Incentives in Tournaments with Endogenous Prize Selection
Christine Harbring () and
Bernd Irlenbusch ()
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Christine Harbring: RWTH Aachen University
Bernd Irlenbusch: University of Cologne
No 1340, IZA Discussion Papers from Institute for the Study of Labor (IZA)
Tournament incentive schemes offer payments dependent on relative performance and thereby are intended to motivate agents to exert productive effort. Unfortunately, however, an agent may also be tempted to destroy the production of his competitors in order to improve the own relative position. In the present study we investigate whether this sabotage problem is mitigated in a repeated interaction between the agents and the principal. As sabotage can hardly be observed in real-world organizations we employ a controlled experiment. Our data provide clear evidence that agents’ behavior is not only guided by competition between agents but also by the possibility to punish the principal via sabotage.
Keywords: relative performance evaluation; reciprocity; personnel economics; sabotage; experiments (search for similar items in EconPapers)
JEL-codes: D23 J33 J41 L23 C72 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp
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Published in: Journal of Institutional and Theoretical Economics, 2005, 161 (4), 636-663
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