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Does a short-term increase in incentives boost performance?

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  • Angelova, Vera
  • Giebe, Thomas
  • Ivanova-Stenzel, Radosveta

Abstract

If agents are exposed to continual competitive pressure, how does a short-term variation of the severity of the competition affect agents’ performance? In a real-effort laboratory experiment, we study a one-time increase in incentives in a sequence of equally incentivized contests. Our results suggest that a short-term increase in incentives induces a behavioral response but does not boost total performance.

Suggested Citation

  • Angelova, Vera & Giebe, Thomas & Ivanova-Stenzel, Radosveta, 2018. "Does a short-term increase in incentives boost performance?," Economics Letters, Elsevier, vol. 166(C), pages 31-34.
    • Handle: RePEc:eee:ecolet:v:166:y:2018:i:c:p:31-34
    DOI: 10.1016/j.econlet.2018.02.004
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    1. Lackner, Mario & Stracke, Rudi & Sunde, Uwe & Winter-Ebmer, Rudolf, 2015. "Are Competitors Forward Looking in Strategic Interactions? Evidence from the Field," Economics Series 319, Institute for Advanced Studies.
    2. David Gill & Victoria Prowse, 2012. "A Structural Analysis of Disappointment Aversion in a Real Effort Competition," American Economic Review, American Economic Association, vol. 102(1), pages 469-503, February.
    3. Emmanuel Dechenaux & Dan Kovenock & Roman Sheremeta, 2015. "A survey of experimental research on contests, all-pay auctions and tournaments," Experimental Economics, Springer;Economic Science Association, vol. 18(4), pages 609-669, December.
    4. Andrew McGee & Peter McGee, 2019. "After The Tournament: Outcomes And Effort Provision," Economic Inquiry, Western Economic Association International, vol. 57(4), pages 2125-2146, October.
    5. repec:wly:soecon:v:82:3:y:2016:p:673-696 is not listed on IDEAS
    6. Götte, Lorenz & Huffman, David B., 2006. "Incentives and the Allocation of Effort Over Time: The Joint Role of Affective and Cognitive Decision Making," IZA Discussion Papers 2400, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Angelova, Vera & Giebe, Thomas & Ivanova-Stenzel, Radosveta, 2022. "Competition and fatigue," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 236-249.

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    More about this item

    Keywords

    Contest; Tournament; Real-effort; Experiment; Contract theory; Forward-looking;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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