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Rent-seeking versus productive activities in a multi-task experiment

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Author Info

  • Oosterbeek, Hessel
  • Sloof, Randolph
  • Sonnemans, Joep

Abstract

Incentive instruments like asset ownership and performance pay often have to strike a balance between the productive incentives and the rent-seeking incentives they provide. Standard theory predicts that these instruments become less attractive when the effectiveness of rent-seeking activities increases. In contrast, theories that emphasize the importance of reciprocity suggest that this relationship may go the other way around. In this paper we test these predictions by means of a laboratory experiment. By and large our findings confirm standard theory. Incentive instruments typically become less attractive when the scope for rent-seeking activities increases. However, reciprocity motivations do seem to mitigate the adverse effects of rent-seeking opportunities to a considerable extent.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 55 (2011)
Issue (Month): 5 (June)
Pages: 630-643

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Handle: RePEc:eee:eecrev:v:55:y:2011:i:5:p:630-643

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Web page: http://www.elsevier.com/locate/eer

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Keywords: Multi-task experiment Rent-seeking Reciprocity;

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References

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Cited by:
  1. Sloof, Randolph & van Praag, C. Mirjam, 2010. "The effect of noise in a performance measure on work motivation: A real effort laboratory experiment," Labour Economics, Elsevier, vol. 17(5), pages 751-765, October.

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