Rank-Order Tournaments as Optimum Labor Contracts

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SOEPpapers on Multidisciplinary Panel Data Research at DIW BerlinThis series presents research findings based either directly on data from the German SocioEconomic Panel study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science.The decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly.Any opinions expressed in this series are those of the author(s) and not those of DIW Berlin.Research disseminated by DIW Berlin may include views on public policy issues, but the institute itself takes no institutional policy positions. J21, J24, J81Keywords: Overtime work, internal flexibility Abstract:In Germany, overtime work is a well-established instrument for varying working hours of employees and is of great importance for establishments as a measure of internal flexibility.However, not all employees are affected to the same degree by a variation of the work effort through overtime work. Besides socio-demographic factors, workplace-specific factors that provide information about the position of employees in the establishment play an important role, too. So far, we do not know enough how these workplace-specific factors are associated with overtime work. This question is at the center of this study. In the analysis, women and part-time employees are taken into account, while previous studies mostly focused on full-time employees and/or male workers. On the basis of the data of the German Socio-Economic Panel (SOEP), the results show a significant negative correlation between women and paid overtime and between part-time employees and unpaid overtime. If the employees p...

Section: Tournament Theorymentioning

confidence: 99%

Individual and Workplace-Specific Determinants of Paid and Unpaid Overtime Work in Germany

Zapf

2015

“…where Y it is player i's performance on game day t. The treatment interaction term post it × euro i equals 1 if and only if player i's nation is qualified for the Euro 2008 at time t. 33 The coefficient of primary interest will be δ 0 . 34 The player fixed effects γ i pick up (timeinvariant) skill differences between players, and the game day fixed effects α t control for changes in playing conditions over time that affect all clubs.…”

Section: Basic Regression Analysismentioning

confidence: 99%

Career Prospects and Effort Incentives: Evidence from Professional Soccer

Miklós-Thal

Ullrich

2014

It is difficult to test the prediction that future career prospects create implicit effort incentives because researchers cannot randomly "assign" career prospects to economic agents. To overcome this challenge, we use data from professional soccer, where employees of the same club face different external career opportunities depending on their nationality. We test whether the career prospect of being selected to a Euro Cup national team affects players' pre-Cup performances, using nationals of countries that did not participate in the Euro Cup as a control group. We find that the Euro Cup career prospect has positive effects on the performances of players with intermediate chances of being selected to their national team, but negative effects on the performances of players whose selection is very probable. Our findings have implications for the incentive effects of within-firm promotions and of external career opportunities.

“…By tying compensation to the agent's relative performance, the principal can …lter out common noise so that compensation to the largest possible extent is based on real e¤ort, not random shocks that are outside the agent's control (see Holmström,1982;and Mookherjee, 1984). With RPE's special form, rank-order tournaments, the agents are also completely insulated from the risk of common negative shocks (see Lazear and Rosen, 1981;Nalebu¤ and Stiglitz, 1983;Green and Stokey, 1983). Moreover, tournaments need only rely on ordinal performance measures.…”

Section: Introductionmentioning

confidence: 99%

“…Moreover, tournaments need only rely on ordinal performance measures. It may thus be easier and less costly to measure relative than absolute performance (Lazear and Rosen, 1981). In addition, it may be easier for the principal to commit to tournament schemes if output is not veri…able, since the number of 'high bonuses'are smaller than under independent contracts (Carmichael, 1983;Malcomson, 1984;Levin 2002).…”

Section: Introductionmentioning

confidence: 99%

“…The papers …ll a gap: In the vast literature on "multiagent moral hazard"(which deals with optimal provision of incentives to several workers), it is (implicitly) assumed that residual control rights are exclusively in the hands of the …rm (in ‡uential papers include Rosen, 1981, andHolmström, 1982). And in the litera-ture dealing with optimal allocation of control rights, the multiagent moral hazard problem is not considered (starting with Grossman and Hart, 1986;and Hart and More, 1990 5 , who analyze static relationships, and more recently Halonen, 2002;and Baker, Gibbons and Murphy, 2002, who analyze repeated bilateral relationships).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Relative Performance Evaluation, Agent Hold-Up and Firm Organization

Kvaløy

Olsen

2007

We analyze a situation where common noise makes compensation based on relative performance evaluation (RPE) desirable, but where the agents' ability to hold-up values ex post obstruct the implementation of optimal RPE schemes. The principal can take actions to constrain the agents'hold-up power by limiting their outside options and by protecting property rights, but once these actions are costly, a trade-o¤ between incentive provision and agent control appears. The model contributes to the theory of the …rm. It indicates why …rms, not agents, own assets, and why peer-dependent incentive systems are more common within than between …rms.JEL Classi…cation: D23, J33, L14