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Observing your competitor – The role of effort information in two-stage tournaments

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  • Ludwig, Sandra
  • Lünser, Gabriele K.

Abstract

We consider two-stage tournaments with different information structures: Either competitors observe each others’ first-stage effort before entering the second stage or not. In laboratory experiments, we observe that subjects adjust their effort to the effort information (if available): While subjects who lead continue to exert the higher effort, they tend to lower their effort relative to the first stage, whereas those who lag increase it. Moreover, the larger the first-stage effort gap, the lower are second-stage efforts. These observations are consistent with our predictions for status-concerned subjects who care about their relative (interim) standing and the size of the effort gap.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 33 (2012)
Issue (Month): 1 ()
Pages: 166-182

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Handle: RePEc:eee:joepsy:v:33:y:2012:i:1:p:166-182

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

Related research

Keywords: Tournament design; Status; Feedback; Incentives; Experiment;

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References

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  1. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1985. "Tournaments and Piece Rates: An Experimental Study," Working Papers, C.V. Starr Center for Applied Economics, New York University 85-21, C.V. Starr Center for Applied Economics, New York University.
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  6. Jordi Blanes i Vidal & Mareike Nossol, 2011. "Tournaments Without Prizes: Evidence from Personnel Records," Management Science, INFORMS, INFORMS, vol. 57(10), pages 1721-1736, October.
  7. Alexandre Mas & Enrico Moretti, 2006. "Peers at Work," NBER Working Papers 12508, National Bureau of Economic Research, Inc.
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  9. Christian Grund & Dirk Sliwka, 2005. "Envy and Compassion in Tournaments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(1), pages 187-207, 03.
  10. Gerald Eisenkopf & Sabrina Teyssier, 2010. "Envy and Loss Aversion in Tournaments," TWI Research Paper Series 52, Thurgauer Wirtschaftsinstitut, Universität Konstanz.
  11. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(1), pages 39-58, January.
  12. David Gill & Rebecca Stone, 2006. "Fairness and Desert in Tournaments," Economics Series Working Papers 279, University of Oxford, Department of Economics.
  13. Schotter, Andrew & Weigelt, Keith, 1990. "Asymmetric Tournaments, Equal Opportunity Laws And Affirmative Action: Some Experimental Result," Working Papers, C.V. Starr Center for Applied Economics, New York University 90-14, C.V. Starr Center for Applied Economics, New York University.
  14. Aoyagi, Masaki, 2010. "Information feedback in a dynamic tournament," Games and Economic Behavior, Elsevier, vol. 70(2), pages 242-260, November.
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  16. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199549603, October.
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Cited by:
  1. Shakun D. Mago & Anya C. Savikhin & Roman M. Sheremeta, 2012. "Facing Your Opponents: Social identification and information feedback in contests," Working Papers 12-15, Chapman University, Economic Science Institute.
  2. Delfgaauw, Josse & Dur, Robert & Non, Arjan & Verbeke, Willem, 2013. "Dynamic Incentive Effects of Relative Performance Pay: A Field Experiment," IZA Discussion Papers 7652, Institute for the Study of Labor (IZA).
  3. Eisenkopf, Gerald & Teyssier, Sabrina, 2013. "Envy and loss aversion in tournaments," Journal of Economic Psychology, Elsevier, Elsevier, vol. 34(C), pages 240-255.

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