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Rent-seeking versus Productive Activities in a Multi-task Experiment

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Author Info

  • Hessel Oosterbeek

    ()
    (University of Amsterdam)

  • Randolph Sloof

    ()
    (University of Amsterdam)

  • Joep Sonnemans

    ()
    (University of Amsterdam)

Abstract

This discussion paper has led to a publication in the 'European Economic Review' , 55(5), 630-43. 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 a given instrument becomes less attractive when the effectiveness of rent-seeking activities increases. More recent theories that emphasize the importance of reciprocity, however, 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

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 06-083/1.

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Date of creation: 28 Sep 2006
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Handle: RePEc:dgr:uvatin:20060083

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Web page: http://www.tinbergen.nl

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Keywords: multi-task experiment; rent-seeking; reciprocity;

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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, Elsevier, vol. 17(5), pages 751-765, October.

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