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- Trust and trustworthiness in organizations: the role of monitoring and moral suasionPublication . Danese, Giuseppe; Mittone, LuigiWe ask whether the corporate law provisions establishing that the conduct of the manager is subject to review by the investors (monitoring) and that managers are held to an honorable behavior (moral suasion) can increase trust and trustworthiness in organizations. We answer this question through a laboratory experiment. We find that moral suasion increases the investors' trust. Monitoring also increases trust but only when the manager is not aware of the experimental identity of the monitor. The manager returns more to those investors who trust more but appropriates around 50% of the available resources. The trustworthiness of the manager is, however, unaffected by monitoring or moral suasion. We discuss possible causes of the difference between the investors' expectations regarding the behavior of the manager and the observed behavior of the manager.
- A social contract approach to sustainabilityPublication . Danese, GiuseppeThis paper asks whether it is possible to derive a concern for future generations (“sustainability”) from an account of the firm as a social contract (SC) among its stakeholders. Two aspects of a leading SC model of the firm limit its usefulness for an analysis of sustainability. First, the stakeholders provide investments to the firm over time. Second, the relationship between contemporaries and future generations is marked by asymmetries of power and knowledge that need to be considered while reconstructing the SC today. I discuss three reformulations of the SC that are all, in principle, capable of introducing within the SC a concern for future generations. The first describes the contractors as heads of families. The second envisages a grand meeting of stakeholders of all generations. The third, which I find most defensible, views the SC as an ahistorical agreement reached behind a thick veil of ignorance. This agreement is based on John Rawls’s norm of reciprocity, whereby the stakeholders adopt today the decision they wish all previous (and future) generations had made regarding the rate of consumption of natural resources and emission of pollutants.
- Testosterone and cortisol jointly predict the ambiguity premium in an Ellsberg-urns experimentPublication . Danese, Giuseppe; Fernandes, Eugénia; Watson, Neil V.; Zilioli, SamuelePrevious literature has tried to establish whether and how steroid hormones are related to economic risk-taking. In this study, we investigate the relationship between testosterone (T) and cortisol (C) on one side and attitudes toward risk and ambiguity on the other. We asked 78 male undergraduate students to complete several tasks and provide two saliva samples. In the task "Reveal the Bag," participants expressed their beliefs on an ambiguous situation in an incentivized framework. In the task "Ellsberg Bags," we elicited from the participants through an incentive-compatible mechanism the reservation prices for a risky bet and an ambiguous bet. We used the difference between the two prices to calculate each participant's ambiguity premium. We found that participants' salivary T and C levels jointly predicted the ambiguity premium. Participants featuring comparatively lower levels of T and C showed the highest levels of ambiguity aversion. The beliefs expressed by a subset of participants in the "Reveal the Bag" task rationalize (in a revealed preference sense) their choices in the "Ellsberg Bags" task.