A General Test of Gaming

Pascal Courty and Gerald Marschke

No ECO2004/33, Economics Working Papers from European University Institute

Abstract: An important lesson from the incentive literature is that explicit incentives may elicit dysfunctional and unintended responses, also known as gaming responses. The existence of these responses, however, is difficult to demonstrate in practice because this behavior is typically hidden from the researcher. We present a simple model showing that one can identify gaming by estimating the correlation between a performance measure and the true goal of the organization before and after the measure has been activated. Our hypothesis is that gaming takes place if this correlation decreases with activation. Using data from a public sector organization, we find evidence consistent with our hypothesis. We draw implications for the selection of performance measures.

Keywords: Performance Incentive; Performance Measurement; Gaming; Multitasking; Government Organization (search for similar items in EconPapers)
JEL-codes: H72 J33 L14 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-pbe
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Working Paper: A General Test of Gaming (2004)
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