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Workaholics and Dropouts in Organizations

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  • Wieland Müller
  • Andrew Schotter

Abstract

This paper reports the results of experiments designed to test the theory of the optimal composition of prizes in contests. In the aggregate the behavior of subjects is consistent with that predicted by the theory, but we find that such aggregate results mask an unexpected compositional effect on the individual level. Whereas theory predicts that subject efforts are continuous and increasing functions of ability, the actual efforts of our laboratory subjects bifurcate. Low-ability workers drop out and exert little or no effort, and high-ability workers try too hard. This bifurcation, which is masked by aggregation, can be explained by assuming loss aversion on the part of the subjects. (JEL: C92, D44, D72, D82, J31) (c) 2010 by the European Economic Association.

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Bibliographic Info

Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 8 (2010)
Issue (Month): 4 (06)
Pages: 717-743

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Handle: RePEc:tpr:jeurec:v:8:y:2010:i:4:p:717-743

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Cited by:
  1. Shupp, Robert & Sheremeta, Roman M. & Schmidt, David & Walker, James, 2013. "Resource allocation contests: Experimental evidence," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 257-267.
  2. Curtis R. Price & Roman M. Sheremeta, 2012. "Endowment Origin, Demographic Effects and Individual Preferences in Contests," Working Papers 12-07, Chapman University, Economic Science Institute.
  3. Roman M. Sheremeta, 2013. "Overbidding and Heterogeneous Behavior in Contest Experiments," Working Papers 13-06, Chapman University, Economic Science Institute.
  4. Subhasish M. Chowdhury & Roman M. Sheremeta & Theodore L. Turocy, 2012. "Overdissipation and Convergence in Rent-seeking Experiments: Cost structure and prize allocation rules," Working Papers 12-13, Chapman University, Economic Science Institute.
  5. Chowdhury, Subhasish & Sheremeta, Roman & Turocy, Theodore, 2014. "Overbidding and overspreading in rent-seeking experiments: Cost structure and prize allocation rules," MPRA Paper 55922, University Library of Munich, Germany.
  6. Hyndman, Kyle & Ozbay, Erkut Y. & Sujarittanonta, Pacharasut, 2012. "Rent seeking with regretful agents: Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 866-878.
  7. Loukas Balafoutas & Glenn Dutcher & Florian Lindner & Dmitry Ryvkin, 2012. "The optimal allocation of prizes in tournaments of heterogeneous agents," Working Papers 2012-08, Faculty of Economics and Statistics, University of Innsbruck.
  8. Markussen, Thomas & Reuben, Ernesto & Tyran, Jean-Robert, 2012. "Competition, Cooperation, and Collective Choice," IZA Discussion Papers 6620, Institute for the Study of Labor (IZA).
  9. James Andreoni & Andy Brownback, 2014. "Grading on a Curve, and other Effects of Group Size on All-Pay Auctions," NBER Working Papers 20184, National Bureau of Economic Research, Inc.
  10. Alexander W. Cappelen & Ulrik H. Nielsen & Erik Ø. Sørensen & Bertil Tungodden & Jean-Robert Tyran, 2012. "Give and Take in Dictator Games," Discussion Papers 12-05, University of Copenhagen. Department of Economics.
  11. Nava Ashraf & Oriana Bandiera & Scott Lee, 2013. "Awards Unbundled: Evidence from a Natural Field Experiment," STICERD - Economic Organisation and Public Policy Discussion Papers Series 46, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.

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