneurship Intentions is then no longer statistically significant.

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Acknowledgments

We are very grateful to Thomas Buser, Holger Herz, Joep Sonnemans, Jeroen van de Ven, and Joël van der Weele for very helpful comments. We thank David Cooper, Charles Noussair, and two anonymous referees for their very valuable suggestions that greatly improved our experimental design and the paper in general.

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Authors and Affiliations

  1. University of Amsterdam, Roetersstraat 11, 1018 WB, Amsterdam, The Netherlands

    Randolph Sloof

  2. Tinbergen Institute, Gustav Mahlerplein 117, 1082 MS, Amsterdam, The Netherlands

    Randolph Sloof

  3. Goethe University Frankfurt, Grueneburgplatz 1, 60323, Frankfurt, Germany

    Ferdinand A. von Siemens

  4. CESifo, Poschingerstrasse 5, 81679, Munich, Germany

    Ferdinand A. von Siemens

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  1. Randolph Sloof
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Correspondence to Ferdinand A. von Siemens.

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Sloof, R., von Siemens, F.A. Illusion of control and the pursuit of authority. Exp Econ 20, 556–573 (2017). https://doi.org/10.1007/s10683-016-9499-7

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  • DOI: https://doi.org/10.1007/s10683-016-9499-7

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