Relative performance compensation, contests, and dynamic incentives

Casas‐Arce, Pablo

doi:10.1108/dlo.2010.08124bad.010

Cited by 18 publications

(25 citation statements)

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“…Organization often implement tournament-style compensation schemes where earnings and promotions depend on relative performance comparisions (Bognanno, 2001;Bothner, Kang and Stuart, 2007;Casas-Arce and Martínez-Jerez, 2009). Yet such schemes are prone to unethical behavior such as sabotage or performance-enhancing activities.…”

Section: Resultsmentioning

confidence: 99%

Is increasing inequality harmful? Experimental evidence

Fehr

2018

Games and Economic Behavior

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Section: Resultsmentioning

confidence: 99%

Is increasing inequality harmful? Experimental evidence

Fehr

2018

Games and Economic Behavior

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“…For example, economic logic suggests that lower skilled competitors may react less negatively to the presence of a superstar, because a superstar has less impact on the likely rank of these competitors (Brown, 2011). In contrast, high ability competitors on the edge of winning positions may even increase their effort, because they have the most to gain (Casas-Arce and Martıńez-Jerez, 2009). Psychological research also suggests that the strongest reactions may come from higher ability competitors, because high performance expectations for these competitors, both from others and from the competitors themselves, may create the greatest pressure to perform well (Baumeister and Showers, 1986).…”

Section: Introductionmentioning

confidence: 99%

Field Evidence on Individual Behavior & Performance in Rank-Order Tournaments

2012

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Economic analysis of rank-order tournaments has shown that intensi ied competition leads to declining performance. Empirical research demonstrates that individuals in tournament-type contests perform less well on average in the presence of larger number of competitors in total and superstars. Particularly in ield settings, studies often lack direct evidence about the underlying mechanisms, such as the amount of effort, that might account for these results. Here we exploit a novel dataset on algorithmic programming contests that contains data on individual effort, risk taking, and cognitive errors that may underlie tournament performance outcomes. We ind that competitors on average react negatively to an increase in the total number of competitors, and react more negatively to an increase in the number of superstars than non-superstars. We also ind that the most negative reactions come from a particular subgroup of competitors: those that are highly skilled, but whose abilities put them near to the top of the ability distribution. For these competitors, we ind no evidence that the decline in performance outcomes stems from reduced effort or increased risk taking. Instead, errors in logic lead to a decline in performance, which suggests a cognitive explanation for the negative response to increased competition. We also ind that a small group of competitors, who are at the very top of the ability distribution (non-superstars), react positively to increased competition from superstars. For them, we ind some evidence of increased effort and no increase in errors of logic, consistent with both economic and psychological explanations.

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“…Table 2 summarizes the mean choices of our subjects under all 9 price vectors in treatments: 1) Chat and 2) No Chat. 10 We analyze the Robot treatment in section 5. 4.…”

Section: Resultsmentioning

confidence: 99%

“…All subjects who work under the simplifying assumption that Other-regarding players' utility is a weighted sum of individual payo¤s and weights add up to one. 10 These vectors (a; b; c) represent the price a of giving to one's self, the price b of giving to player 1, and the price c of giving to player 2.…”

Section: Categorizing Social Preference Types From Giving Menusmentioning

confidence: 99%

Do people who care about others cooperate more? Experimental evidence from relative incentive pay

2017

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We experimentally study ways in which the social preferences of individuals and groups a¤ect performance when faced with relative incentives. We also identify the mediating role that communication and leadership play in generating these e¤ects. We …nd other-regarding workers tend to depress e¤orts by 15% on average. However, sel…sh workers are nearly three times more likely to lead workers to coordinate on minimal e¤orts when communication is possible. Hence, the other-regarding composition of a team of workers has complex consequences for organizational performance.

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Relative performance compensation, contests, and dynamic incentives

Cited by 18 publications

References 0 publications

Is increasing inequality harmful? Experimental evidence

Is increasing inequality harmful? Experimental evidence

Field Evidence on Individual Behavior & Performance in Rank-Order Tournaments

Do people who care about others cooperate more? Experimental evidence from relative incentive pay

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