Strive to be first or avoid being last: An experiment on relative performance incentives

Dutcher, E. Glenn; Balafoutas, Loukas; Lindner, Florian; Ryvkin, Dmitry; Sutter, Matthias

doi:10.1016/j.geb.2015.08.008

Cited by 41 publications

(19 citation statements)

References 50 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…An increase (respectively, decrease) in group output in response to losing (respectively, winning) the contest in the previous round would be consistent with the basic directional and reinforcement learning dynamics in contest experiments (e.g., Dutcher et al, 2015). However, we observe that group output is not affected by the contest outcome in the previous round as the coefficient estimate on Win lag is not statistically significant.…”

Section: Dynamics At the Group Levelsupporting

confidence: 80%

Sorting and communication in weak-link group contests

Brookins

Lightle

Ryvkin

2018

Journal of Economic Behavior & Organization

Self Cite

View full text Add to dashboard Cite

Section: Dynamics At the Group Levelsupporting

confidence: 80%

Sorting and communication in weak-link group contests

Brookins

Lightle

Ryvkin

2018

Journal of Economic Behavior & Organization

Self Cite

View full text Add to dashboard Cite

“…Figure 1 shows β r and λ r as functions of r for the normal distribution of noise with n = 20. Dutcher et al (2015) referred to them, respectively, as "winner" and "loser" tournaments. Kräkel (2000) referred to the prize structures with j = 1 and j = n − 1 as "bonus" and "penalty" schemes, respectively.…”

Section: Figurementioning

confidence: 99%

“…Kräkel (2000) referred to the prize structures with j = 1 and j = n − 1 as "bonus" and "penalty" schemes, respectively. Dutcher et al (2015) referred to them, respectively, as "winner" and "loser" tournaments. the predicted symmetry.…”

Section: Figurementioning

confidence: 99%

The Optimal Allocation of Prizes in Tournaments of Heterogeneous Agents

et al. 2016

Self Cite

View full text Add to dashboard Cite

Tournaments are widely used in organizations, explicitly or implicitly, to reward the best-performing employees, for example, by promotion or bonuses, and/or to penalize the worst-performing employees, for example, by demotion, withholding bonuses, or unfavorable job assignments. These incentive schemes can be interpreted as various prize allocations based on the employees' relative performance. While the optimal prize allocation in tournaments of symmetric agents is relatively well understood, little is known about the impact of the allocation of prizes on the effectiveness of tournament incentive schemes for heterogeneous agents. We show that while multiple prize allocation rules are equivalent when agents are symmetric in their ability, the equivalence is broken in the presence of heterogeneity. Under a wide range of conditions, loser-prize tournaments, that is, tournaments that award a low prize to relatively few bottom performers, are optimal for the firm. The reason is that low-ability agents are discouraged less in such tournaments, as compared to winner-prize tournaments awarding a high prize to few top performers, and hence can be compensated less to meet their participation constraints. (JEL M52, J33, J24)

show abstract

“…In addition to analyzing the effects of simple v. detailed RPI, the current study investigates an important but often ignored factor that may moderate the behavioral consequences of RPI: group composition in terms of team members' task abilities. Group composition is important in this context because it may influence whether rank information is motivating or frustrating (Berger et al 2013b;Dutcher et al 2015;Gill et al 2019). As will be discussed in more detail in the hypotheses section, I expect that in homogeneous groups, RPI is motivating as it facilitates social comparison.…”

Section: Introductionmentioning

confidence: 99%

Volume or value? How relative performance information affects task strategy and performance

Schreck

2020

J Bus Econ

View full text Add to dashboard Cite

Employees face volume-value trade-offs when they perform tasks with multiple characteristics, leaving them with a choice between different strategies towards the goal of maximizing the total value of their output. Either they produce many, less valuable units of output (volume strategy); or fewer, more valuable units (value strategy). In such a situation, the provision of relative performance information (RPI) may be useful for both, motivating employees to exert high levels of effort, and helping them to find the optimal strategy relative to their individual abilities. The study investigates how useful two common forms of RPI-simple and detailed-are in improving the performance of employees who face volume-value trade-offs. In particular, it analyzes how group composition in terms of the group members' relative abilities moderates the behavioral consequences of RPI. Results of a laboratory experiment suggest that the behavioral effects of RPI depend on group composition, indeed: While in homogeneous groups, performance is highest under simple RPI, in heterogeneous groups, performance is highest under detailed RPI.

show abstract

Strive to be first or avoid being last: An experiment on relative performance incentives

Cited by 41 publications

References 50 publications

Sorting and communication in weak-link group contests

Sorting and communication in weak-link group contests

The Optimal Allocation of Prizes in Tournaments of Heterogeneous Agents

Volume or value? How relative performance information affects task strategy and performance

Contact Info

Product

Resources

About