Measuring the welfare and spillover effects of rank information

Wenbo Zou and Wenzheng Gao

Journal of Economic Behavior & Organization, 2023, vol. 216, issue C, 187-220

Abstract: Rank information is often provided to improve task performance; however, its welfare and spillover effects have rarely been measured. To fill this gap, we conduct a controlled laboratory experiment in which participants complete a simple cognitive task and report their willingness-to-pay (WTP) to receive or avoid rank information provided in different manners and then make choices in subsequent games. We find that providing rank information with a full public announcement improves performance; however, the unconditional WTP results suggest that doing so brings a negative shift in the overall welfare of the participants in comparison to a partial or no announcement. Based on conditional WTP data, we find that participants' social comparison utilities are on average positive; it is the case even conditional on low rankings. In contrast, the public recognition utilities can be negative, while their negativity is reduced by adopting a partial announcement scheme, in which only the rankings of those among the top third are announced. Estimates from a structural estimation indicate that the partial public announcement scheme together with financial incentives is the most socially efficient intervention combination. Finally, no spillover effects are found in subsequent games.

Keywords: Rank information; Task performance; Welfare evaluation; Spillover effect; Public recognition; Social comparison (search for similar items in EconPapers)
JEL-codes: C91 D61 D91 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:216:y:2023:i:c:p:187-220

DOI: 10.1016/j.jebo.2023.09.030

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