First-place loving and last-place loathing: How rank in the distribution of performance affects effort provision

David Gill, Victoria Prowse, Zdenka Kissova and Jaesun Lee

No 783, Economics Series Working Papers from University of Oxford, Department of Economics

Abstract: Rank-order relative-performance evaluation, in which pay, promotion and symbolic awards depend on the rank of workers in the distribution of performance, is ubiquitous. Whenever firms use rank-order relative-performance evaluation, workers receive feedback about their rank. Using a real-effort experiment, we aim to discover whether workers respond to the specific rank that they achieve. In particular, we leverage random variation in the allocation of rank among subjects who exerted the same effort to obtain a causal estimate of the rank response function that describes how effort provision responds to the content of rank-order feedback. We find that the rank response function is U-shaped. Subjects exhibit 'first-place loving' and 'last-place loathing', that is subjects work hardest after being ranked first or last. We discuss implications of our findings for the optimal design of firms' performance feedback policies, workplace organizational structures and incentives schemes.

Keywords: Relative performance evaluation; Relative performance feedback; Rank order feedback; Dynamic effort provision; Real effort experiment; Flat wage; Fixed wage; Taste for rank; Status seeking; Social esteem; Self esteem; Public feedback; Private feedback. (search for similar items in EconPapers)
JEL-codes: C23 C91 J22 M12 (search for similar items in EconPapers)
Date: 2016-03-03
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: First-Place Loving and Last-Place Loathing: How Rank in the Distribution of Performance Affects Effort Provision (2019)
Working Paper: First-place loving and last-place loathing: How rank in the distribution of performance affects effort provision (2017)
Working Paper: First-Place Loving and Last-Place Loathing: How Rank in the Distribution of Performance Affects Effort Provision (2015)
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