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An Empirical Investigation of Gaming Responses to Explicit Performance Incentives

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Author Info
Courty, Pascal
Marschke, Gerald

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Abstract

This Paper studies a particular kind of gaming response to explicit incentives in a large government organization. The gaming responses we consider occur when agents strategically report their performance outcomes to maximize their awards. An important contribution of this work is to examine whether this behaviour diverts resources (eg agents' time) from productive activities or whether it simply reflects an accounting phenomenon. We evaluate the efficiency impact of the behaviour we identify and find that it has a negative impact on the true goal of the organization.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3164.

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Date of creation: Jan 2002
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Handle: RePEc:cpr:ceprdp:3164

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Related research
Keywords: contract theory; government incentives; moral hazard; multi tasking; performance incentives;

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Find related papers by JEL classification:
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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  1. Kelman, Steven & Friedman, John N., 2007. "Performance Improvement and Performance Dysfunction: An Empirical Examination of Impacts of the Emergency Room Wait-Time Target in the English National Health Service," Working Paper Series rwp07-034, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  2. Oscar Mitnik, 2008. "How do Training Programs Assign Participants to Training? Characterizing the Assignment Rules of Government Agencies for Welfare-to-Work Programs in California," Working Papers 0907, University of Miami, Department of Economics. [Downloadable!]
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  3. Hessel Oosterbeek & Randolph Sloof & Joep Sonnemans, 2006. "Rent-seeking versus Productive Activities in a Multi-task Experiment," Tinbergen Institute Discussion Papers 06-083/1, Tinbergen Institute. [Downloadable!]
  4. Nillesen , P.H.L. & Pollitt, M.G., 2004. "The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands," Cambridge Working Papers in Economics 0446, Faculty of Economics, University of Cambridge. [Downloadable!]
  5. Peter R. Mueser & Kyung-Seong Jeon & Andrew Dyke & Carolyn J. Heinrich & Kenneth R. Troske, 2006. "The Effects of Welfare-to-Work Program Activities on Labor Market Outcomes," Working Papers 0602, Department of Economics, University of Missouri. [Downloadable!]
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  6. Darren Grant & William B. Green, . "The Simple Economics of Thresholds: Grades as Incentives," Working Papers 0901, Sam Houston State University, Department of Economics and International Business. [Downloadable!]
  7. Simon Burgess & Marisa Ratto, 2003. "The Role of Incentives in the Public Sector: Issues and Evidence," The Centre for Market and Public Organisation 03/071, Department of Economics, University of Bristol, UK. [Downloadable!]
  8. Christos Genakos & Mario Pagliero, 2009. "Risk Taking and Performance in Multistage Tournaments: Evidence from Weightlifting Competitions," CEP Discussion Papers dp0928, Centre for Economic Performance, LSE. [Downloadable!]
  9. Kuhn, Michael & Siciliani, Luigi, 2007. "Performance Indicators for Quality with Adverse Selection, Gaming and Inequality Aversion," CEPR Discussion Papers 6261, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  10. Jamasb, T. & Nillesen, P. & Pollitt, M., 2003. "Strategic Behaviour under Regulation Benchmarking," Cambridge Working Papers in Economics 0312, Faculty of Economics, University of Cambridge. [Downloadable!]
  11. Simon Burgess & Carol Propper & Marisa Ratto & Emma Tominey, 2004. "Incentives in the Public Sector: Evidence from a Government Agency," The Centre for Market and Public Organisation 04/103, Department of Economics, University of Bristol, UK. [Downloadable!]
  12. Gerald Marschke & Pascal Courty, 2004. "A General Test of Gaming," Discussion Papers 04-04, University at Albany, SUNY, Department of Economics. [Downloadable!]
    Other versions:
  13. Pascal Courty & Gerald Marschke, 2003. "Making Government Accountable: Lessons from a Federal Job Training Program," The Centre for Market and Public Organisation 03/083, Department of Economics, University of Bristol, UK. [Downloadable!]
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