Strive to be First or Avoid Being Last: An Experiment on Relative Performance Incentives
Loukas Balafoutas (),
Florian Lindner (),
Dmitry Ryvkin () and
Matthias Sutter ()
No 9330, IZA Discussion Papers from Institute of Labor Economics (IZA)
We utilize a laboratory experiment to compare effort provision under optimal tournament contracts with different distributions of prizes which motivate agents to compete to be first, avoid being last, or both. We find that the combined tournament contract incorporating both incentives at the top and at the bottom induces the highest effort, especially in larger groups. Avoiding being last produces the lowest variance of effort and is more effective at motivating employees compared to competing for the top.
Keywords: experiment; contract; loser; winner; tournament; learning (search for similar items in EconPapers)
JEL-codes: C90 D24 J24 J33 M52 (search for similar items in EconPapers)
Pages: 39 pages
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-exp, nep-hrm and nep-lma
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Published - published in: Games and Economic Behavior, 2015, 94, 39-56.
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Journal Article: Strive to be first or avoid being last: An experiment on relative performance incentives (2015)
Working Paper: Strive to be first or avoid being last: An experiment on relative performance incentives (2013)
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