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Tournament Incentives Affect Perceived Stress and Hormonal Stress Responses

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  • Thomas Dohmen
  • Ingrid M.T. Rohde
  • Tom Stolp

Abstract

We conduct a laboratory experiment among male participants to investigate whether rewarding schemes that depend on work performance – in particular, tournament incentives – induce more stress than schemes that are independent of performance - fixed payment scheme. Stress is measured over the entire course of the experiment at both the hormonal and psychological level. Hormonal stress responses are captured by measuring salivary cortisol levels. Psychological stress responses are measured by selfreported feelings of stress and primary appraisals. We find that tournament incentives induce a stress response whereas a fixed payment does not induce stress. This stress response does not differ significantly across situations in which winners and losers of the tournament are publically announced and situations in which this information remains private. Biological and psychological stress measures are positively correlated, i.e. increased levels of cortisol are associated with stronger feelings of stress. Nevertheless, neither perceived psychological stress nor elevated cortisol levels in a previous tournament predict a subsequent choice between tournaments and fixed payment schemes, indicating that stress induced by incentives schemes is not a relevant criterion for sorting decisions in our experiment. Finally, we find that cortisol levels are severely elevated at the beginning of the experiment, suggesting that participants experience stress in anticipation of the experiment per se, potentially due to uncertainties associated with the unknown lab situation. We call this the novelty effect.

Suggested Citation

  • Thomas Dohmen & Ingrid M.T. Rohde & Tom Stolp, 2023. "Tournament Incentives Affect Perceived Stress and Hormonal Stress Responses," CRC TR 224 Discussion Paper Series crctr224_2023_409, University of Bonn and University of Mannheim, Germany.
  • Handle: RePEc:bon:boncrc:crctr224_2023_409
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp409
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    References listed on IDEAS

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    1. Allan, Julia L. & Andelic, Nicole & Bender, Keith A. & Powell, Daniel & Stoffel, Sandro & Theodossiou, Ioannis, 2021. "Employment contracts and stress: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 360-373.
    2. Jana Cahlíková & Lubomír Cingl & Ian Levely, 2020. "How Stress Affects Performance and Competitiveness Across Gender," Management Science, INFORMS, vol. 66(8), pages 3295-3310, August.
    3. Thomas Dohmen & Armin Falk, 2011. "Performance Pay and Multidimensional Sorting: Productivity, Preferences, and Gender," American Economic Review, American Economic Association, vol. 101(2), pages 556-590, April.
    4. Buckert, Magdalena & Schwieren, Christiane & Kudielka, Brigitte M. & Fiebach, Christian J., 2017. "How stressful are economic competitions in the lab? An investigation with physiological measures," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 231-245.
    5. Buser, Thomas & Dreber, Anna & Mollerstrom, Johanna, 2017. "The impact of stress on tournament entry," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 20(2), pages 506-530.
    6. Songfa Zhong & Idan Shalev & David Koh & Richard P. Ebstein & Soo Hong Chew, 2018. "Competitiveness And Stress," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1263-1281, August.
    7. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    Cited by:

    1. Dohmen, Thomas & Shvartsman, Elena, 2023. "Overexertion of Effort under Working Time Autonomy and Feedback Provision," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 1255-1266.

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    More about this item

    Keywords

    Incentives; stress; cortisol; sorting; laboratory experiment;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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