Costs of Control in Groups

This paper explores the role of social groups in explaining the reaction to control. We propose a simple model with a principal using control devices and a controlled agent, which incorporates the existence of social groups. Testing experimentally the conjectures derived from the model and related literature, we find that agents in social groups (i) perform more than other (no-group) agents; (ii) expect less control than no-group agents; (iii) decrease their performance substantially when actual control exceeds their expectation, while no-group agents do not react; (iv) do not reciprocate when facing less control than expected, while no-group agents do.